All Forum Posts by: Brian Hughes

If other franchisees are having similar issues,  get organized (don't know how hard that would be to do - I suppose things can get competitive) and approach the business and advertising partner about it.  Offer alternate terms that are fair but perhaps based on the quality of leads or ultimate success rate or something.   Ultimately they don't make money if you don't.   Or,   there has got to be more than one of these "we buy horses" organizations around to associate with.   

From my redfin feed.    move fast...

https://www.redfin.com/WA/Seattle/5720-S-Hazel-St-98178/home/178612

@Matt Higgins I'm guessing that along with the rent increase from $400 to $800 you probably invested in some needed repairs/updates in the property,  and its a lot more likely that your operating budget now covers all expenses, allows for ongoing basic maintenance, and makes enough return to be worthwhile to you.    

And in general....

I've lived in Seattle for all my adult life,  and been a small landlord since 2006.

Its true that supply and demand is a fundamental law of economics, and as more comparatively well off people pile into seattle, housing is going to get more expensive and the bottom-barrel housing units that used to be out there 10 or 20 years ago that people who were living solely on disability or SSI or maybe could hold down a low wage job despite issues like substance abuse or mental illness were able to afford is getting redeveloped.   In my old neighborhood (Georgetown Seattle - industrial chic hipster central) in the time I was there at least half dozen or so big old mansions and boarding houses (all at or near the end of their useful lives without major rehab) were demolished for townhouses.   Each of these judging on their size probably had between six and 15 rooms,  probably individually rented,  and each room was probably going for a few hundred a month up until the end.  Odds are pretty good the ownership wasn't too picky about residents either, as long as they could come up with the move in costs.

My own SFR residence I bought recently was previously being used as a boarding house. It was uninhabitable when I bought it (leaking roof, collapsing chimney, no functional baths or kitchen, no laundry facility, illegally subdivided basement room, wiring, plumbing issues, cockroaches, trash filled yard, etc. I don't know whether the prior owners sold due to seattle's rental housing inspection program, not having funds to fix the place or personal issues (probably a combination) but due to Seattle rental policies I have no intention of re-offering this place for rent. When I move on, I will sell it. (Its habitable now, by then will be nicely fixed up)

The fact that there hasn't been an official 'boarding house' zoning designation for decades up until just recently (SEDU's - small efficiency dwelling units)  means that most of that kind of housing is at or near end of life and anything replacing it is new and comparatively expensive,  or its being replaced with housing that appeals to higher income people.

I support some of the zoning changes the city has been making, like allowing 2 ADU's on most residential lots. (I don't support removing the owner occupied requirement for such properties though - as that makes it essentially triplex zoning, and now anybody who wants to own their own home has to compete with investors) and there is PLENTY of underutilized higher density zoning areas in parts of the city that could be redeveloped. Within a mile of me and all along the existing light rail route going south from Seattle there is acres and acres of vacant land. Some of it is already in the development pipeline for sure. There are acres of dumpy, deteriorating warehouses along the duwamish river that seems to me could be rebuilt as a whole new urban waterfront neighborhood.

The city (and surrounding ones) do need to make it less complex and easier to build at all scales.   For example my 4-plex has a 350sf, above grade full ceiling height finished storage area.   It is completely unused except for some of my junk right now,  and could easily be built out as a studio apartment.   There is enough parking already,  space in the meter panel for another meter,  and easy access to add plumbing.   I could hire out structural modifications to add needed egress windows and strengthen the shear walls and rough in the breaker panel,  then frame the place myself, pay somebody to drywall it,  then install the kitchen and bath stuff and probably have a unit ready to go for someplace around $50K.   Unfortunately the zoning, building, and fire codes have changed since this building was built and retrofitting the rest of the building to comply would probably double or triple that number.  (1980 building)  I'm fine with doing comparatively easy, low cost stuff like thickening exterior walls to upgrade insulation (just add shim layer on inside to allow 6" insulation gap) but I'm not going to gut the other 4 units to bring everything up to current fire code just to (re)finish about 10% of the gross sf of the building.    And this would be a unit that for example the mail delivery person in the CBS segment would probably be able to afford and would work well for her.

Similar story at my triplex,  which I recently learned due to zoning changes there I could theoretically build 3 more units while preserving the existing structure, enough parking for one space per unit, and actually INCREASING green space on the lot.   However the permitting costs, time involved, and (this being in seattle) the extreme anti-landlord policies in place there means I have little incentive to do so.   So more likely when I sell the property,   its subdivideable lot (for 4 standalone "RSL" - small lot standalone homes) - will go to a developer despite the property being in excellent condition.   The existing $1500/mo 2br units would get lost to $3000+/mo mortgages on the replacement homes.

I know where the market has the most need - and I am sitting on the resources necessary to make a contribution of a few units - but various regulations, costs, etc. are disincentivizing or holding me back.   I wonder how many more people in my position there are around here.   Probably enough to account for at least a few thousand units.    Not enough to "solve" the problem - but it would make a dent.

Also,   as an ESA the dog's behavior IS the tenant's behavior.    Gently remind the tenants that (assumed true) the home has no existing damage from pets (chew, scratch marks,  soiled carpets/interior finishes, damaged landscaping, etc)  and such damage will not be considered normal wear.   The tenants should also expect to be responsible for cleaning up the animal's waste from the yard.

Another thing to change in a timely but non-retaliatory fashion is to require the tenants to carry renters insurance,  in case their lovable ESA bites somebody.

Plus side is at least you are getting a golden retriever and not a pit bull,  or a herd of ESA goats or something.

^^ thats the problem with not having any leeway in the screening process.    You sit down (either in a vaccuum or with your laywer, some acquianance with a rental, etc and hash out your criteria,  then somebody shows up who meets those criteria but are exhibiting some behavior,  or something comes up in the screening you didn't anticipate but which is a huge red flag,  but now you are stuck and would have to offer them the unit.

It seems nuts,  but the what if somebody shows up totally drunk has happened to me - multiple times.   It seems to be such a no brainer,  but yet once I had a group of three show up,  a couple and some friend,  and the friend was so drunk he tripped and fell and knocked over a bunch of the current tenant's belongings.   At that point I kicked them all out  (this was before first in time)  -  another time different unit a completely drunk, belligerent guy drove to the appointment, and when he saw that I was already taking an application from another party ahead of him, got belligerent,  and also argumentative when I tried to explain my screening process was not negotiable.  Again, kicked him out.   with first in time if I don't have "applicant must not be under influence of drugs or alcohol" and "must not be beliggerent or aggressive" on my criteria, then legally I cannot consider it.

Like most of these other renter protections,  first in time is designed to shift risk onto the landlord,  and corner them into having to offer housing to somebody unqualified.
 

Assuming this home was built before 1978 be darn sure that you (or your contractors) follow mandated lead paint safety regulations -  and pull permits as required.    Otherwise the tenants if they get upset for you for any reason either during or anytime after the remodel can report you to the city and get you fined for all kinds of things and you may be liable for any lead paint exposure effects to them forever.   

Or,   just have the plans ready and waiting for the next time the house turns over.

If you are looking to buy in seattle, consider a house hack situation. If the home has an ADU (or two) you could live in one unit and rent the others out. There are places out there for less than $650K. you wouldn't cash flow occupying one unit, but I bet you would come close to offsetting your mortgage. My last sunday jog I went past two such houses that each have two units in Skyway. IIRC both are in the 400K's and have been on market for a few weeks and look to be in habitable/decent condition. Neighborhood is on outer fringe of seattle so not walkable to any amenities, but still good commute options to lots of places.

One thing to consider though-  Seattle has very punitive/strict tenant protection laws -  and given our recent city council elections which appear to have moved the council FARTHER left (if that was even possible...)  expect it to just get worse.  The avowed socialist councilmember we were all hoping would not get reelected did win on late mail in ballots,  so they are going to be very emboldened now.  

I'm not aware that Snohomish county has blanket ban on looking at criminal history on a rental application. HOWEVER guidelines have been established by HUD I think that blanket "No felons" or "No criminal history" can still get you into trouble - you have to have written criteria, make an individualized assessment and look for mitigating factors.

Before seattle changed its rules and I hired a property manager,   I used language in my qualifying criteria to basically say that if a criminal record was present it must not reflect a pattern of repeated infractions,  must not have been for any violent crime or type of crime likely to impact landlord property, other tenants, or the landlord;   any not yet completed incarceration, parole, restitution, etc must not present an obstacle to paying rent and maintaining compliance with rental agreement, and there must be evidence of stability/mitigation, e.g. gainful employment, attending school, or some other constructive activity occurring after the conviction.

But again, might be good to consult with attorney OR work with a local snohomish county property manager or landlord group who know better what is going on there.

Again I would also seriously consider having floor on credit score.   It removes any subjective nature if decision made on account of that,  and most habitual criminals and scam artists aren't going to have good credit.

Yes,  Screen every adult as above.    as a married couple or otherwise related individuals its pretty standard to sum their income,  so only one needs to be producing,  but all adults need to be screened for other aspects; eviction history,  judgments, credit report, prior landlord reference / rent payment history etc.    Note that if this property IS in Seattle,  it is ILLEGAL to consider criminal history on your background check,   with a few very narrow exceptions,  basically for sex offender status.  I'm hearing now a similar statute may be on the table statewide this next legislative session.  Fun.   Most seattle tenants know this these days so its a great way to get into trouble.  Read the ordinance if unsure,  consult an attorney as above if still unsure.

(To offset the risk,  increase standards in other areas,  most notably higher credit score and prior landlord reference - frankly if they just got out of jail from an X-year stint an applicant probably won't have much to show on either of these points).    

I really hope you are reporting the rent income on your federal taxes....

Yes,  there are no state/local taxes specific to residential rental activity in WA,  though some jurisdictions have fees for business/rental license and periodic inspection costs.