All Forum Posts by: Roy Nash

WA State is pushing through 2 Bills that will enact Rent Control based on Inflation.  Similar to your comments my immediate reaction will be to raise all my below Market rents to a value closer to Market before these horrid laws pass.   I have historically tried to keep rent raises moderate and not try to come to Market in one raise and rather use a multiple year raise approach.   For some of these tenants this has been 5 or 6 years or more of Under Market Rents but with annual raises maybe 4 or 5% above inflation.  Its still a big annual raise to a lot of these tenants but is far less than an immediate raise to Market rents.    Unfortunately for my Under Market Tenants in WA State I will have to move Rents Closer to Market early in 2023 or Forever be locked into Below Market Rates.    Rent Control does not protect tenants.  It actually destabilizes Housing supply by removing affordable units from the Market, forcing landlords to minimize improvements and maintenance, and actually increases Market Rents as landlords try to recoup losses forced on them via Rent Controls.

Quote from @Luka Milicevic:

Quote from @Andrzej Lipski:

Here in Connecticut they just proposed Bill 138 https://www.cga.ct.gov/asp/cga... They are calling it Rent Stability but it is rent control capping rent increases to 2.5% across the entire state and not allowing landlords to terminate leases with tenants. The sad thing is that this bill is being steam rolled through on just a name along with no details.

The tenant unions around the state are funded by the Democratic Socialists of America (DSA) and they are trying to drive the US to where all rental housing is run by the government.

 I've actually read something similar in the past being proposed in CA. Maybe even passed, I don't know. 

I have several tenants that are paying below market rent right now that have been with me for a long time. I know MANY MANY landlords that are at below market rents with long term good tenants. 

My immediate reaction to this proposal would be to raise rents to market price as soon as I can. Every year without fail I would raise them 2.5%. If you don't do this, you will be stuck with below market rents for the rest of time. 

It will be a detriment to many tenants out there and of course make housing supply less attractive 

Quote from @Nathan Gesner:

Quote from @Guy East:

I want to raise rent for an existing tenant, how far in advance of their lease ending should I notify them of the increase? I want them to stay so I feel like telling them too far out might give them more time to look for alternative options, but I also want to notify them and hopefully get a new lease signed. 

 Depends. Most states require 30 days notice. Some states require up to 120. Some states regulate how much of an increase you can give. You need to tell us what city/state this is in so we can give you better advice. An even better option? Learn to find the answers yourself by reading the law. Go to Google (or your favorite search engine) and type in "rent increase CITY/STATE" and look for state-sponsored websites or links to state law.

 Nathans comment  is the right approach.  Know the law.    I am in WA State and the law was changed to require longer notices of 60 days minimum.  However prior to that it was 30 days.   I always give just the minimum notice possible.   I now give 60 day notices but I would give a 30 day notice if it was legal.    I also conduct frequent Market Analyses of my property types to make sure the rent raise is in line with the market so that they cant easily find a cheaper or even equivalently priced unit.  The Combination of a Short notice and rental rate increase in line with the Market pretty much insures they will NOT move.

Quote from @Kar Sun:

Quote from @Joe Villeneuve:

So what's the problem?  Your rent increase is based on cost increase.  That means you MUST increase the rent to cover it...with profit (please don't forget that...or stop investing).  IF the tenant doesn't like it, they can leave.  Whining tenants over a rent increase isn't anything new.  If they leave, so what. If the property is as desirable as you say it is, then you should be able to replace the tenant without a problem.

Just make sure you follow the landlord/tenant laws (as you seem to be doing) and also make sure the end result of that rent increase is right inline with the area.

In the future, don't deal directly with you tenants as the landlord.

 Agreed. 

Personally I would rather he moved after his whining.

He makes enough money and this is not about someone being on the street.

My biggest raises are always reserved for the ones I wish would move!    

Quote from @John Underwood:

I would not do a $400 increase to a good tenant. I'd do maybe $75 to $100 at most in one year.

Agreed $400 is too shocking to the tenants.  Our rents have gone up alot in my area in Washington.    In some cases my Rents are $400 to $600 under Market even though I have been agressively raising them 10% a year (except duing Covid Eviction Moratorium where it was illegal in WA State).   My raises were $75 to $150 max this year averaging about 11% and they just went out with 60 day notices which is alot to most of these people.  

We moved from Seattle Area in 2006 and could not sell for what we thought it was worth as it was just the beginning of the mortgage crises.   I turned a nice house into a rental and eventually the market recovered and we sold in 2018.  In the mean time we lost our principle residence capital gains exemption.  After selling it we then had to use a 1031 exchange to shield our equity gain.   So for $30K difference in the sales price that probably does not cover the capital gains that will be due if you ever sell after turning it into a rental.  Also ironically we eventually sold to our renter "AS IS" for a lower value than we could have received if it had been in the pristine condition of Pre-Rental.  So basically my renter got a better deal due to the wear and tear they caused!  LOL.   Anyway for $30K either one of those issues could cost you that much or more.  

Quote from @Paul Clements:

Can the deal be closed without me signing the buyer agency? The purchase contract for the property has already been signed by me but I have not signed the buyer agency agreement.

I told the agent I'd paid her the 0.5% spread but that I don't want to pay the admin fee or nearly as much; told her I've seen the fee before but was expecting around $300 not $1000.

I won't sign Buyers agent agreements.   Three different agents have tried.  I bought properties using 2 of these agents after they agreed to remove the requirement.   Otherwise I would just get somebody else to write the offer.  I'm loyal to the agent but not if they try to make me sign a buyer's agent agreement.

@Account Closed I have been watching MLS Duplexes in Spokane pretty closely for a number of years. Anything not priced too aggressively is going pending in a few days. They Usually get listed on Wed and go Pending by Sunday after collecting offers. However with that said, it seems to be slowing as some duplex properties that would have sold more quickly in the past are still available even after weeks. Have you been able to buy anything yet?

@Sara Reeder My next loan will have to be a DSCR type loan. My fear of the scenario you just posted is actually causing me to delay making any offers. I am Worried that if the interest rates keep going up every week or two the lender will find a way to make it difficult to close because they don't like the quoted rate and then the deal will fall apart.

I self manage and can appreciate what you are saying.  However, I have looked at a number of properties to purchase recently and most are professionally managed and the deferred maintenance in most of them is just so obvious.   One of these Property Managers I called to talk about the property said he didn't really know much about the property because he had not been in there in years.  Most of my tenants or people I know that live in properties with PMC have indicated that that their PMC were non responsive to repair requests.  I have heard more negative reviews from people than positive reviews.    So if I ever do turn over to a PMC I would probably also slowly do it also and gage my comfort level.   I would also appreciate any comments with positive experiences with PMCs.   Thanks