All Forum Posts by: Curtis Bidwell

I have had properties in Olympia for many years and watched the changes take place both statewide and locally. I have been to the legislature and city council meetings to testify against the so-called ‘tenant protections’ that are damaging rental opportunities for marginal tenants.

There is no “right answer” for you, but here are a few considerations.

1. Coming out of the city council meeting I determined to sell everything within the city limits as soon as it was expedient to. I am of an age that I don't want to fight those unnecessary battles when the problems arise. Having said that, I renewed my excellent tenants with increases to make sure I'm as close to market as I can be -knowing that future increases will be limited. I will sell my SFR when they vacate and the multi-family when my loans come due (2-3 years).

2. In the city you have to have a State business license with city endorsements, register the property and have inspections (all at your expense).

3. The makeup of the council is extreme far left. Choose your politics, just know what that means … more regulation will follow. They publicly state their bias against property rights. The rule of law has been replaced with the rule of feelings, emotion and an ideological mandate.

4. Some investors thrive in this type of market knowing they will have strong equity growth as regulation tends to lead to fewer players, fewer available rentals and therefore higher prices (rents and property value). But they know they need adequate reserves to sustain them if/when there is a lawsuit or eviction to cover lost rent, repairs, etc. -which used to take 20-30 days but can now be multiple months.

Yes, a good manager can help mitigate some risks, but I’ve had excellent tenants move in that I eventually evicted - life happens to good people!  

Does your manager offer a placement guarantee, where they cover the cost of eviction if tenant doesn’t work out?

Be sure to connect with the local meetups to hear from current active investors, get encouragement and insights and ideas of what people are doing in today’s markets! 

@Patrick Nickell Hi Pat, welcome to BP!  I’m just curious how you arrived at your rent rates? Where is this located, are you in the Vancouver market or are you moving up toward Seattle? A 4 bed/2 bath duplex unit in Western Wa should be renting for $2k+ unless it’s really old, out of repair, or very rural.  

There have been so many changes to the tenant-landlord law over the last few years, both statewide as well as many city counsels trying to match/outdo Seattle that it’s almost impossible to keep track.  Join RHAWA (Rental Housing Assoc of WA) or Washington Landlord Assoc and use their attorney-drafted contracts.  They keep current with state and local legislation (a whole lot cheaper than an attorney and you get other benefits as well)!

@Nick Gagel Keep it simple! One account for income and expenses (checking). And one account for security deposits (savings/ trust acct).  Transfer excess proceeds you won’t need for your rentals to your personal account. 

Keep a ledger of income and expenses. Easy enough with a couple units to do in Excel. Once you grow do it in Quickbooks or other software where you can keep more detailed records with reporting features for your accountant.

I believe the attorney will likely tell you to maintain/repair road to its original condition and then send them a bill. They agreed to it when they purchased with the accompanying covenants. When they don’t pay file a lien. Now they have a repair bill as well as the cost to remove the lien. next time they’ll cooperate!  

For mor significant amounts (+ $100k) I know that both BP members and contributors, Brian Burke (Praxis Capital) and Dave Van Horn (PPR Notes) have note funds that pay 6-10% depending on your time frame. You can hold for as little as 6 months. Most of our projects will take most of that time and we can borrow from other lines of credit if need be until the fund matures. 

I’ve found that for smaller amounts it doesn’t really matter.  Once we get into a deal it more than makes up for a bit of lost interest.  

@Andrew Ralston I’m reminded of the meme that said, “We did have one house in your price range.  Unfortunately we sold it in 1969”.  But seriously, don’t get hung up on cap rates! They are merely of an indication of what the market is willing to pay for a particular asset, in x condition, and x location at this moment in history… subject to change without notice! 

It is only one indicator among many (better ones) to consider.  It does not tell you if the property is a good deal - and very well may be a worse deal because of a high cap rate! High cap rates tend to indicate less desirable, more run down properties.  More risk, higher rate. 

I like to find properties that i can improve through upgrades, better management, and market rents. My last one was barely a 5 cap that basically broke even on day 1.  Within 60 days I was at 6.25% cash on cash, and after 1 year I was at almost 20% (I then refinanced my cash out of the investment at twice the purchase value!). If I had said No due to a low cap rate I would have missed out on a great opportunity.  

Post a sign and start towing.  I have had to do that in a couple places.  Word spreads pretty quickly and the problem goes away!  

We have a culdesac with 3 duplexes and other units have friends park in front my tenant’s garages so they can’t get out.  I posted a letter on each neighbors door to set the expectation and haven’t had any issues since.  

“Would it be possible to 1031 the proceeds of all lots but one, and keep the proceeds of the last lot to help cover the development expenses,”… Yes, but you’ll pay “boot” on that amount.  

“…and then to avoid capital gains taxes on the money from the last lot, deduct all or some of the development costs from it?”  Check with your tax adviser but, yes in theory.  You will likely add all development costs to the cost basis of the project thereby reducing the overall capital gain.  

Seattle in particular, and Washington in general has become a hard places to invest.

We certainly want to be more practical than political.  To that end, I testified before the state legislature 3 sessions ago as the crazy policies were ramping up.  I said, "The practical outcome of these policies will be that we end up with government and corporate housing and nothing in between".  Come to find out, that's exactly what they want!  They have voiced their position as being "Housing as a right" (per the United Nations 1948), They are of the opinion that  "Nobody should profit off someone's home".  

So their policies are intentionally pushing independent housing providers out of the market leaving fewer available homes at higher prices -predominantly in multifamily situations.  The end result is not to the benefit of the tenant (screening has become much tighter and fewer marginal families are finding housing), we can't terminate rule violators and otherwise undesirables - leaving the good tenants that can, to go elsewhere.  

Now we are hearing that they want to give tenants first right of refusal when you decide to sell ... SFR and Multi-family (tenants, together with non-profit or government agencies to purchase) potentially removing the opportunity to bid up to the highest value.

To invest as a landlord in Washington State you will need good professional management and a good attorney.  With each jurisdiction defining their own set of rules it is hard to keep up and manage the added responsibilities.