All Forum Posts by: Steve Abercrombie

@Nik Moushon - I think ductless mini splits in smaller rentals (say up to 1K S.F) make the most sense to install only in the main living area in the NW because of the cost of additional heads (and installation). Especially for A/C you can use a box fan to move the air into bedrooms. If you have a bigger SF, consider multiple heads, if the payback is there. I am going to add a master suite into the 3rd Story of my duplex - and for that expansion I'm going to add a 2-head unit. One head for the main living space and one for the ~500 s.f. master. Because it is on the top floor the A/C is a huge amenity. In other climates (like Hawaii) I see a lot of STRs put them only in the bedrooms and leave the main living spaces naturally conditioned.

@Jeff S. - I'm up in Washington State (Olympia and Tacoma) so similar climate. I have a lot of experience with ductless mini-splits. I have one installed in my personal residence, am considering installing them in a rental duplex, and I have commissioned dozens of them in apartment and commercial projects in Puget Sound.

Overall I'm a huge fan of the units - they are pretty easy to install, work really well, and are energy savers compared to about any other system out there. They do have problems in other climates when the temp gets below the teens during the winter. The upside is that you get A/C for our increasingly hot summers. 

A few gotchas on these units:

• While installation is pretty easy - the refrigerant lines are soft copper. If the installer has to go around a corner, force the lines through a tight (or blind) penetration, or just isn't careful; they can kink or break the lines which leads to a host of problems that won't be covered under the mfg warranty.
• They don't heat enclosed bedrooms or bathrooms really well when the doors are closed. Plan to install cadets, heat panels / cove heaters, or baseboards in any room that is on an outside wall or has windows. Wiring and 220 circuit requirements can run the cost up quickly if you are converting from a central system. You can also run multi-head systems, which are great for comfort and convenience but expensive up-front. There are alternate options to transfer air to/from bedrooms, but those get somewhat complicated.
• The cassette fan coils are ugly and take up wall space, You also need a thermostat for each one so you have to plan for labor for that wiring.
• In my experience the Japanese products (mitsubishi, fujitsu, daikin, etc.) are better technology than the American manufacturers (trane, lenox, etc.). LG is somewhere in the middle.  If you are trying to install smart thermostats like a nest make sure that the unit you're buying is compatible. Most of the manufacturers you can only use their thermostat and their "smart" thermostats aren't typically that great.
• Pay attention to condensate (the water produced by the units inside and out). You've got to run a drain from the inside unit particularly. If they back up they can create a big headache
• You need to clean the filter on the inside unit more frequently than 60 days. If there are pets or a lot of dust you may need to do it more frequently. If you don't the fan has to work a lot harder and that will eventually shorten its life.
• If you are switching from a central system or get tripped up needing to comply with current code - you may have to provide a fresh air source (this is really good to do in any building, particularly your primary). Panasonic bathroom fans on constant low with an occupancy sensor or humidity sensor to boost into high speed are my go-to, but it is another potential cost add.

The utilities offer good incentives / rebates for ductless heat pumps, but you usually have to use a "registered installer" so you may end up paying more than the rebate is worth.

@Andrew Hodgson 

Thanks for the clarification. I mixed up Veristone and Vestus in my post. After posting, I got info via another venue that Caliber has moved out of the auction game due to low volume.  Vestus and Caliber had competing products ~ 2 years ago when I was looking more heavily at auctions.

@Naomi Pinger - Thanks again for organizing! After a couple of years we'll have tried every venue in town. Well 80 has a back room that might be a good fit. It is a couple doors down from Ramblin Jack's. http://well80.com. The room is semi-enclosed - don't know if it would be too noisy or not, but when I've walked by it didn't seem as noisy as the Ram.

@Tyler Kinkade - From my research, there seem to be two firms that are the go-tos for Auctions in Thurston Country. Caliber and Veristone have different offerings, but are both worth checking out. Caliber runs meetups in Tacoma 2X a month which are a pretty good rundown of their auction platform and funding (Veristone is a funder, Caliber has an HML partner). Caliber also wholesales deals in Thurston and Pierce. I haven't done any deals with them, but have a few contacts over there, feel free to DM me if you'd like me to put you in touch.

It depends on your investment criteria and strategy. If you are just looking on MLS, I think there are still deals to be had, but they are selling very fast. Most are getting multiple bids at listing. With the amount of cash you have, you could also look off-market. Good deals, off market, seem to go in a matter of hours in Tacoma/Pierce Co. at the moment. My approach is to stick to my numbers and be patient, I have a long-term perspective, and can wait until we crest the peak of this real estate cycle.

You can choose to work with an agent that will write bids for you based on local knowledge and your criteria as soon as they are listed. It's all about getting a decent funnel - you'll bid on a lot of properties before you get one under contract. So long as you have an inspection contingency you have an opportunity to review the property once under contract. If you are paying cash you care in a pretty strong position. You can offer a short inspection and closing period to make the offer more attractive.

There is always an opportunity to reach out via some of the meetups - and try to find someone to partner with on a deal. Plenty of people are getting their hands on BRRR-type properties around Hilltop, so that may be a good ticket.

Personally, I'm starting to look out of state where cashflows are much better; there are strong local economics; and dollars will buy more properties. Also doing so as a hedge from our local market, a consideration of worst-case if we get an earthquake up here.

@Pete M. - I checked out this and the deal analysis thread and there are two things I would look at. 

1) The neighborhood. That part of South Tacoma is appreciating and improving, but from everything I have seen is less attractive, and therefore not getting top rents for unit improvements as other neighborhoods (e.g. Hilltop, Proctor, etc.). That said, some of the blocks that are developing better neighborhood amenities could be a good bet as the neighborhoods I mentioned are getting harder to find deals. I've been to a few properties in that Zip that were too far away from amenities and weren't deals for me based upon comp rents.

2) Legal duplex and utilities - my understanding in Tacoma is legal duplexes will be classified by the Assessor as a duplex and will be separate metered by Tacoma Power (each unit with it's own meter). There are a few considerations there. You will typically pay slightly higher interest on a duplex than an SF depending on your lender. If you are not separately metered you have a bit of a challenge with utilities. If you pay utilities as the LL it will kill your cash flow.

To pass them through to tenants it is best to separately meter them. You probably don't want to mess with getting a new utility meter in unless you are doing a legal (and potentially expensive) conversion from SF to MF. In that case you need a sub meter on the electric, water, and gas (if present). Electric is getting cheaper to sub-meter, and water isn't too horrible. If the house was SF, the question is whether it is setup so that you can sub meter effectively Same goes for the plumbing... You've got some capital cost to get there. Also think hard about getting meters that will report via the internet or a cell signal to avoid having to have them read (unless you have Prop Mgt. willing to do that bi-monthly). 

I see a lot of properties that are being rented as individual units without being legal duplexes. I usually am most concerned about the metering situation. I think buying as a SF isn't a deal breaker because of the interest rate and eventually having the exit path of rehabbing back to an SF and selling retail. I think that making tenants pay utilities without having separate meters creates some risk when you get in a rent dispute with a tenant down the road.

@Naomi Pinger - Thanks for organizing and finding a new location. I'm looking forward to catching up with everyone in the new year! I usually have good luck finding parking on the right hand side of State Ave if you are coming in from the east.

Hi @Aja Leafe-Hall. Thurston County and Western Washington in general are great places to invest. The hot markets here mean a fair amount of effort is required to find good deals, but they also mean strong rental and buyer demand for high quality rentals or flips. A great resource i is the local BP meetup that usually happens the 3rd or 4th Tuesday of the month. @Naomi Pinger is the organizer and I think the next one will take place in January due to the Holidays. 

Naomi - Any chance you can get these posted up a little earlier? I've been trying to attend for a few months, but can't plan in advance when they aren't posted until the day before the meetup. Will the August meetup be on 8/22 or 8/29? Thanks!