All Forum Posts by: Curtis Bidwell

@Buyan Thyagarajan.  My policy on raising rents is simple: “Every tenant, every year.”  Don’t let them dictate the terms of your business.  And don’t fear them, or you will go out of business. In my market, I almost look forward to turnover because the market moves faster than annual rent increases!   (I turned a unit this month for $175/mo increase - after doing $75/mo increases the last 2 years on existing tenant! -they’re move was due to military relocation, not rent price).

Your raises don’t have to be extreme, but your actual cost of ownership and maintenance go up every year.  Taxes, Insurance, maintenance, utilities, wear and tear, etc... 

Also, if your in one of the “progressive” markets that are increasing “tenant protections” while limiting your property rights and contract rights, you need to keep it at market rates or you’ll never catch up once they fully institute rent controls.

“I can appreciate your sensitivity to rent costs.  The current market dictates $1600/mo for your home.  Based on the current costs of property taxes, insurance and other costs out of our control, I am able to do $1580 for you, because you’ve been a great tenant and cared for the home. If that doesn’t work for you I’ll need to know by (date) so we can plan accordingly.” 

@Pat D. Any time I have a project that requires more than a shopping cart I go to the pro desk or millworks at Home Depot and let them bid it for me. You’ll be surprised at what they can do. Same at Lowe’s.  

Talk to your local contractors and they’ll tell you where they get the best price on various materials (spoiler: lumber And trim is generally better at other suppliers! But for me, I’ve negotiated best prices for Windows at HD, appliances at Lowe’s).

Hi @Kate Holden, Welcome to BP.  I have an excellent local guy that has done my taxes for many years.  He is VERY real estate friendly having owned several of his own properties and handling several of us who have larger portfolios.  He is aggressive and creative, and is very capable of defending his work before the IRS.  His name is Joe Koval.  PM me if you'd like his info.  

@Blair Nye You're right, the Puget Sound region is the most underserved in the nation for AC!  But most new construction is including it now. I am doing major renovations on my C+ apartments and adding mini-splits with AC.  It will be a major draw to quality tenants and allow a significant rent premium which will add significantly to my overall value.  

I vote "Yes".  Install AC if your able! 

@Josephine Wilson I believe your rent expectation are under market.  Check the specific area, but I would expect a minimum of $900/unit in that area being close to universities.  Update them and you’ll get up to $1250/unit.  Now your an doing 1% and making comfortable money (with expected rent growth of 8%/year for next 2 years!). 

@Oliver Betuel   I live off my rentals so it’s a very practical question.  If you’ve been at it awhile you can trace the history of your expenses and can go off the averages.  Until then create a working budget and save 6 months of expenses (most lenders will require 6 months reserves when you go to buy more property).  What comes in above that you take for living /savings /investing. 

You account for it simply as an equity draw: a non taxable event -as your income, expenses and depreciation will determine your actual taxable income or loss.

@Nick Wilkinson Nurture that awesome relationship by honoring what you have and making sure your future deals are solid.  Use it but don’t abuse it!   

I’ve bought several deals that were 100% financed.  My last had a debt coverage ratio of 1:1.  My lender gave me 12 mo interest only to make it work. 

So I’m not as concerned about equity going in if I know I can get rents to market quickly which will ultimately drive the value.  I refinanced this deal in 12 months for double the value (Current debt coverage including my cash out is 1.7)

What I want is cashflow. That is what covers the expenses. Equity doesn’t mean anything until you sell or refinance. If I have adequate cashflow I’ll create a reserve that will cover the downturns, vacancy, cap ex, etc... 

@Uttam A. I have property in both Puyallup and Lacey-Olympia-Tumwater.  The whole region is dynamic but I tend to like Thurston County better.  Our purchase-to-rent ratio is generally better than up north.  We have a diverse economy. Demand outpaces supply ...substantially. 

Last week I advertised 1 unit and rented 2.  I could have rented 4!

Even better opportunities are found in some of the outlying smaller communities like Shelton where they have easy access to Olympia (20 minutes), less expensive cost of living, and far less political and social drama than in Seattle.  

Opportunities are there if you diligently research, have the means to close,  and follow through.  Good luck! 

A "proper lease agreement in place with right terms" would have included the condition checklist.  Being as your contract apparently did not include the proper condition checklist YOU WERE NOT LEGALLY ENTITLED TO A SECURITY DEPOSIT FROM THEM!  

RCW59.18.260 ...No deposit may be collected by a landlord unless the rental agreement is in writing and a written checklist or statement specifically describing the condition and cleanliness of or existing damages to the premises...

Return it quickly to avoid any further action from them that could cause you more grief.  Consider it a valuable lesson learned for a mere $400!  

@Robert Saunders. @Brian Geiger Makes an important point.  The less money down means a higher payment therefore less cash flow available which can put you in a bind when unexpected expenses arise (they will!). 

In my example above, we actually cash flowed at closing.  But I knew rents were significantly below market ($300/mo/unit) AND we weren’t stuck with leases we had to honor.  Within 2 days of closing we had occupied the one empty unit at $895, up from $550!  And we began to systematically raise rents and renovate vacated units. Within 10 months we had created enough value to refinance and take cash out, paying back my Line of Credit, and getting permanent financing at a better rate.  In the end I was about 70% leveraged, which is comfortable for me -and the bank.

TAKEAWAY: if rents are already at market with little opportunity to improve property and income, 70% ltv is a good baseline.  
BUT if you have clear opportunity to improve property and income (and trim expenses) then I’m not concerned with 0 down.