Seattle Rental Inspection

ALL landlords within Seattle city limits MUST register their rental properties (single family, condos or apartment buildings) with the city by 12/31/16.  You can register at www.seattle.gov/RRIO

The City will be requiring property inspections every 5-10 years and will make random selections monthly.  If you have been selected, we can recommend an inspector and answer any questions you or your tenant might have.

OTHER CHANGES

• The City now prohibits increasing rent if a property fails to comply with the RRIO.
• The City has prohibited special deals or concessions for tenants based on where they work.
• The City approved a new law outlawing housing discrimination based on source of income.
• When selling or reoccupying a property, landlords MUST give 90 days notice (formerly 60 and 20 days), but landlords may request a hardship exception to shorten the notice period in certain circumstances.  
• The time in which landlords need to refund a tenant’s security deposit is 21 days from the date the tenant surrenders possession, unless otherwise stated in a lease agreed upon prior to 2016 
• Effective January 2017, landlords will need to accept applicants on a  “first come, first serve” basis.  All information regarding minimum screening criteria will need to be disclosed prior to accepting applications and they must be screened in the order in which they have been received. 

Happy Investing!

Increasing Affordable Housing

WHY ADUs and DADUs ARE A GOOD THING

For the City

They increase affordable rental housing, utilize existing house stock without compromising the scale and character of neighborhoods, encourage better housing maintenance and neighborhood stability, reduce sprawl and environmental footprint, and are viable alternative to larger scale housing projects

For the Homeowner

They provide rental income, offer a private living unit for family members or friends, create aging in place opportunities and increase property values

For the Renters

They offers affordable rent and access to amenities in single family neighborhoods such as privacy, quieter environment and less traffic congestion

More in tomorrow's blog about the policy changes proposed by the City of Seattle. Stay tuned!

Happy Investing!

Today's blog courtesy of David Taber, Neiman Taber Architects

Seattle's Rental Inspection Program

As Seattle goes, so goes the rest of the state....

This is true for much statewide legislation, including regulations related to rent control. While Seattle's Rental Inspection program is not technically rent control, it is a new initiative just now being implemented to inspect ALL rental units within the city of Seattle. Several other jurisdictions within Washington State are eyeing this program for possible consideration in their own municipalities.

So here is the description of the inspection program from the City of Seattle's website:
The Rental Registration and Inspection Ordinance (RRIO) helps ensure that all rental housing in Seattle is safe and meets basic housing maintenance requirements. The program will educate property owners, managers, and renters about City housing codes and their responsibilities; and require owners to verify their properties meet these standards when registering with the City.

Registration:

• The Rental Registration and Inspection Ordinance requires landlords to register all rental housing units in Seattle, from single-family houses to large apartment buildings.
• Exceptions to the registration requirement include commercial lodging, state-licensed facilities such as adult family homes, and housing owned by government groups or by housing authorities such as Seattle Housing Authority.
• Landlords must register their properties according to the following schedule:

• All properties with 10 or more units should have registered by September 30, 2014. If you own one of these properties and have not yet registered, you will be assessed a $20 late fee and you may be subject to additional penalties and fees.
• All properties with 5 to 9 rental housing units should have registered by March 31, 2015.
• All properties with 1 to 4 rental housing units will be registered from 2015 to 2016. Specific deadlines for these properties are based on the ZIP code where the property is located.

• Registrations must be renewed every 5 years.

Inspection:

• The ordinance requires that all registered rental properties be inspected at least once every 10 years.
• The owner must hire a qualified rental housing inspector or City inspector to do the inspections.
• Rental properties with prior enforcement action will be inspected early in the program.

Several property owners at the recent Trends NW trade show indicated that they had already been required to do inspections.

Seattle Rent Increases

According to Tom Cain of Apartment Insights Washington, rents are up In the King County metro area by 7.9% over the past year, and now average $1284 per unit or $1.53 per square foot. The highest rental rates are in downtown Seattle at $2.43/sf. Class C properties have the lowest vacancy rate (at 3.7%) and rent for an average of $908.

Vacancy rates are also down on average to 4.17%. Ballard has a relatively high vacancy rate of 8.6%, due to the overbuilding in this submarket. By the time the units under construction there are completed, it will have quadrupled the inventory of 50+ unit complexes in the past six years.

There are currently 16,135 units of new construction in the metro area, up 16.6% from a year ago. 59% of these units are in the City of Seattle.

Rents are still forecast to increase 4.5%-5.5% over the next several years, according to Reis. Cain finds it remarkable that the market continues to strengthen in the face of massive amounts of new units. The underlying strength of the economy is what contributes to this growth. According to the US Census, Seattle grew faster than any other major American city in the past year. Seattle also has the second best rate of small business creation in the country, according to recent data.

Had all of these new units not been built, then Seattle rents would be even higher. The rental market’s performance in the past year has been stellar, thanks to developers and lenders who have provided apartments to help meet the demand.

Please message me at HomeLandInvestment@gmail.com if you are interested in investing in income properties in Seattle.

Happy Investing!

Seattle Rental Market is Hot! Hot! Hot!

This link was sent to me by my financial adviser David Donhoff, and I am happy to pass it along. If you are looking for rental income, then NOW might be the best time to jump into the Seattle market.

Seattle rental market increasingly competitive and expensive – Local News – Seattle, WA | NBC News

Good!
http://www.nbcnews.com/id/52168425/ns/local_news-seattle_wa/

There’s a huge influx of people relocating for corporate jobs at places like Amazon, Microsoft, Nordstrom and Starbucks and looking for a place to live, according to Seattle Rental Group.

“As the inventory is shrinking a lot of the private rentals owners are choosing to actually sell instead of continuing to lease out the property. So that’s also taking away from the inventory too,” said Ashley Hayes, with Seattle Rental Group.

According to Mike Scott of Dupre + Scott Apartment Advisors Inc., the average rent for a one bedroom apartment in Seattle is $1,223 this Spring. Plus, rental rates are higher compared to last year. Rates are going for $2.50 to $3 a square foot around Seattle for a one bedroom, one bath, nice view and building. Last year, the rental rate was in the low $2.00 range, according to Hayes.

The trend is your friend…. do *NOT* miss out on the trend!

Rental Deal Analysis

Calculating Cash Flow and Cap Rates<br><br>

The reason to purchase rental properties is for cash flow and income. Cash flow is simply the difference between the income produced by the property in the form of monthly rents, and the expenses associated with the property, such as mortgage payment, property taxes, insurance, repairs, etc. Positive cash flow is always the goal; negative cash flow to be avoided. The capitalization rate (cap rate) is the percentage of the original purchase price paid represented by the net annual income (Net Operating Income or NOI) produced by the property (monthly cash flow multiplied by 12).<br><br>

For example a rental purchased for $100,000 that generates $500 in NOI each month would have a 6 percent cap rate ($500 multiplied by 12 is $6000, divided into the original $100,000 purchase price).<br><br>

To calculate cap rate and cash flow, we assumed a 20 percent down payment and a 4 percent interest rate to come up with an estimated monthly mortgage payment. Real estate investors typically assume an additional 40 percent of the gross monthly rental proceeds for expenses such as property taxes, insurance and repairs.<br><br>

There is an old rule of thumb that many veteran real estate investors use to calculate a reasonable purchase price for a rental, that is, that monthly gross rents should equal one percent of the sales price. This is simply referred to as “the 1 percent rule."<br><br>

While the 1 percent rule and the 40 percent rule mentioned above are useful to provide “general overall initial calculations,” the particular characteristics of each property purchased must be taken into account to determine the true return on investment.<br><br>

Some of these characteristics may include: what is the age, quality of construction, level of past maintenance, physical location within a given neighborhood, will the owner be paying any portion of the utilities such as water, electric, gas, trash or Home Owner’s Association dues, etc.
<br><br>But this quick lesson on cash flow and cap rate will help the investor get started in analyzing rental properties for possible acquisition.
<br><br>For a list of income-producing properties in the Seattle area, please contact Home Land Seattle at HomeLandInvestment@gmail.com or 888-621-4999.
<br><br>Happy Investing!