All Forum Posts by: Brian Hughes

7/7 current on rent.  One resident was behind for a few months at the start of the pandemic but caught up.    Knock on wood.

you can PM me and I will share what (miniscule) experience I had making a bid on a south seattle area commercial property around that scale recently.

is that 200k  the total cash part of your investment (including purchase + rehab),   or is it all rehab on top of the 314k?   If the latter the home must have needed a lot of work...

(i'm about halfway through the $150k I figure i need to spend to fully rehab my personal residence, also in seattle - everything is fully functional now but interior needs cosmetic overhaul throughout)

I totally 2nd the recommendation for RHAWA.

On criteria, be aware Seattle has a ban on screening for criminal history for rental applications. this does NOT apply for ADU or DADU situations as long as the owner lives on site. However, if your home is zoned/classified as a duplex (any L zone classification I think) then you cannot use this exception even if you live on site. Also be aware that even if exempt from this an outright ban 'No Felons' etc. is considered discriminatory at the federal level - you must have language saying something to the effect of criminal background will be evaluated case by case given certain factors (generally factors relating to what the offense (or pattern of offenses) was, and if it suggest a substantial increased risk to owner, other residents, neighbors, or property) and also be aware you can't consider criminal history with final disposition over 7 years ago. So if somebody committed a felony but they completed whatever restitution was required of them 6 years ago and they have been clean since and otherwise meet your criteria, is probably pretty safe to consider them.

When I still screened and self managed what I found  (small but >1 sample size)  was that applicants who had ONE criminal event in their past but otherwise met criteria were generally no worse of tenant than otherwise equivalent applicants with no criminal history.   However applicants I accepted who had MORE than ONE criminal action in their past were pretty much all 'high maintenance' tenants.

Given the (temporary and permanent) rules in seattle I would also highly recommend asking for a credit score more like 700 minimum.   There is a big difference in overall financial stability between those two numbers.   If it were still possible to ask for first/last up front and other mitigations 600 would still be okay  (I never used to look at credit score at all)  today you can't make alternate verifications like that to see if your applicant has some level of financial stability.

While I started out self managing,  In this day and age I would highly recommend considering hiring a local, experienced property management firm.   You will take an 8-10%  hit on income for the overhead probably for a single unit management contract,  but consider it an extra layer of insurance.  You should still be able to work with a decent PM on setting criteria,  etc. that are appropriate for your living situation.   At minimum,  build property management into your cost/benefit analysis the costs and make sure it pencils.

BTW, make sure your homeowners insurance policy is updated to reflect the ADU as well. Otherwise if something happens you may find yourself without coverage. Its an easy thing to miss.

IIRC WA did pass in the last few years statewide clarifications that if occupants of a property could not produce documentation of rental agreement they could be treated as squatters and removed by the sheriff without the same eviction process as for an official tenancy.   If they had a verbal agreement with the last tenant,   and the last tenant gave notice or has officially abandoned per definition thereof  (you can look for things like them having cancelled their utility accounts, emptied unit of their belongings, etc)  then they can't prove anything and maybe you can use that approach.   If the last tenant gave (or retroactively gives) them some kind of written sublet agreement,  but you don't allow sublets,  maybe you can convince the judge that it isn't evicting the first tenant because they already left and tried to sign over their tenancy in a manner that was illegal.   But attorney time for sure.    Sucky situation good luck.

Also,  be sure to contact WLA or RHA and make sure they know the details of your situation,  if you have not already.  While they can't do anything directly the information is getting collated to show damage being caused by overbroad COVID eviction moratoria.

Hi-

Looking to pick the brain of anybody in a seattle secondary market who has tenants on commercial lease.  Extra bonus if its a smaller/boutique mixed use type property as opposed to something like a restaurant or retail storefront.

PM me if one or more of your investments match this profile and you are willing to share thoughts.

Thanks!

BTW,  if you are planning on sticking with it please consider joining RHA   https://www.rhawa.org/  if you have not already.

2 kitchens makes it a lot easier.   I assume then there is probably a full bath on each level then.    Given all that there is probably room to squeeze in a stacked washer/dryer combo someplace hopefully near plumbing, the breaker panel, and and exterior wall for the vent.    That said,  places without onsite laundry do rent but its probably a big disadvantage especially for what would otherwise be a good size unit that would likely accomodate a small family.

If you weren't on good relations with the last tenant AND they were renting to airbnb guests I wouldn't put too much stock in any of their complaints.  You can evaluate for yourself by having your husband and if available kid(s) run around upstairs while you listen from the downstairs bedrooms or let a TV/Radio run upstairs and listen from various parts of the house.   Just installings doors/etc to separate the two living spaces will help with that too.   Other fairly simple things like swapping paper thin hollowcore doors for solid ones might help with that too depending on how the noise propegates.

I know things have slowed down a lot.    I have a just-fully-renovated 1br unit in burien thats gone 2 weeks without a single showing.   Its asking price is now the same as an identical unit in the same building that rented in less than a week a few months ago.   (I was asking a little more up til price drop today as this unit is the top floor and renovated to a little nicer standard,  but very comparable).   I  know it will rent,  just got to be patient and find the right price point.   Hopefully its not too close to (or below) the pre-renovation (which was SORELY needed) rental rate. 

I have a triplex in South Park on Thistle st.   I actually toured your home when it was having an open house sometime last year IIRC.

You are right as that house is pretty clearly set up as a boarding house or by-the-room rental,  which can mean a lot of extra work especially for a 'noob' landlord.   I don't remember it being in particularly bad shape.   Dated isn't really too important if you are renting by the room;  the decision point(s) there for potential renters is always going to be 1) is it habitable?  2,3,4)  price, price, price,  and 5) can I tolerate the other roommates?

If you try to sell now given COVID, the economy, the season, and Seattle politics you may take a loss. However rule changes in zoning (I think your lot along with all the others is RSL now) that are fairly recent may mean you can legally divide the home into at least 2, maybe more completely separate living quarters. I don't remember but if it didn't have a kitchen and bath on each level, adding that and adding appropriate interior doorways could net you a 'real' up/down duplex or if easier to permit that way just a home with ADU. And each of those would probably be a lot easier and less hassle to rent than either individual rooms or a single house set up for large groups.

Adding kitchens and baths is a significant job but it might be worth it in long term value if you could upgrade the place to 'real' duplex status.   I don't remember if there was laundry hookups but make sure each unit has those or there is a common secured room someplace with coin op if easier.  

If you don't want to or can't invest in the upgrades and don't want to try selling now,   your best bet is probably to find a property manager that has experience with boarding houses,  and let them handle the cat herding.   But as a boarding house not near a university/school you are probably going to be housing of last resort,  meaning a higher percentage of drama-prone residents even under best of circumstances.

The other option might be to actively seek out a section 8 tenant with a large family.   Its a mixed bag but you will have the benefit of government paid most of the rent,  and the tenant at least will have the fear of losing their subsidy to help keep them in line.   But in that case you would also have a large family in the home,   so a) no point in nice renovations if you go that route and b) expect and plan for high utility bills (bill back everything you can) and plan for maintenance.   

Good luck.
 

Its a trend that cities are allowing more accessory units in 'single family' residential areas.   The reasoning is social justice of course but in reality its simply population pressure and either density needs to start going up or the city in question either keeps sprawling or keeps getting more expensive to live in. 

Zoning issues aside, so if the 'tiniest' of these structures (or glorified camping trailers) have no kitchen and bath, how are they rentable either as a detached residence or as an STR? I can see the value in 'pop up' extra space for an office or family room or bedroom, latter case as long as the user doesn't mind running inside to the main house to use the facilities, meanig it would work best with year round mild climate. In a rental case I'm guessing most people would not be interested in those circumstances, and those who would consider the option certainly wouldn't pay a premium for it.

So I guess the question is, when accounting for water, sewer, and electrical hookups, THEN what time to install and what is the ROI? What is the smallest footprint that includes a functional bathroom with shower and a functional kitchenette?