All Forum Posts by: John Barrett

@Nick Littleton you can also look into Washington Landlord Association.  They also offer the latest updated leases but are a more affordable option if you do not have  a lot units.  We started with WLA and moved to RHAWA as we got more units.

John

@Mike Hern This is annoying for the companies dealing with it but ultimately, I don’t personally see it going anywhere. Aggregation of data isn’t illegal and each property management company’s and owners still have to make decisions when acting on the market information / research they purchase.

A more accurate assessment is that other market participants who are not as closely monitoring changes in the market are loosing out on rent. Running your business better than others is not illegal. Cities plans for affordable housing should not rely on landlords poorly managing their assets.

John

@Jin Zhang I am still looking at deals and hope to purchase more over the next couple of years.  I do look at the increasing costs due to interest rates and prices in my area still being high but if the deal makes sense we will move on it.

Near term the focus has been on getting my units undergoing rehabs complete and rented.  Rent growth has been significant and just raising rents can have a dramatic affect on your profitability. Additionally, I am looking at an opportunity to add an additional unit to an existing multifamily property.  Even with all the costs of permitting, plans, materials and construction it will provide a solid return.

John

@Brandon Teachout You might also reach out to Rain City Capital or Certain Lending. Rain City is a traditional hard money lender and Certain Lending is a DSCR lender.

John

@Timoteo Guy This program is going to be just like section 8 housing in that it will be very helpful for some and not good for others. 

My take is the risks to the landlords participating in this program are a lot greater than the promise of guaranteed rent.  By limiting landlords ability to manage their properties cities like Seattle have reduced the supply of housing.  This creates overwhelming demand from qualified tenants.  Given the choice, I think the majority of landlords are going to go with better qualified tenants and avoid the potential challenges & vague promises of support.

@John McKee We have done three 1031 exchanges so far.  Our most recent 1031 exchange was done last year in April.  We sold a 2 bdrm, 1 bath per side duplex  and purchased a 3 bdrm, 1.5 bath per side duplex with garages.  The duplex we traded into is only 15 minutes from our house, 30 years newer and much easier to manage. 

The specific details of our transaction are as follows: sold original duplex for $535K (rolled over equity of $145K) and purchased new duplex for $550K. We renovated the new duplex and now have it rented out.  Total rents for the new duplex are ~$1,500 more per month, got a lower interest rate on our new loan, cash flow from the property is roughly double and were able to significantly improve our equity via forced appreciation.

Hopefully this helps answer some of your questions.

John

@Evan Ghang I owned a duplex outside of Seattle during the 2008 housing correction.  During that time, I saw the value of my property fall by roughly 20% off it's high.  While this did hurt my pride that the value of my property had fallen, it didn't have any impact on my occupancy and rents actually increased during those years.  I did not have to tap into any cash reserves but I know people who did.  The key determining factor in my opinion was the amount of leverage people had taken on and duration of the loans.  People with fixed rate / longer duration debt were able to ride out the market turbulence.

John

Hi Amir,

Your plan is solid and you can get owner occupied financing that would allow you to get more attractive financing.  Interest rates are going up, so your financing costs will likely be more expensive in the future. While property prices may come down, I don't think it is likely that values will fall enough to offset the higher interest payment.

Another strategy could be to look for properties that have the ability to add an ADU but do not have one currently. This way you could use your skill set to increase the value of the property by adding the ADU.

Best of luck,

John

@Ana Vhan you can also reach out to RHAWA as they have staff attorneys that can call and ask questions of.  They are more expensive than WLA but both organizations are quite good. Based on the information provided, it seems like your lease will go will roll over to a month to month unless you have notified your tenants correctly that they lease is ending.  That said, you can still end your lease but will need to follow the new state & local regulations.

Best of luck as you navigate this situation, it is never fun but there is a process for removing tenants if that's what has to happen.

John