All Forum Posts by: Brian Hughes

I had the same situation with my most recent property (a four-plex in burien, WA).    of the 3 occupants  (4th unit was vacant at closing)  2 were long term tenants (7 years, 15+ years).    They were paying between $630-710 a month.   (Market rents were probably 50% more)

I first wrote a letter introducing myself and explaining my long term goals for the property including enumerating the (long) list of needed repairs which I was going to begin tackling immediately,  as well as pointing out the amount that expenses had gone up for the building in the 10 years during which the prior owners never gave a rent increase.    I then laid out a 2 year initial schedule for how much rents would increase and when so that the residents could plan for it.   I then met with every tenant to discuss the same with them and answer their questions.   The rents were still below market at the end of that 2 years but the building was  cash flowing and no longer at imminent risk of major systems failures.

Obviously I was trying to be very transparent and accomodating to the existing tenants, in part because I knew they had limited incomes and options should they have to move.   But I think it worked out well.   The other 2 units have had turnover at this point,  but both aforementioned residents are still there today with rents a lot closer to market rate, though with unit overhauls I could get more.  

Basically I was transparent with the tenants as to my needs, plans, and expectations and I made sure to demonstrate that I was reinvesting in the property concurrent with asking more from them, and in general I tried to show I am an attentive and responsible landlord.

Assuming your home only needs basic spit and polish (paint, carpets, a quick landscaping job, etc)  I know some people on this site might bristle at the suggestion but your best bet might be to find a listing agent willing to spend some money up front on those things (to be paid back along with selling commission) in hopes of getting the  home to sell for substantially more.   If the house needs a lot more than spit and polish,  you are probably better off just selling as is.  These days not all agents/brokerages charge the full 6% so shop around and you may save a few thousand.    

Otherwise,  I guess the question might  be are you just starting over with no assets and liabilities other than the house,  or are you needing to sell in order to pay off other debts to get back to a clean slate?   Maybe you just want to get the hell out of there.    Do you have a job (or reasonable prospects thereof) that can allow you sufficient income to keep the place if you wanted to?    What if you rent a couple rooms?    Assuming you have a reasonable interest rate,   the payments shouldn't be too bad on a 400k-ish balance,   especially compared to anything comparable you might try to replace it with in the same area.    Renting a room or two would make a big dent in a $2500-ish (just guessing) monthly mortgage payment.

Hi Jordan-

The association I was referring to is Rental Housing Association of Washington (rhawa.org)

City of Seattle is the one jurisdiction that I am aware of around here that has passed limiting ordinances and taxes on short term rentals. If you are outside of Seattle proper you are probably fine in that regard, but its good of course to do your research. I watch what seattle is doing since I have units there but I don't do STR's so I dont pay as close of attenion there.

Welcome and congrats on buying your first home (even if from family :) ) and getting started with finding ways to diversify yourself and your income.    These days such moves are very wise.

I've got a couple friends who are qualified but on the fence about buying a home and I keep trying to push them to buy something in the region, even if not absolutely ideal at least something with potential they can improve over time,  before they get priced out completely...

If you have not already done so,  consider joining the local landlord/owners group  (RHA -- rental housing association).  They will help you with up to date local information,  lease forms, screening and other services,  and help keep members up to date on local regulations, and other education.   Also,  your membership will help us all out with advocacy at various levels of government.   (I'm a member obviously,  its worth it)

if you are in Seattle proper if you are not already aware you are now limited in the number of short term rental units you can have, and you must be licensed and pay per night taxes on it.    I think the rules are no more than 2 units,  or 3 if one of them is your home.   I'm assuming they are counting full living units, e.g. apartment units or houses,  not individual bedrooms therein, but make sure you take a look at the ordinance.

I have no firsthand experience with this,  but from what I have gathered watching things since I started caring about this (~10y):

As for forgiveness instead of permission after getting caught, If its an unpermitted ADU and the place was otherwise owner occupied, probably at minimum you would be required to bring the unit up to code (which could be very expensive or just plain infeasible) and pay for the inspections and some kind of fine on top of that. From what I gather they don't get too aggressive in rooting these out though just owing to the fact that making you remove it would eliminate much needed housing and force a resident to have to move out (at your cost). In the best situation you'd probably have to register the unit and make sure it passes RRIO. In any case you would be at the mercy of the City and the building department and right now both are hostile to landlords. They might choose to throw the book at you or not, it would just depend on circumstances.

I haven't investigated this as I don't invest in SFR's would be to go ahead and build out an ADU or ADU-ish space but still rent the whole home as a unit, and advertise/describe the home in a manner that might appeal to a tenant with an extended family or roommates. (Just be sure to describe the property e.g. "two living areas" , not your desired tenant, fair housing and all). You might also allow the tenant to sublet that area, but that is very risky for lots of reasons, and this would constitute a (very) grey area in the law.

In situations like this the biggest risk of getting 'outed' is probably the neighbors.   Talk to the owners,  see how many houses are already rentals,  and generally do your best to be as good a neighbor and owner as possible if you try it.    If the house on either side is already a boarding house,  you are probably fairly safe.    If one or the other is the neighborhood prude,  beware.

In response to the comment about seattle and vicinity neighborhoods,  For the out-of-staters,    white center is gentrification central and one of the "more affordable" areas in/adjacent to seattle right now.     Crime rates are probably higher there than some areas but its hardly a ghetto.   There are a few corners/streets that are sketchy but that is true of anywhere and those areas are dwindling.   There is a pretty good mix of home architectures most dating from 30-60's but everything else too,  and there is a pretty good mix of small multifamily and some midsize apartment projects;  most of these 50's and up.    Most new development is townhouses;  replacing the oldest/most run down buildings in L zoned areas.   

I don't live there but close by and I do spend a lot of time in that area so yes I'm a bit of a booster....

Zoning and permitting issues aside,   you  might look at the habitability standards that are specified in Seattle's recent RRIO (rental registration and inspection ordinance)  as the unit would need to comply with these.    The parameters for the inspection are pretty bare-minimum for any reasonably built and maintained unit,    but if you are looking at converting a basement with low ceilings,  uneven or dirt floors,  moisture issues, no or very small windows,  etc.   the costs involved for building a legal MIL would be a lot more if you had to correct issues like these rather than if the home had a full height basement,  modern foundation, and existing roughed in plumbing for example.

Depending on what your father (or you) want and how long the home has been owned by your father,  selling and rolling that money into something bigger could be a good move,  though on the other hand Phinney is one of the most desirable areas in the city.

As 'bad neighborhoods' go the home in the above example is hardly a ghetto.   It is an area that has historically been more working class but is improving very rapidly right now.    There is a transit center about two miles away that would give you direct bus access to downtown seattle.     The home itself looks pretty modest but plenty of room for expansion on the lot.   The location is solidly residential in every direction, near a large park and the largest shopping center in west seattle.      Odds are it will sell for over asking price,  unless there is something seriously wrong with it that isn't evident.

I don't know of any local books per se,  but Within western WA,   my best recommendation for learning more about local laws is to attend some seminars/classes by Rental Housing Association of washington state.  (rhawa.org) They regularly have "new landlord" orientation and landlord tenant law classes.   There are a couple other rental industry groups that operate locally as well but RHA seems most focused on smaller, independent landlord concerns.   Also,  many municipalities and local community groups have landlord liason / education / outreach programs.  An email inquiry to the local city or county would probably be fruitful   I don't know about other counties,  but king county has several books/pamphlets that focus on fair housing best practices.    If you are doing it right in king county you are probably safe in any other county in the state.     If you want to look at it from the other side of the table,   go look at the tenant's union website and read their recommendations and advice about housing law to their members.

FWIW on the shared walls comments, I was apprehensive about going back to that as well (having lived in my fixup-SFR for about 6 years before buying my first rental) But the calculus is a bit more in your favor when you're the boss. It hasn't been much of an issue for me. But its true I live alone, with a family it could be a much different equation.

I'm also in seattle and have been executing on a similar strategy -  since 2006 I have acquired 8 units (3 properties) in Seattle and Burien.    This is a very useful site,    I've been a landlord/investor for 10+ years and find I'm still learning quite a bit here.    Welcome.

I kind of suspect the owner occ requirement on ADUs will remain else all SFR zones would turn into investment free-for-alls (more than they are now) and its probably somewhat fair to limit competition between people wanting to buy their own house and people wanting to convert it into a duplex or triplex. I'm supportive of the city enacting policies to encourage more ADUs and DADUs. Right now while the govt. claims they want to encourage it, the actual policies and taxes/fees penalize you pretty badly especially if you want to build a DADU.