All Forum Posts by: John Barrett

@Henry T. That's a very valid point.  I will working condensing it going forward.

Apparently WA state tool for searching legislation does not allow to link directly to the bill.  Here are a few links if you would like some details on this legislation or want to provide some feedback to the legislature.

https://app.leg.wa.gov/csi/Tes...

https://files.constantcontact....

John

Hello,

I live in WA state and we have a long proud history of proposing and passing poorly though out legislation which has long exacerbated the under building of new housing.  The result has been a widening gap between new class A rents and the dwindling supply of "naturally affordable" housing.  I generally provide written comments but have not seen any response.  Here is my new approach.  Suggestions  / comments or general notes welcome.

John

Link to legislation:
https://search.leg.wa.gov/sear...

HB 1388

Thank you for finally addressing the shortage of housing in WA by creating an even worse morass of overly complex legislation that will further harm the average resident. Your complete ignorance of and disregard for the basic rules of economics, supply and demand are certain to lead to the utopian vision of overly abundant housing our state so desperately needs. While many might scoff at the idea that someone can arbitrarily dictate that all rental prices will follow the CPI-U, you have boldly chosen to assert yourself and demand that the world conform to your ideas. Congratulations, the dismal science of economics holds no sway over you! History is filled with an abundant number of examples where governments have chosen to ignore economic reality in order to deliver unparalleled prosperity to their citizenry. If you can’t find any, then it’s clear that none of those “other” leaders were as brilliant, charismatic, social media conscious, oblivious to reality or frankly anywhere near as good looking as you.

To those who might point out the obvious logical fallacy in your proposed legislation, it is clear they simply do not understand the power of this legislature to demand laws of economics be suspended whenever or in whatever fashion are necessary when they conflict with your vision of the world. Thankfully after the successful passage of this legislation and the other House and Senate bills of equivalent quality, the residents of WA State will no longer have to worry about prices of anything rising faster than CPI-U (between 3%-7%). Finally, the world will be put on notice that only our legislators will decide what prices are allowed to increase in our State.

By crafting a bill this incredibly vague with little to no explanation as to how or who will decide what costs are “necessary to maintain the dwelling unit” or “substantially likely to force a tenant household to move or involuntarily relocate”, you have guaranteed ample employment opportunities for attorneys to argue both for and against this. Just like that this dreg of a piece of legislation has now made you a job creator!

Like the missing member of a group project who contributes nothing to the finished assignment but demands to present the material to the class; you are giving our court system the opportunity to shine by spending years and huge sums of money litigating this legislation. Undoubtedly, they will take this opportunity to evolve your atrocious piece of legislative tripe into something far worse.

Clearly claiming the power to reshape the rules that govern reality (economic & otherwise) is highly dangerous and can only be entrusted in your “highly capable” hands. Going forward it is clear that legislature will need to address the fact that many people have chosen to relocate to WA for employment opportunities. I have full confidence that you will address this issue of increased “demand” for housing no less eloquently than you have address price controls in this legislation. As such, when can the residents of WA expect your new legislation to require all people relocating to our beautiful state to bring their housing with them? Additionally, any insight into where you will create / manifest the new land these incoming dwelling units to occupy would be greatly appreciated. I assume all of this will be handled via legislative decree but wanted to clarify, asking for a friend.

It has been said that “Hard times create strong men, strong men create good times, good times create weak men and weak men create hard times.” While many people worry about the future of our State, it is clear based on your leadership that we will soon have the opportunity create many new strong men and women. Until they can come along to lead us back to good times, keep up the great work!

@Clayton Swansen really a bit of a mixed bag at the moment.  Positive is that there are not a lot of multifamily properties for sale and prices are still high.  Challenge is that mortgage rates are also high which has dramatically increased the monthly payment for borrowers. 

If I were in your position, I would target having the property listed April / May time frame next year and go after someone who would want to be an owner occupant. Things to consider are implementing a plan to get rents to market rate and addressing any maintenance issues. Hire a good agent and make sure they have a solid plan for marketing the property based of recent / reasonable comps.  Otherwise your listing will not get views and will become stale.

Best of luck,

John

@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