All Forum Posts by: Brian Hughes

Its gonna depend a lot on what your product is and where it is.    If you are talking about downtown $3000 studios those are probably a tough sell right now.    if you've got a fairly priced (for seattle!), well maintained and well located house or class B/C building in a real neighborhood with decent sized units you are probably all full.

I had a vacancy (1brs,  Burien downtown - adjacent municipality 15 minutes to downtown seattle)  in April around the peak of the first 'wave' of COVID and it filled in about a week with the highest credit score applicant I have had to date -  rent about 25% higher than prior resident,  with some light renovations,  mainly vinyl plank floors and refinish the pink fiberglass tub.

@Sandra Regnell   yes,  avoid things that don't add up.   also avoid (or at least patiently, thoroughly screen) anybody who is in a big hurry to rent,   and run away screaming if they offer to pay multiple months up front in cash or they try to get you to to skip any portion of the screening process, or start in on the sob stories.

as for finding people with credit better than 700:
https://www.fool.com/the-ascent/credit-cards/articles/heres-what-americans-fico-scores-look-like-how-do/

so roughly half of people have credit of 700 or better.   You can bet that there are more home owners and less renters in that group for various reasons  (leading and trailing indicators).    So yes,  finding a renter with credit better than 700,  especially for class C (workforce, affordable, older housing stock, etc) housing is going to be fairly rare.   (I don't know what type of rental property you have,  but thats where I'm at)   If you are class B or class A it should be easier.

When I self managed I didn't look at credit score.   My property manager's credit score cutoff right now I think is 680.   They may have bumped it up a bit due to seattle's "emergency" blanket ban on screening for eviction or nonpayment history.

I would drop your asking price before relaxing your screening criteria.   If you are only getting desperate-looking people who are trying their hard luck story at every advertised vacancy and the local market is not totally tanked,  you may be asking a bit too much.

Good luck.

Its definitely a judgement call but depending on exactly what bad credit is  (vs. say no credit)  a co-signer or guarantor may be an option.   I have done that a few times with younger applicants (their first or second apt's usually)  who had enough income,  but didn't have much or any credit history or prior address history and in a couple of those cases it became very valuable that there was a co-signer involved.    

that said,  if any lies or omissions of material fact come up in your THOROUGH background check,  yes,  deny.

Depending on your jurisdiction, it may be much harder than normal to recover from a screening mistake right now,  so extra prudence is a good idea.

@Michael Haas   Well I did come upstairs from my vault full of gold coins that I stack and count over and over again to write the above post :)    I'm sure if SCC thinks we are the bad guys they will love the wall street hedge funds and other large out-of-area investors that buy all the seattle multifamily stock as local investors move their interests to the outer rim worlds, like renton, burien, and tatooine.

100K down is a solid down payment for some seattle houses:  Since you are an architect maybe something like this:

https://www.redfin.com/WA/Seattle/5905-S-Roxbury-St-98118/home/176774

could be of interest.   Fixer,   700sf unfinished basement and large detached garage/shop means potential for D/ADUs in addition to blank slate reenvisoning of the main unit.

upper rainier beach is a really nice area (I live about 6 blocks west of this listing)  and among the more affordable in seattle.  Still walking or scooter/bikeshare distance to light rail.

---------

And if you are considering renting those other units,  please be sure to familiarize yourself with Seattle's lengthy set of tenant protection ordinances.   Many of them might seem great from the renter's side but present significant challenges/risks once you take the leap to the dark side.   It sounds like you envision a wonderful community where everybody gets along,  but the reality will be you will be the landlord and at some point or other you will have to be firm and stand up for yourself and your rights, or you WILL be taken advantage of.

Good luck.

#iamnotalaywer

Section 8 and other rent voucher programs are a legally protected class in WA.   You cannot deny a tenancy solely because their income,  or some portion of it is from the program.  The excuse of "I havent been inspected for the section 8 program" also isn't going to fly because they will do the inspection as part of the move-in process.   If your unit fails the inspection for reasons that are nontrivial,  you can then stop the process,  but if its something minor/stupid like needing to add additional smoke detectors in a bedroom and you don't do it you could be exposing yourself.   I'm pretty sure other tactics like saying "I only accept 11 month leases" because section 8 requires 12, are also asking for a discrimination lawsuit.

My understanding on this (from lots of reading but no direct experience)  is that you can apply the same rental qualification criteria to a section 8 applicant as any other - credit score, prior landlord reference, criminal background check (except in seattle) and so on,  however when it comes to income you are only allowed to verify the tenants portion of the rent responsibility.   For example,  if the tenant pays $400 of a $2000 rent,   and you have a 3x rent income requirement,  you can verify the tenant has $1200 in income other than the section 8 voucher.  Even then,  you have to consider all income sources,  which could include SNAP and other subsidies.    Of course,  since section 8 defines the benefit per participant based on their income,  their income will in theory always qualify.   However if your unit is being advertised for $2400 and their portion of rent plus subsidy is $2000 then of course you can say no on account of insufficient income.

This is frustrating because in theory you could be presented with an applicant with zero income other than vouchers and other public assistance,  knowing full well it takes some amount of real cash income to maintain a household.   But the odds of a section 8 participant with negligible real income who still has good credit,  good landlord references, and no criminal history are probably fairly low.   If you are presented with a section 8 voucher and they actually have an okay credit score and pass your other criteria,  its probably not the end of the world to work with them.

That said,  its hasn't happened to me yet.  In my experience (before I started having a property manager do screening) anybody with section 8 disappeared after seeing my screening criteria.

Good luck

Heh - disgusting.   that got me so excited I drove past the place today :)   other than the totally overgrown yard the exterior doesn't look that terrible,  but I can believe the interior might be another story.   Still,  a) I'm really aiming higher in unit count and b) price would probably have to be significantly less to make it worthwhile.   FWIW the home immediately next door (not a duplex) appears to have just gone on market.  I couldn't find the listing but would be interesting to see the specs/price for comparison.

Anyway on the architect,  I'd say both talk to one before any specific property just to get a better idea both in terms of attributes of the home to look for,  and also to get any ideas of difficulties/quirks with the particular jurisdiction you are looking at,  and then after the purchase (assuming you are trying to do everything above the board, permitted, etc.  work with them again.

I would caution that shared utiliies can be a big pain. I know somebody else who has a home they converted with an ADU ; his household is just him and his wife, but their tenant ended up being 5 people. (they lived in the adu side and rented the main unit) and for various reasons the utilities ended up being literally hundreds a month and was a point of friction. That can largely be avoided by planning ahead to keep it separate as possible, and submeter or mitigate in other ways when not possible; like apparently these days you can get programmable thermostats with a 'administrator' mode that will allow you to set a maximum temperature in case you end up sharing with a resident who likes to keep the house at 80 degrees with electric baseboard heat. It happens. I've had it happen a couple times to me with roommates and tenants.

Good luck.

I would find an architecture firm that has experience building out ADU's. Your basic strategy seems sound. Other thoughts to consider - it might be good to add a dedicated water heater and heating/cooling system to the ADU - so you aren't fighting with the tenant over the temperature or who is using too much hot water. Shared laundry may be unavoidable depending on the size of the home; if the ADU is a smaller one is probably a safe move to make laundry free but if you are considering a large (2 or 3br) ADU you might want to think about metered laundry (coin op or something) just in case you get an occupancy-limit sized household.

I don't know if they would allow it for an ADU vs. a real duplex, but the ability to add a second electric meter and breaker panel would be a good way to prevent issues with excess utility usage (you could bill back or just require tenant to get the electric service in their name) - even without that there are submetering options.

In any case, a home with at least a 200 amp service would be a minimum, when we are talking about having 2 kitchens, and 2 heating systems (often the easiest way to go with the ADU heating is electric baseboard, though maybe a heat pump is an more desireable option now) though having natural gas service might lessen that need.

The electric panel, water shutoffs, and some other utilities might need to be in common areas of the house both you and the adu resident can access. You don't want the main breakers in the ADU where you have to give 48hrs notice to enter every time a breaker pops if you end up with an uncooperative tenant. (Seems petty but believe me it can happen) Similarly if all the breakers are in the main residence then if the tenant pops a breaker they have to disturb you.

You could also actually look at "real" duplexes and triplexes.   Don't know your budget but there are a few of those around as well.   (Des Moines is an area on my radar)   for example https://www.redfin.com/WA/Des-Moines/403-S-192nd-St-98148/home/338852  has been on the market a while so a semi-aggressive offer would not be an unrealistic move, though its probably on the "habitable fixer" end of things and I understand that with a child in school you may be a lot more selective about location,  neighborhood area etc.    Other issue of course is if its occupied,  right now asking a tenant to move is very limited,  though I think the statewide moratorium does allow moving your own family into the unit as a reason,  though I would be very careful about it.

oh,  and please have the owner of the home contact RHA and/or WLA if they have not done so already and report the circumstances to them.  I think both organizations are collecting examples of where the COVID emergency rules are being taken advantage of or otherwise causing severe unintended consequences.

right now due to the various COVID ordinances,  unless they are committing acts that constitute a health or safety hazard I don't think there is anything you can do.   Since they are "nonpaying tenants" owing to the situation,  if you owned the home then upon having your right to evict restored you would at that point have to commence the process;  but first offering them a payment plan most likely based on whatever rules are most strict in the particular jursidiction you are in.   This could be very problematic if for example the "rental agreement" was verbal and no rent amount is stated.   

I wouldn't touch this without first knowing exactly what the situation is and talking with attorneys familar with the eviction process as well as squatter, holdover, getting out of verbal tenancy agreements, etc.   #trainwreck #dumpsterfire