All Forum Posts by: Brian Hughes

Apologies if this is wrong forum.   This is of interest to anybody investing in WA State.

As has been the case the last few years in WA,   statewide rent control bills have been proposed which would severely limit housing provider's ability to adjust rents to meet costs or to improve and reposition a property.

This year there are TWO bills - House Bill 1388 and  1389 - that could pass together or separately and each would limit rent increases to a maximum of 3% annually or inflation (up to 7%) and add a host of other rules governing whether maintenance,  repairs or upgrades would allow for further increases.  1388 also has language basically making any amount of rent increase unallowable if tenant cannot afford it,  might relocate as a result of it, or if it is deemed too much by the attorney general based on whatever criteria they choose to apply.    1388 also includes language that effectively creates vacancy control,   meaning a vacancy may not allow for resetting to market rate.     1389 is a somewhat more 'conventional' bill and also includes rules around exceptions for "necessary" repairs and updates as well as rules for "banking" rent increases if you do not take the full increase amount allowed in a given year,  but the process for taking advantage of that requires serving a lot of notices properly.     1389 prohibits resetting your rent to market rate if you had to evict the prior tenant for any reason.   This is particularly bad since evictions often come with lost rents,  legal expenses,  increased turnover costs, and repairs.   

I tried to avoid getting my opinions into this but spoiler alert this would not be good for anybody operating rental housing in WA.    Please consider going to the WA legislature home page,  looking up these bills,   and submitting testimony or at least a position (pro/con) against them.   

Thanks!

galvanized supply pipes  and branch drains that are still in service are probably on the edge of failure.   Common locations for supply lines to fail are where male threaded galvanized pipe is threaded into brass or copper valve and fitting bodies  (due to galvanic corrosion)  and hot water lines will rust up so badly as to start restricting water flow or begin leaking a decade or two before the cold side fails similarly.   It also depends to some degree on your water supply - how acidic it is - and climate,  etc.    Galvanized supply lines can still be holding water but be very fragile if the corrosion has progressed far enough.  Sometimes you can tell because of rust staining and buildup on the outside of such affected pipes,   but even without that they can be weakened considerably from their original state.

On the drain side galvanized branch drains  (1.25 through 2" galvanized pipes)  can also rust out or clog up as the rust on the inside is very rough and catches hair, grease,  and other debris and will eventually need aggressive rootering,   which if the pipes have rusted enough may open up holes in them.

I should note CAST IRON (hub and bell) old sewer pipe,  at least the 3" and 4" stuff seems to have a bit longer lifespan than galvanized steel;  it still rusts but doesn't crumble and flake and encourage blockages like steel does,   so an old house with a cast 4" sewer stack you may be fine for many decades more if you just replace all the branch lines going into it but leave the main stack.    However I have seen rusted through cast iron as well.

On the electrical side agree that any wiring that doesn't have vinyl outer sheath and a ground wire should be considered obsolete and past its service life.    Any breaker panel that doesn't have a main disconnect should also be considered obsolete,   irrespective of if it is "big" enough or not.   Owing to the trend towards smaller,  more efficient appliances and LED lighting  electrical loads I think are somewhat less than they may have been per SF like in the 70's through 2000's when everybody had incandescent lighting and big tube TVs and refrigerators, dishwashers,  etc. that used 2 or 3x as much power as modern ones.

I've had a couple turn-of-century units rewired to remove K&T and failed 'BX" (flexible steel sheathed  2 wire cable)  and agree with other posters the pricing isn't that bad as long as you can find an electrician that has some experience with that kind of work,   and sometimes it might be helpful to open up some cable routes ahead of time for them to use so they don't have to do the exploratory work.   

If your home will likely remain economically viable  (not in path of redevelopment in next 10 years)  its probably worth looking at some systems upgrades.

I'm pretty hands on with my properties insofar as maintenance and upgrades so I am frequently in contact with my tenants and they all know who I am,  but I leave routine stuff  (rent collection,   leasing / showing / movein / moveout, basic turnovers,  notices, etc)  to property management.   This does mean I come in contact with tenants pretty often.    I've definitely run into situations where the tenant tries to play both sides and confuse things claiming I said or agreed to something when talking with the PM or vice versa.    I also have a couple 'legacy' tenants who were in place before I hired PM that still periodically contact me directly for things.    

My response when a tenant calls me these days (infrequent,  but still sometimes occurs) is almost always a polite  "please contact the PM -  I've hired them to be your 24/7 first point of contact if you need anything.  I'll get involved if I need to;   thanks"

In the case of the tenant that was trying to play me against the PM they were not a legacy tenant but inherited with a new property acquisition.   They had my personal contact because shortly after I purchased the building they had a fire in their unit,   and to try and expedite repairs as much as possible I was communicating with them directly for a while.   They of course kept the info and eventually the relationship went downhill as I had to enforce some lease terms around some of their behavior which they pushed back against.  They started making "legal" threats and personal attacks once I got to the point of making moves other than polite requests that they could not just ignore to force the issue.  Long story short I ended up telling them very clearly I was blocking their number and email/SMS and I would only communicate with them formally via the property mananger.   If they asked me anything in person of importance when I was onsite I would decline to answer and send them a formal written response via the PM.   I've also been reporting any conversations I have with them in person back to the PM.   Once I took those steps it mostly stabilized the situation though that tenant is still a bit 'dramatic' at times.  (I should note for all the drama this tenant is current on rent - otherwise they would not have received the level of patience they got)

Managing your building(s) is 10% of the risk and effort. The other 90% is managing people - your tenants, your PM, contractors, etc. And as with all people they are mostly good but 10-15% cause more drama than necessary but will ultimately work out and 1 or 2 percent are the real trouble makers. Don't make emotion-based tenancy or hiring decisions and build yourself a good team (handyman, PM, etc) even if you are hands-on. These days its very risky to go it alone especially if you have anything bigger to rent than an ADU and especially if you are located anywhere that is 'tenant friendly' which is increasingly most larger municipalities and the coasts.

for WA I don't think you have to notice tenants that you are selling except in Seattle where there is technically a TOPA (tenant opportunity to purchase) ordinance but honestly I don't know how well it is enforced but in theory its 90 days notice during which time if the tenants or a 3rd party they designate make a bona fide offer you have to 'consider it' whatever that means.    It probably means if they make a full price offer and you say no because you want the property on the open market they sue you.   In theory you can't even talk to somebody else about selling without violating this law.   For example every time somebody cold calls me and offers to  buy my triplex in seattle,  I am violating this ordinance.

Obviously when a sale is COMPLETED it is good practice to notice the tenants that the property has been sold,  but even that may not be necessary IF the property is under management and the property manager isn't changing and the tenants have never directly dealt with the prior owner.   However the new owner should notice everybody if the property management,  address/party they pay rent to or process for paying rent,  or request maintenance from,  bank account where their security deposits are kept,  etc changes then yes there needs to be notice.    Otherwise tenants existing leases stay in effect - new owner can change them on renewal or with proper notice if MtM.

Be sure that you are well familiarized with Seattle rental regulations.   Seattle is extremely tenant friendly and extremely landlord hostile.   For example,   with limited exceptions you cannot screen for criminal history,   you cannot evict anybody (even under "normal" circumstances - we are still in the extended covid eviction protection period) during "winter" months or if they have kids or are in any way involved with the school system.   You have to register your property and comply with inspection standards - most are pretty basic but there are some stupid standards like forcing all handrails regardless of age to be updated to modern standards that seem designed to hit everybody.    You can't stop a tenant from bringing in their own roommates if their space legally can accommodate the extra people (and there is NO enforceable occupancy limit if you rent a single family house),  and you can't meaningfully screen those roommates.    Removing somebody for lease violations (other than rent nonpayment) or even squatters can take years.   You have to offer payment plans to any applicant that requests them for deposit and last months rent and you can't consider that they elected that in your screening process.   You have to go through formal third party mediation and offer payment plans if somebody falls behind on rent before attempting to evict for nonpayment.   You can't charge a nonpaying or lease violating tenant your legal fees.   Late fees and other such charges ancillary to rent are severely restricted or banned.    The city pays tenant legal representation costs - you are on your own.   The list goes on and on - in the last 5 years or so something like 39 tenant protection ordinances have been passed by the city.     

The region is great as a whole,  so you might want to consider a different close by market - Renton and Burien are both good options adjacent to seattle and there are others too.

If you are serious about seattle,   before you do anything else attend RHA (rental housing association) www.rhawa.org seminars for new landlords on renting in seattle,   and I think the city also does new landlord orientations periodically see https://www.seattle.gov/rentin...

I'm pretty sure once your tenants have gone month to month  (either by your presenting them with a MtM agreement,   or their existing agreement stating that it converts to MtM,   OR BY YOUR ACCEPTING RENT AFTER A FIXED TERM LEASE ENDS then legally they are MtM you cannot force them to accept a new lease agreement.    You can still offer them said agreement but its entirely their decision if they want to accept it or not.   That said,   you can still offer both the carrot and the stick insofar as offering fewer/less rent increase if they agree to a longer term lease.  Just be sure to give enough notice for rent increases.  In seattle its now 180 days,   not 30 or 60,   AND if you increase rent more than 10% and the tenant's income is below a threshold and they move anytime in the next six months you will have to pay relocation assistance.   (but oh no its not rent control....)

You can still amend rental agreement terms by issuing appropriate notices of rule changes.   Just don't try to replace the entire lease with one notice for rule changes.  (So I've been advised by somebody who is an authority on such things)

Editorial:    Since laws on this changed in WA to not allow landlords to issue no-fault terminations I've now had two tenants willfully refuse to sign lease renewals  forcing me to decide between accepting their rent payments and letting them go MtM or refusing to accept the rent and risking a protracted battle to remove them.    In both cases the tenants in question were paying rent as agreed but adversarial - one was a hoarder we (me + PM) constantly had to lean on to keep their behavior within tolerable limits but they were emboldened with "just cause" law changes and when the pandemic hit and we couldn't threaten nonrenewal.   That tenant thankfully decided to move on their own after we refused to allow them to start piling stuff in the carport and other common areas; something we could still control;  basically we told them we would start discarding any items left outside and they couldn't handle that.    The other tenant (inherited - outside seattle) had brought in additional occupants and also had too many dogs (but were allowed by prior owner) for the space and is resentful of our efforts to get roommates onto the lease and to get them to control the dogs and not wreck common spaces and to clean up after their pets and so have lashed out in various ways;  one way was refusing to sign renewal,  even though it had no rent increase or significant terms changes.  With them we eventually gave them ultimatum of all adults sign lease (which had specific provision so they could terminate early ; something they gave as a reason for not wanting to sign)  or accept a 10+ percent MtM rent increase.   They made a huge fuss and lots of sometimes less than polite noise but ultimately chose to accept the rent increase.

Fun and games but unfortunately also new normal (in WA) I think.

Risks with this:   1)  unless you do it for all housing applicants who reach a certain stage in your screening process,  you are discriminating.    2)   what if an applicant is from out of state?    You'd have to rely on photos or video.   maybe best thing would be an interactive video call,  so you can say things like hey don't skip the bathroom or whats behind that door
3)   careful to recognize what might be tenant damage and what might be issues or defects in their unit that is not their fault.   Mold for example could be in either category and if you denied a tenancy based on this and somebody decided it was a defect in the unit you could be in trouble.     4)  Another issue is if applicant has roommates they are NOT bringing along to your unit,   and those roommates caused whatever conditions in the existing unit.   I've had a total slob for roommate once and if my new landlord had ever seen the prior unit then I'd probably never gotten another unit.   5)   by seeing in intimate detail how the tenant lives you may be opening up yourself to 'unconscious bias'  claims if you are in a tenant friendly jurisdiction and you deny without a very concrete and verifiable reason after seeing their unit.

Is this in seattle city limits?     

if you do decide to rent out your current home (or any portion thereof) be sure to understand WA and local rental regulations.   There has been dramatic changes in rental laws statewide and in many cities and counties and they all strongly favor the tenant.    Also be sure to have a landlord policy or otherwise update your homeowners insurance.