6 month leases in downtown Seattle

8 Replies

I have an 800 sq. ft. condo in the Denny Triangle area, and I'm thinking through different strategies for how to rent it out at some point in the future.

The HOA unfortunately prohibits rentals for less than 6 months, which throws out the otherwise lucrative Airbnb option...

So, what are your thoughts on how a short-term lease (e.g., 6 months) would fare in the downtown Seattle area in terms of vacancy and rent?  And whether furnished vs. unfurnished would change the answer at all?

Maybe this has changed, but when I moved to Seattle and didn't want to commit to a single rental for a whole year, I found that 6 month leases were hard to get.  It seems like offering this could be a good way to differentiate yourself, and command a higher rent - but the costs may outweigh this.

One other concern I have is that, if I needed to use a property manager if I'm not in the area to self-manage, the management fees needed to get the place rented twice a year would really stack up.

Appreciate any opinions/experiences people have with this kind of strategy.

Thanks,

Mike

MTM, 6 month or 12 month, is immaterial if your place is easy to rent up any time of the year. Your goal should be to rent to long term stable tenants who take care of the place, pay rent on time and follow the terms of the rental agreement/property rules. Don't assume you will need to rent up every 6 months. If that becomes the norm, then you or your PM would be falling down on the job.

Congrats on owning a prime piece of real estate! It's a great time to be renting in the Denny Triangle neighborhood. As you know, Amazon is hiring like crazy and people are streaming into the city. I just had two properties listed for rent in North Seattle. Of the inquiries, half were from people relocating from the San Francisco Bay Area, and 4 inquiries were from separate Amazon.com relocation specialists. 

There is a market for short-term leases. As you mentioned, often people relocating from other cities like to rent first, even if they have the means to purchase, while they learn the city. In your neighborhood especially, a long-term tenant may be the exception, rather than the norm. A 6-month term lease (NOT month to month agreement, but that's a different topic) would set you apart, and also offer flexibility to increase rent incrementally as prices continue to climb. Another way to differentiate your unit and command a higher rent is allowing pets. Many old-school landlords look down on pets, but by screening pets on a "case by case basis" you can mitigate risk and usually charge a higher base rent plus non-refundable fee to cover cleaning. Not to mention provide a service for those who need housing for pets.

Good luck!

I think, 6 Month is great in the area right now.  You can continue to catch rents that are moving up quickly and not be behind the current climate.  However, if you are not living in Seattle, then I might suggest a 9 month lease that way you still only have 1 lease up a year most years.

Troy beat me to it! Trying to get a 9 month lease would be the best outcome if you need to hire a PM company..and the plus side on short term leases is the ability to stay current with the market and increase rent when applicable..

@Mike Catalfamo And, to add on to what everyone else has mentioned. Since you are in a desirable locale; you being able to get your property rented out will be very quick in respect to turnaround.

I have a friend who rents a room in their apartment and gets $800-$1000 a month in the downtown Seattle area. They recently posted an ad, and filled the space in less than 48 hours. They rent the room for at min 3months - 6 months at a time.

Hmm, my first reaction to this is that this is a good plan if you can get a great tenant in based on the flexibility, but they keep renewing for 6 more months or it goes to M2M after 6 months and they really stay 2 years.  It's not a great deal if tenants truly move out after 6 months and it is a revolving door of tenant turnover.  

Have you chosen a property manager?  Ours charges on base rent collected, no fees to place new tenants.  But turnover can still cost in lost rents and cleaning/damage over the deposit if it isn't collectible.  Our property manager also sets the lease terms rather than us.

There's my two cents...

Originally posted by @Melissa Melia :

Congrats on owning a prime piece of real estate! It's a great time to be renting in the Denny Triangle neighborhood. As you know, Amazon is hiring like crazy and people are streaming into the city. I just had two properties listed for rent in North Seattle. Of the inquiries, half were from people relocating from the San Francisco Bay Area, and 4 inquiries were from separate Amazon.com relocation specialists. 

There is a market for short-term leases. As you mentioned, often people relocating from other cities like to rent first, even if they have the means to purchase, while they learn the city. In your neighborhood especially, a long-term tenant may be the exception, rather than the norm. A 6-month term lease (NOT month to month agreement, but that's a different topic) would set you apart, and also offer flexibility to increase rent incrementally as prices continue to climb. Another way to differentiate your unit and command a higher rent is allowing pets. Many old-school landlords look down on pets, but by screening pets on a "case by case basis" you can mitigate risk and usually charge a higher base rent plus non-refundable fee to cover cleaning. Not to mention provide a service for those who need housing for pets.

Good luck!

 I agree with Melissa and if you do furnish it nicely (for professionals) you could definitely charge a premium.  Sounds like you two should talk! 

Thanks everyone, these are a lot of good ideas for me to consider.

@Michele Fischer - I haven't, since I'm mostly just doing a thought experiment at the moment, but I was basing my assumption about rent-up fees on a call to a PM in Tacoma.  It's good to hear that not everyone does that.

@Jon Magnusson  - Sounds like you're thinking furnishing is a benefit for a 6 month lease.  I was thinking that for < 6 months it would definitely make sense but it could potentially turn people away who want to move their stuff in from out-of-state but just have a short-term place to stay.  Guess it's a trade off to be considered.  I'll try to research more about how many places going for 6-9 month leases are furnished to get a sense of what's on the market.

Mike

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