All Forum Posts by: Angel Prentiss

Wow. Thank you for sharing this. I know what you mean… sometimes the info you want to find is tied to a tangent that’s not on the agenda or our memories of where that piece of info is.

@Jay C.- very nicely and detailed list of issues and problems. Thank you.

When picking a market, it’s not just the local (city) jurisdiction one must assess-@Jason Chung- have you researched what’s been happening at the state level?
I used to live in Seattle but now on the East side. I HAD hoped to return to the city at some point, but I’m so disgusted and appalled by the state of things,I would not— and that would be as a homeowner. Seattle itself has layered on so much restrictions I’m glad we don’t have
rentals there. If you are a cashflow investor, cash on cash is nonexistent. Not mentioned so far is that Seattle requires rental registration, consequences if you don’t. There is also periodic mandated property inspections (and it’s not a just a mere expense item, rubber stamp process).

Rent control would not be the only reason not to invest. need to look at the laws at all levels and all that would impact the way you would manage the property and interact with tenants.

We used to be able to post a 3 day pay or vacate. Not anymore. We used to be able to assess late fees from the first day it’s contractually late-not anymore. The list goes on.

Then there capital gains legislation aimed at landlords in the works, then modified but the desire is there. Inside just extended the moratorium yesterday. A Seattle legislator says if this is not extended, it’ll be 20months of weight on these renters hitting them all at once. Hmmm, nothing about the property owners.

Couple weeks ago I heard of an investor with SFRs in tacoma and is selling them off to get out from underneath. He has some *state*employees who are still working but stopped paying rent. Because he has 11 rentals, it’s too many for him to qualify for landlord assistance.

In tacoma which is more a little more friendly, I have to hand over a pamphlet created by the city and accept security deposit in installments if requested. While I’ve done that before of my own volition, I design so it’s front loaded; it’s my choice. What good does $300/mo security dep over the next few months if they move into a $400k property and start doing damages or stop paying rents of $1700-$2100?

Credit screening might be taken away. Lead time to get your property back is lengthening— if you can service notice or non-renew. Luckily we have our tenants on leases so I’m able to non-renew and they actually moved out. 

We sold a SFR last oct because we didn't know what kind of tenant we could get stuck with. Plus the value has gone up that it'd take me over 20yrs of cashflow to make what I would in selling. Now we will sell another. I'm keeping two tenants who have been great but there is always a risk of them running into hardship and we'd have little recourse (and spend lots of time and or money) to get them out esp if relationship sours.

For those of you collecting rent by ACH, are you requiring per lease terms the tenant to ACH on the rent due date? (so you get rent 4-5 days later) Or are they sending in advance so that you receive rent by the rent due date? Please share which service you are using. Currently we word our leases that renter are responsible in their logistics so that we receive rent by 1st of the month so we don't have to have conversations of when they sent, pointing finger at post office, etc.

Thanks!

AJay,

I think you may asking if you can still keep a property as a rental if you refi at a higher value because you bought below market value.

You need to figure out if the property refinanced will still meet your investment objective and you need to determine if the deal is still a deal with the rehab included. Your objective is not the same as other people's.

Conventional financing rules will determine how much you can refi and appraisals/comps will factor into how much that new loan is. On residential 1-4 units the more properties financed you have, the LTV can become more restrictive. There are also waiting periods for refi as well if you purchased with cash. (the rules change depending whether you have 4 or fewer or over 4 so I can't be more specific off the top of my head).

Say your objective is monthly cashflow, then calculate what income you will or will not receive under the new financing. Also what are the cap rates and cash on cash (with rehab included)? Do these still meet your objective? If the new debt service is taking away much or all the monthly income you want, then you might want to finance less. This all depends on your investment objective (which can change over time as well!). The numbers will tell you your options and then decide.

If your objective is to hold, the deal gives you equity, and monthly income isn't necessary, you can also get a HELOC on that equity so you can access the capital to fund other projects. You need to call around for banks and credit unions who will do HELOCs for non-owner occupieds.

We live in the Seattle area. 

Never receive for the TX properties except a letter from real estate agent offering her selling and management services. One for the central/eastern WA in the 3 years of holding it.

We got a couple for the Atlanta property -- the first postcard needed help. I couldn't tell which house she wanted to buy. I could only tell because it was probably the Atlanta house because I recognized the 404 area code. It's probably a good idea especially if mailing out-of-state owners that you include the property address... also nothing personal, looked like a straight ad with nothing compelling. Interesting...

Seller signed letter of intent.

Does anyone have a WA attorney experienced in reviewing/drafting lease options ... actually a sandwich lease option? I have several contracts or can use theirs. One of our attorneys said don’t do it, wants me to set it up as purchase and sale at a future date, bit pricey too.

Drive that area and make sure you are comfortable there. There are worse neighborhoods than Hilltop but it's not a good area. I have a house there (my first rental and a big remodel) couple blocks SW of this duplex. It's a mix bag - some blocks better than others. We are unfortunately on a worse looking block - our rental is the best looking. Crime can be high. The week before we completed the big remodel and tenant was going to move in in spring 2012, people broke into crawlspace trying to steal copper. The idiots didn't know what they were doing or were so desperate they could have blown up the house... they cut 10 feet of our brand new 220 line for the range and about 3 feet of the gas line (copper, corrugated looking). Cost us about $1000 in repairs and lost rents. I definitely lock doors when I am there at the house. Fortunately we have a pretty good tenant who is very comfortable in that type of neighborhood but he will probably move soon to a smaller place. This is the one in our portfolio I would dump if we can't find a good responsible tenant. We buy in other somewhat sketchy neighborhood but I don't look for properties there... if you buy, I recommend finding one with a good 3-4 block buffer.

If you are looking for good strong cashflow, you can do that here. It depends on what you are willing to trade off.

Hope this helps!

Hi!

I have two projects where the GC fell through. I am looking for contractor referrals in the Seattle Tacoma area who are available now, reliable.

1) Flip is about 50-60K and 2) B class rental makeover 20-25K

Would prefer licensed and bonded GCs to run projects, especially the larger project, but I can GC if needed.

Trades I'm looking:

GC to handle most

Plumbing (repairs and move a sink drain 7 feet on same wall)

Carpenter (fix & install doors, trim, rebuild deck)

Window installer (can install and trim)

Electrician to make some repairs on wiring

I have painter, flooring, roofing, kitchen/bath cabinets covered

Thank you!
Angel

@Pavel S.

Have you been investing already or new setting up shop? Do you have a team set up and how hands-on do you want to be managing rentals - outsource or do it yourself? This may determine where you look. Also, are you working a job? (Sorry, I can't tell these from your posts).

I live in Bellevue and have lived in Seattle as well. Areas like Bellevue, Seattle, Kirkland, Redmond, Issaquah are very tough to cashflow** (unless you come across offmarket deals or you have an in to fix something that most investors can't/won't undertake).

**Positive cashflow to us means positive money we can consume/save/reinvest and not have to take it back. So it's

Rent less the following:
- PITI
- vacancy (6-8%),
- maintenance (5-8%)
- legal reserves (landlord tenant questions)
- accounting (tax returns gets more costly as holdings increase)
- lease up and makeover assuming 12-18mo turnover and
- some capital reserves
- paying myself 5% to manage (in case we outsource management in the future).

We invest out of state in SFRs and apartment partnerships as well as Pierce County where we can hit our investment criteria. We are starting to look at Snohomish county as well. Best way is to drive some areas, meet agents and property managers LOCAL to the area and ask them to outline neighborhoods to consider and where to avoid. I personally haven't gone past Lakewood and Puyallup due to drive times. An hour each way is plenty for our family. At one point in 2012 I had 4 Tacoma rentals being fixed up (2 whole-house DEEP makeovers and 2 smaller makeovers) and a Shoreline flip. That was a lot of driving! It's all running smoothly now (helps to screen well and set expectations with tenants :-) ) And we have some trades to call upon for repairs. These rentals cashflow about $150-250 per house - some are lower because we were able to pull out most of our capital via cash purchase and delayed financing. I raise rents 1.5-3% each year and when our north Tacoma house tenants moved to another of our rentals last month, I increased rent from 1125 to 1250 with ease.

My suggestion would be to look at Sno and Pierce and maybe south King with agents and property managers in those areas, analyze listing they send you to be more familiar and do your own marketing. Lease options could help turn properties from non-cashflowing to cashflowing.There are definitely opportunities outside of our immediate areas but you will want to check out the health those markets.