Flip or rent? Property in South Park Seattle
New to Real Estate · Seattle · Member since 2020 · 4 posts · 0 votes
We are debating what to do with this property: it’s our first investment property. It was rented when we bought it and the tenant was supposed to lease for 3 years. And then Covid happened. Tenant stoped paying, we had to get a lawyer. Definitely too much for the first land-lording experience. Tenant moved out and we just took over the property about a week ago. It needs some work done. And we are debating if we should remodel and sell it or continue trying to rent it. It’s a big house that can accommodate multiple renters. However, even before renting I think we would still need to renovate as everything is outdated. I am including Redfin listing. Would love to hear others opinions. Thank you in advance.
https://www.redfin.com/WA/Seat...
I have a triplex in South Park on Thistle st. I actually toured your home when it was having an open house sometime last year IIRC.
You are right as that house is pretty clearly set up as a boarding house or by-the-room rental, which can mean a lot of extra work especially for a 'noob' landlord. I don't remember it being in particularly bad shape. Dated isn't really too important if you are renting by the room; the decision point(s) there for potential renters is always going to be 1) is it habitable? 2,3,4) price, price, price, and 5) can I tolerate the other roommates?
If you try to sell now given COVID, the economy, the season, and Seattle politics you may take a loss. However rule changes in zoning (I think your lot along with all the others is RSL now) that are fairly recent may mean you can legally divide the home into at least 2, maybe more completely separate living quarters. I don't remember but if it didn't have a kitchen and bath on each level, adding that and adding appropriate interior doorways could net you a 'real' up/down duplex or if easier to permit that way just a home with ADU. And each of those would probably be a lot easier and less hassle to rent than either individual rooms or a single house set up for large groups.
Adding kitchens and baths is a significant job but it might be worth it in long term value if you could upgrade the place to 'real' duplex status. I don't remember if there was laundry hookups but make sure each unit has those or there is a common secured room someplace with coin op if easier.
If you don't want to or can't invest in the upgrades and don't want to try selling now, your best bet is probably to find a property manager that has experience with boarding houses, and let them handle the cat herding. But as a boarding house not near a university/school you are probably going to be housing of last resort, meaning a higher percentage of drama-prone residents even under best of circumstances.
The other option might be to actively seek out a section 8 tenant with a large family. Its a mixed bag but you will have the benefit of government paid most of the rent, and the tenant at least will have the fear of losing their subsidy to help keep them in line. But in that case you would also have a large family in the home, so a) no point in nice renovations if you go that route and b) expect and plan for high utility bills (bill back everything you can) and plan for maintenance.
Good luck.
Brian thank you for your insights! You made some really good points. The house has two kitchens already but one laundry unit. It could probably be turned into duplex. Ex tenant was saying that sound proofing is not great since he was hosting Airbnb guests downstairs. That could be a problem for a duplex. We would not sell it as of now. Maybe next year in the spring. We are currently trying to sell our townhome in West Seattle (not going too well). My other fears with continuing to rent it is with probably not best tenants and Covid, they might stop paying and we can’t evict during Covid.
We are looking into flipping it by renovating it and possibly selling it next year. We can live there during renovations, fingers crossed our west Seattle home sells. Question is how much money should we put into it. Also, finding contractor had been an experience :(
I appreciate your feedback! We don’t have much experience with real estate yet. I am a psych nurse and my husband is data analyst. Definitely learning a lot.
2 kitchens makes it a lot easier. I assume then there is probably a full bath on each level then. Given all that there is probably room to squeeze in a stacked washer/dryer combo someplace hopefully near plumbing, the breaker panel, and and exterior wall for the vent. That said, places without onsite laundry do rent but its probably a big disadvantage especially for what would otherwise be a good size unit that would likely accomodate a small family.
If you weren't on good relations with the last tenant AND they were renting to airbnb guests I wouldn't put too much stock in any of their complaints. You can evaluate for yourself by having your husband and if available kid(s) run around upstairs while you listen from the downstairs bedrooms or let a TV/Radio run upstairs and listen from various parts of the house. Just installings doors/etc to separate the two living spaces will help with that too. Other fairly simple things like swapping paper thin hollowcore doors for solid ones might help with that too depending on how the noise propegates.
I know things have slowed down a lot. I have a just-fully-renovated 1br unit in burien thats gone 2 weeks without a single showing. Its asking price is now the same as an identical unit in the same building that rented in less than a week a few months ago. (I was asking a little more up til price drop today as this unit is the top floor and renovated to a little nicer standard, but very comparable). I know it will rent, just got to be patient and find the right price point. Hopefully its not too close to (or below) the pre-renovation (which was SORELY needed) rental rate.
BTW, if you are planning on sticking with it please consider joining RHA https://www.rhawa.org/ if you have not already.