All Forum Posts by: John Barrett

@Brandon Teachout You might also reach out to Rain City Capital or Certain Lending. Rain City is a traditional hard money lender and Certain Lending is a DSCR lender.

John

@Timoteo Guy This program is going to be just like section 8 housing in that it will be very helpful for some and not good for others. 

My take is the risks to the landlords participating in this program are a lot greater than the promise of guaranteed rent.  By limiting landlords ability to manage their properties cities like Seattle have reduced the supply of housing.  This creates overwhelming demand from qualified tenants.  Given the choice, I think the majority of landlords are going to go with better qualified tenants and avoid the potential challenges & vague promises of support.

@John McKee We have done three 1031 exchanges so far.  Our most recent 1031 exchange was done last year in April.  We sold a 2 bdrm, 1 bath per side duplex  and purchased a 3 bdrm, 1.5 bath per side duplex with garages.  The duplex we traded into is only 15 minutes from our house, 30 years newer and much easier to manage. 

The specific details of our transaction are as follows: sold original duplex for $535K (rolled over equity of $145K) and purchased new duplex for $550K. We renovated the new duplex and now have it rented out.  Total rents for the new duplex are ~$1,500 more per month, got a lower interest rate on our new loan, cash flow from the property is roughly double and were able to significantly improve our equity via forced appreciation.

Hopefully this helps answer some of your questions.

John

@Evan Ghang I owned a duplex outside of Seattle during the 2008 housing correction.  During that time, I saw the value of my property fall by roughly 20% off it's high.  While this did hurt my pride that the value of my property had fallen, it didn't have any impact on my occupancy and rents actually increased during those years.  I did not have to tap into any cash reserves but I know people who did.  The key determining factor in my opinion was the amount of leverage people had taken on and duration of the loans.  People with fixed rate / longer duration debt were able to ride out the market turbulence.

John

Hi Amir,

Your plan is solid and you can get owner occupied financing that would allow you to get more attractive financing.  Interest rates are going up, so your financing costs will likely be more expensive in the future. While property prices may come down, I don't think it is likely that values will fall enough to offset the higher interest payment.

Another strategy could be to look for properties that have the ability to add an ADU but do not have one currently. This way you could use your skill set to increase the value of the property by adding the ADU.

Best of luck,

John

@Ana Vhan you can also reach out to RHAWA as they have staff attorneys that can call and ask questions of.  They are more expensive than WLA but both organizations are quite good. Based on the information provided, it seems like your lease will go will roll over to a month to month unless you have notified your tenants correctly that they lease is ending.  That said, you can still end your lease but will need to follow the new state & local regulations.

Best of luck as you navigate this situation, it is never fun but there is a process for removing tenants if that's what has to happen.

John

@Clayton Bray I have used @Adrian Chu for my lending on a number of properties and been very happy with the results and process. I would give him a call.

If you need lending that is based on the property / project then I would contact @Nghi Le with Certain Lending. I haven’t had the opportunity to use them yet personally but have heard good things from folks that have.

Regards,

John

@Bryce Henson First off welcome.  Secondly, I would suggest you spend some time thinking about what area of real estate investing is most interesting to you.  You can always broaden your interests but for me personally, it was easier to get started by targeting a specific type of property.  This will help you identify which meetup or Facebook groups will be most beneficial for you.

John

@Ken Lim My take is that it really depends on if you are able to negotiate with the seller on the price.  Clearly the condition of the property would justify price concessions.  This along with higher costs to finance the property will make your return in the short term smaller.  This is less of an issue if you plan to hold the property for a number of years.

I do like the idea of having a number of properties in close proximity as it does make management easier and allows for some economies of scale.  That said, if the property does not meet your required return either due to the purchase price, scope of work or associated risk, then you have your answer even if it is not the one you would like.

John