All Forum Posts by: Sean Smith

Over the weekend Washington State Legislature passed controversial rent control measure EHB 1217. It is now out for signature with Governor Bob Ferguson.

For anyone who owns investment real estate in Washington, make sure to read up on the details. If there's information I missed please chime in the comments below.

Residential Housing:

- No rent increases within the first year of tenancy.

- After the first year, yearly rent increases are capped at 7% plus CPI (up to 10%).

- 90-day notice required for rent increases.

- Rents can increase beyond the cap in between tenancies.

- Month-to-month leases cannot differ by more than 5% from term leases.

Manufactured/Mobile Homes:

- No rent increases in the first year of tenancy.

- After the first year, yearly rent increases are capped at 5%.

- A one-time increase of up to 10% is allowed if the tenant sells the mobile home, with prior notice.

- Move-in fees capped at one or two months' rent (if a pet is involved).

- Late fees are tiered based on consecutive months of late payment (2%, 3%, 5%).

Exemptions:

- Buildings under 12 years old, public housing, nonprofit organizations, and owner-occupied duplex, triplex, and fourplexes are exempt.

- Real estate investment trusts, corporations, or LLCs with corporate members are not exempt for residential properties.

I'm curious if anyone here feels this will meaningfully affect their portfolio. How are you adjusting strategy going forward, if at all?

Hey @Jake Mendoza the BRRRR method has a lot of steps involved - not to say it's not possible - but more so have you considered trying to do it locally in LA county vs. out of state?

I'm originally from the Santa Clarita area and know for a fact there are sub-$500k deals up in Canyon Country, Palmdale, Lancaster, etc. Might be easier to manage your first construction job within an hour or two drive instead of out of state.

@Gonzalo Villacorta welcome to the BP community! 

When starting out it's important to work towards one concrete, attainable goal. That could be your first flip, you first rental property, etc. It's easy to get overwhelmed by the many many shiny objects in real estate. The hardest part is just getting started.

My advice:

- Identify your real estate strategy

- Identify your target area

- Connect with/build your team of brokers, property managers, GCs, lenders, and other investors

- Practice running numbers and bounce them off your team

- Make lots of offers!

@Hisac Lucas welcome to the community! Great resources and experienced investors in these forums. Best of luck getting started!

@Alan Eslinger Everyone's definition of MTR seems slightly different. When I hear MTR I think 3, 6, 9 month leases. Longer than an STR stay, shorter than an annual lease.

Using that definition I don't have a ton of MTR experience so maybe someone else will chime in.

But I do have a decent amount of experience with rent-by-the-room / co-living properties. Think annual leases for individual rooms with furnished common areas. 

In the Seattle area these rent on the low end around $650 a room/mo, and the top end I've seen is around $1200/room/mo. With a 6 bedroom house, this strategy could be a game changer when compared to the average SFH rents.

Furnished finder is a good place to advertise, and I've also seen success using Zillow's room rental feature and even FB marketplace.

If you're self-managing, it goes without saying but make sure to screen your prospective tenants throughly. 

If you want to hire a PM, there's one co-living mgmt company in the area I'm familiar with that be worth talking to. 

Supplemental docs found in the disclosures and rent roll from the listing broker. If I were offering on this property I would write in a successful eviction as a condition of closing. Unless you're getting an incredible steal on price I wouldn't inherit a partially processed eviction.

 @Nana Sefa this property has an active eviction taking place in one of the units, the units are outdated through and through, and there are a few Zinsco panels that should be replaced. Overall it needs more work up front and possesses more risk than I'd be willing to take on for the amount of return I expect to see.

That isn't to say that someone couldn't do well with this property. Just not for me or any of my investors actively looking.

@Bao Vu I know the property you're talking about based on the price. 

Overall the numbers are okay on paper if you can get average/above-average rents within a year. Your market rent estimates are realistic, maybe a bit conservative which is a good expectation to set. 

My calculations showed this deal breaking even around 30% down with average rents. The market can support higher rents with updated units IMO -- plus there's some value-add upside in the equity growth through improvements. I'd lean towards lower down, saving cash for renovations at the turnover of each unit. This one will need it.

Personally, I looked into the details of this deal and decided to pass on it for a few reasons besides price & rents - happy to share my findings.

Hi @Khushbu Magiya I've had a handful of clients work with Real Property Management Select and RNB Property Management over the years. Happy to DM you some info about a few local players.

@John Schneble I'm sorry to hear about the divorce. Kudos to you for taking this difficult time and turning it into an opportunity. 

Of course, consult legal counsel to confirm who has asset ownership and don't spend a dollar until you know for certain. 

I suggest exploring a few strategies to see which can yield the best returns. Rent-by-the-room/coliving is becoming a great strategy in our market to achieve higher rents. Short term rental is another option to increase revenue beyond the traditional LTR approach. Both of these strategies require more active involvement in the management of the unit, or you can take the Long Term Rental approach for some stability.

Best of luck!