All Forum Posts by: John Barrett

@Michael Oziel lots of good advice here on this thread.  If I were in your position, I would be following @Michael Haas advice and starting with a house hack.  Qualifying for a primary residence will allow you to get the lowest cost financing and low down payment options.  Additionally, if you have roommates or are able to do home improvements you will be able to dramatically reduce your cost of living while building equity. Finally, if you live there for at least two years you will be able to sell and not pay capital gains so long as they are under the federal limit.

I would caution you not to feel rushed to make the leap into investing.  The only time frame that matters is yours.  Spend the time to get ready for this next step.  Develop your plan, research the areas you think you might like invest, get your financing lined up, and general real estate education.  I don't mean to imply you have to have everything figured out (Analysis Paralysis) but having done this work will give you the confidence to move decisively when you do see the right property for you.

Best of luck,

John

@Eric Cheng I invest in the Marysville area and really like it.  It is a tertiary market but comparatively, it is more affordable than most.  The area you mention seems to be more single family homes but there are multifamily properties within a 5 mile radius.  Prices have been climbing over the last few years.

There is a meetup group (CIA) that would meet once a month at Bob's Burgers by the outlet mall which is worth attending.  Other than that, I would suggest driving the area to get to know it and determining the investment strategy you want to implement.  This will help you determine what the next steps are you will need to take.

Best of luck,

John

@Jay C. A lot of people have been talking about rent strikes on on social media in May. Unfortunately some elected "leaders" in WA state have also been calling on people to withhold rent even if they can pay.  The encouraging thing is that both industry data and my anecdotal data (my portfolio) is that very few people have followed through with this.  I have only a couple tenants who needed some extra time to pay rent and none on rent strike.

My view is that this situation is not about tenants or social justice but rather political theater for people with extreme points of view to get attention.  While it is irritating as landlord to be constantly portrayed in a negative light rather than for the value we create, this does not change my desire to invest in real estate.

Change is the only constant in life and this just another thing to adapt to.  My strategy is to provide a great product, market it well, do good tenant screening and provide excellent customer service.  It doesn't cost you anything to treat people well.  It's not fancy or revolutionary but it is very effective. 

John

@Joe M. The government policies regarding evictions have not caused me to change my thinking with regards to investing in real estate.  While these policies are good political theater, most reasonable people acknowledge they are not beneficial to tenants or landlords in the long term.

While these regulations present additional risk that need to be accounted for when conducting your due diligence, to me the fundamentals of investing real estate continue to look good long term.  I will adjust my screening and reserves to account for these risks. My belief is that real estate will provide superior returns to other asset classes so I choose to allocate my funds there.

Best of luck,

John

@Corban Anderson Your first step should be to figure out what strategy will best meet your goal.  If you are not clear on which strategy will work best for you then you need to spend some time getting really clear about the goal you are trying to achieve with your investment.  Real estate is just the investment vehicle, you are the driver and it is ultimately up to you to guide your investment.  Otherwise you just hoping and wishing for success and that's not a plan.

Seattle is a tough market to invest in as prices are really high and there is a lot of competition for listings.  That said, if your strategy is to do a house hack situation that can work well.  Otherwise you can look at cities both north, south, and east of Seattle with properties in a variety of price points.  The key is figuring out what challenges / problems you are willing to take on and solve with each property (lower price point but requires management company vs higher cost but can self manage).

Best of luck,

John

@Nikki Closser While this is a terrible policy decision by the Seattle City Council and shows this group of "leaders" lack any semblance of understanding of the economic principles, this is not the end of the world for your investment.  Even in a city as poorly run as Seattle, with leaders who are actively advocating that tenants break the terms of their leases, evictions are still a relatively rare.  The May rent strike looked really scary on social media but did not materialize into any discernible impact in May rent collection.

What this means for investors is that we will need to diligently screen tenants (will likely need to be more creative given the new rules) and work to maintain positive relationships with them.  In the end, the vast majority of people are decent and just looking for a comfortable, safe & clean place to live.  Provide your tenants with that and good customer service and I don't think this insanity will really have much of an impact.

Best of luck,

John

@Marc Winter This is terrible public policy and it will ultimately just end up hurting the very people these politicians want to help.  That said, I don't really expect this to be as impactful to landlords as people would think.  The reality is the evictions in general are not as common as you might expect.  While we don't yet know how much Covid-19 pandemic is going to change that, I personally haven't seen any increase yet.  Though this is just my experience.

The 2nd order consequence of the misguided policies by the Seattle City Council is that selection criteria and rents will rise to compensate for the increased risks that landlords are being forced to accept.  Additionally, as the city councils war on landlords continues to drive smaller operators out of the market it further reduces the availability of affordable housing.  Since there have been no policy solutions provided to increase the number of housing being built or reduce the regulatory burden supply will remain constrained and prices high.

John

@Brett Lee As others have said, it all depends on what goal you are trying to achieve.  If you are looking to grow, this is a good time to be pulling equity given rates.  Another option is to sell the property and have a much large amount of money to put towards another property.

While increasing your level of debt on a property has be done in a careful and deliberate way, I find having more cash available gives you more options to seize opportunities.  I think it is likely that access to capital will likely become more difficult as the economy continues to struggle.  This could make it harder for you to access the equity in this property at a later date.

No one knows what the future holds so all you can do is make the best decision possible based on the information available today.

Best of luck,

John

@Jack B. Sorry to hear that you are dealing with this situation.  The only thing I can offer is to remind you to maintain perspective.  You are purchasing this property for a reason and even if you end up being delayed in the near term, in the long run this will just be another story about an obstacle that you overcame. 

Best of luck,

John

@James Fraundorf you will find a number of options in that price range the further north of Seattle you are willing to drive.  Based on a price range of $350K and number of bedrooms desired you will likely end up in Everett or Marysville.  Both have older housing stock which will provide you options for finding a value add property.  

If this is a purely investment play, I would be looking at some of the rougher but improving neighborhoods as these will offer the possibility of higher returns.  If this is somewhere you plan on living with your family you may not want to be as aggressive.

Best of luck,

John