All Forum Posts by: Jack B.

@Aaron Miley

Aaron, that was helpful indeed. That link led to this RCW (

http://app.leg.wa.gov/RCW/default.aspx?cite=82.45.105

) also pasted below, which to me sounds like as long as I buy another house within 9 months, I will get an excise tax CREDIT when I sell the new house eventually, assuming the credit was larger than I owe in excise tax from selling the new house, I don't get a refund of the difference, and if the tax credit is less than what I owe for selling the new house, I owe the difference.

So that is good in that it reduces my expenses drastically buying and selling IN state. Unfortunately no relief if 10-31 exchanging out of state. I guess I might just end up refinancing these and reinvesting the money in Florida. Cheaper to refinance than pay realtors fees alone, not to mention excise tax, 10-31 exchange fees, etc. This way I still have West Coast property for appreciation with a bit of cash flow and property management in place and cash flow property in Florida where I want to relocate to eventually. PLUS, this way if I don't like Florida or things there change, I can move back to Seattle for a few thousand dollars in moving costs and a cross country road trip! But that's for another thread.

RCW 82.45.105 Single-family residential property, tax credit when subsequent transfer of within nine months for like property. Where single-family residential property is being transferred as the entire or part consideration for the purchase of other single-family residential property and a licensed real estate broker or one of the parties to the transaction accepts transfer of said property, a credit for the amount of the tax paid at the time of the transfer to the broker or party shall be allowed toward the amount of the tax due upon a subsequent transfer of the property by the broker or party if said transfer is made within nine months of the transfer to the broker or party: PROVIDED, That if the tax which would be due on the subsequent transfer from the broker or party is greater than the tax paid for the prior transfer to said broker or party the difference shall be paid, but if the tax initially paid is greater than the amount of the tax which would be due on the subsequent transfer no refund shall be allowed.

Has anyone read through the RCW to find the exemptions or otherwise found an article that lists the exemptions? From what I see foreclosure, transfer to family members under specific circumstances and transfers of "devise" are exempt. Since I wouldn't be selling to family or letting it get foreclosed on, none of those apply to me. But the devise one might, as I plan to 10-31 exchange the property.

I'd either 10-31 in state OR out of state. I suspect if I do it out of state there is no exemption, but I'm sure someone here has run into this before.

I've thought about ABNB'ing the MIL while I'm living in the house since it is 10 miles to DT Seattle and Bellevue. You're talking about ABNB of the MIL while I rent the house out? Same thing either way, no? As far as noise, zoning, etc.

Yes, apartments are noisy, but houses are not supposed to be. While the apartment tenant may not mind the noise of the house tenants, the house tenants will likely not enjoy the apartment tenant noise.

I might add that my girlfriends mom rents a house down the street with the landlords brother living in the MIL apartment below them (basement). So I suppose there is a market for it. I will say it works out for them because they don't hear him though I'm sure he can hear them on the hardwood floors above him. Probably explains why he is gone from early in the morning to late in the evening even though he is retired. Probably doesn't have a lot of choice of where to live so he deals with the noise by being gone all the time. 

@Paul Weller

King County, Renton specifically. I think right now I'm technically OK since it's owner occupied and such. 

As far as picturing myself as either tenant, and how separate the units are. They are both in the same house, but the apartment has a completely different setup including kitchen, exterior entrance, parking, bathroom, bedroom, living room, dining room, laundry, etc. The unit is on the other end of the top floor of a huge house, with a locking door separating the unit from the rest of the house.

The only issue I could think of is possible noise both ways. The apartments bedroom is partially over the master bedroom. I hear the tenant get up in the mornings because the floor creaks a little. Other than that, the unit is over the large 3 car garage.

Then there is the other way around. The house portion that I currently live in has 3 of it's 5 bedrooms upstairs. If the tenant for the house had kids, they may disturb the apartment tenant a bit since the apartment shares a bedroom wall with one of the upstairs rooms.

I guess it's one of those things I can try out and see. What I suppose I could do is market the property at $2,700 a month (a very good rate for the area and the house) and if they balk at the apartment setup I'll offer that area to them as well for a total of $3,500. 

Apparently lot's of Asian families in the area with multi generational households, so perhaps I can find one family who is looking for such a setup. Thing is of course, this is a market where 90% of the people are home owners per the census, so most of your renter applicants have bad credit. They usually don't have a ton of options for renting so it may work.

I have a huge house that I just added to the portfolio with a nice MIL apartment, which helps subsidize the mortgage quite nicely. 

I'm planning on downsizing to one of my other rentals eventually, and am wondering how feasible it would be to rent out the house to one family when I have a tenant in the MIL apartment? 

It's a 3,500 SF house 15 minutes from Seattle and Bellevue. The apartment is about 750sf, has it's own kitchen, dining, living, bedroom, bathroom, parking laundry and entrance. It is on the top floor over the garage mostly.

The rest of the house is 5 bedrooms, 2.5 baths, with a huge living room, huge family room, giant dining area and massive kitchen and 3 car garage. 

I could rent the main house out for $2,500 easily and $1,100 for the MIL, which would be more profitable for me then the $3,000 rent I would get for the entire house as one unit with no separate tenant in the MIL. It's a $600 a month difference in profit. 

Of course zoning might be an issue, as it's zoned single family. I think since it's technically like a room mate in my situation, it's not considered multi family. But if I moved out and rented the two units out to seperate families....

Bump...

My MIL apartment just rented includes utilities. I didn't promise anything, just told him I would consider sharing my wifi with him. Clean record, guy in his 50's, good credit. Still I worry about what someone else is doing on internet in my name. I've considered daisy chaining another wireless router to broadcast two SSID's to separate him from my files, but his activity still traces back to my name. I could even buy a more modern router to just broadcast two SSID's off the one router, but still, this just keeps him from viewing my files and traffic.

Nothing in the lease says I include wifi or cable. I could just tell him after looking into it I decided not to pursue it, and give him a $50 credit for getting a hot spot. Or even no credit, rent is already $100+ below market.

The mailbox is a similar issue, though not as serious. I could just get his mail and put it in a special mailbox for him on his porch.

So far, I've received good references from his landlord, etc. Never a late rent payment in 4+ years and no problems from them. His credit was actually fine, pretty good actually. He did have a minor criminal conviction for violence a few years ago (I once had a tenant with FIVE DUI'S from out of state. Never a problem from the guy). Her credit was still not great but no recent late payments. I do see the bad pattern of behavior HELOC after HELOC and credit cards galore for shopping from the old days. Seems tamer now, but a few hundred dollars of retail store credit card debt a year or so ago in collections on her account. Turns out she works after all so they are a 2 income household.

Next up is the visit to their place and the month to month lease and the funds. To top it off, I got to keep the holding deposit of the guy who was supposed to rent from me (HIGH income, baaad credit but for benign crap) but backed out after his landlord decided not to move back into the rental. I guess this will be a test case before the community. Hopefully this doesn't become an example of what NOT to do. Now let's see if he can come up with the deposit, first/last and the pet fee. Its almost 10K....

ETA: It was interesting to note that his company is actually booming again with new construction business not just renovations and fixes for REO's.

The business logic is the vast majority of tenants have bad credit otherwise they would own. Tenants in my other properties have had bad credit and still pay on time. I tried raising the standard but damn near nobody qualifies. If they did, most would own. On the rare occasion you do find one who is qualified it's because they need a temporary place to stay while they look for a house to buy.

The other business logic to it is that I get a tenant for a long time, and less vacancy costs. With such high standards for credit it's nearly impossible to find a tenant. Three months and nothing. Before I filled vacancies in a breeze and my tenants with bad credit have always been on time. I only had a girl with NO credit be late so far, but she doesn't have bad credit just NO credit.

SO I figure I get extra deposit just in case, keep them on a MTM lease, and charge higher rent for the extra risk. I can visit the place they live now to make sure they are not trashy and have 3 months worth of rent as their deposit, on a MTM lease. Risky, sure, but I'm also with no other prospects that don't also have bad credit, sitting on a house that I'm soon going to be losing money on if I don't get someone in there to make payments. That doesn't mean I should throw the first tenant I can find in there, but at the same time, I see that they all have some kind of issue and I can make it work for me or against me. By renting to them and charging a premium I'm making it work for me, vs. the house sitting empty is losing money over the long term.

This guy actually thinks about it the same way I do:

https://www.biggerpockets.com/blogs/3907/27426-why-i-love-bad-credit-tenants-and-they-love-me-back