Selling Beacon Hill Home

Coming on the market this week!

This vintage home on South Lander Street in Beacon Hill will be coming on the market at the end of this week. Lots of old world charm on the main floor, with three bedrooms and one bathroom, original fir flooring, and 9' ceilings. Exterior has new paint, and various repairs and landscaping have been completed.

The house features a light and bright interior with a formal living room and dining room. One bedroom and bath on the main floor, two roomy bedrooms and large walk-in closet and storage on the upper floor. The total square footage of finished space is approximately 2920.

The spacious kitchen has a butler pantry and gas cook stove. Natural gas heating as well.

There is a fenced backyard, with a beautiful deck right off the dining room.

Watch https://youtu.be/RtXz-hGG-dw to get a better look at the interior spaces.

The upstairs unit has three bedrooms and one bath; and is currently rented through August 2016 for $2300 per month. The downstairs unit was recently developed as a 2-bedroom ADU and will be vacant at the end of this month. It is currently rented for $1400 per month. Permits expired to make it a legal ADU, but the City inspectors have identified it as such. A new buyer will need to complete the permitting process. Live downstairs and collect rent upstairs!

Driveway for off-street parking for up to two vehicles. Plenty on on-street parking for your guests!

Close to the Mt Baker Light Rail Station, El Centro de la Raza, The Station coffee shop, and many other amenities on Beacon Hill.

We have been managing the rentals for this property, but the Owner is now ready to sell. Send a private email to HomeLandInvestment@gmail.com if you are interested in getting more information before the listing hits the market.

Happy Investing!

RRIO Checklist

Whether the investor uses a private inspector or the City of Seattle inspectors, this is the checklist that is used to inspect rental properties registered in the city's Residential Rental Inspection Ordinance (RRIO) program:

1. Exterior: Structure, Shelter, and Maintenance

Roof, chimney, foundation, stairs, and decks are reasonably free of decay (e.g., severe cracks, soft spots, loose pieces, deterioration, or other indications that repair is needed); maintained in a safe, sound, and sanitary condition; and capable of withstanding normal loads and forces. The building and its components, including windows, should be reasonably weather-proof and damp-free.

2. Interior: Structure, Shelter, and Maintenance

Walls, floors, stairs, and other structural components are reasonably free of decay, maintained in a safe and sound condition, and capable of withstanding normal loads and forces. Natural and mechanical lighting and ventilation is adequate and maintained in good working order for each habitable room in the unit.

3. Emergency Escape Windows and Doors

Every sleeping room built or permitted after August 10, 1972 must have an emergency escape window or door. Emergency escape windows must open to the exterior, have a minimum opening of 5.7 square feet with a minimum dimension of at least 24 inches high and at least 20 inches wide, and must not exceed a maximum sill height of 44 inches from the floor. In order to meet the total square footage requirement, a window size of nearly 2 by 3 feet is typically required. Sleeping rooms that were built under permit prior to August 10, 1972 are exempted from this requirement.

4. Room Size and Condition

All rooms used as living or sleeping rooms must meet minimum requirements for square footage and must not have dirt floors.

5. Heating System

Every bathroom and habitable room must have a functioning, properly ventilated, and permanently-installed heat source.

6. Electrical Standards

All electrical equipment and wiring must be approved and maintained in safe and sound condition and in good working order.

7. Plumbing and Hot Water

Plumbing systems must be properly installed, functional, sanitary and maintained in good condition. Water temperature reaches at least 100°F after running water for two minutes.

8. Sanitation Standards: Bathrooms

Every unit has at least one directly accessible bathroom (primary bathroom) that includes an operable toilet, sink, and tub or shower, all in safe and sound condition and sanitary working order. Does not apply to a legally established SRO/rooming house/micro-housing unit that does not have a bathroom, although any associated common or shared bathroom must meet these standards.

9. Sanitation Standards: Kitchen

Every unit has a kitchen with a sink, counter, cabinets, cooking appliance, and refrigerator maintained in safe, sound, and sanitary condition. This does not apply to units comprised of a single habitable room such as a Single Room Occupancy, rooming house, or micro-housing unit when the unit does not have a kitchen. Common kitchen must meet these standards.

10.Owners’ Obligations

Property owners are responsible for ensuring that the property is free of excess trash; insects and rodents have been exterminated; unit and building doors lock with a deadbolt or deadlatch; and working smoke detectors are installed outside sleeping rooms.

Happy Holidays! Happy Investing!

My Property Management Agreement

Readers and clients have asked me how I charge for my property management services. Typically, I will charge a monthly fee of 10% gross rental income plus a half-month fee for tenant fulfillment (advertising, showing, screening and leasing up a property). I will do short-term and furnished rentals, for an additional fee.

Here are some excerpts from my property management agreement, for anyone interested in renting out their Seattle house:

Article I – Powers and Duties of the Manager

1.      Owner hereby appoints Manager as Owner’s agent to handle, manage, and control the Property, and expressly authorizes and empowers Manager as follows:

a.      To advertise the Property for lease and to execute leases covering the Property, or any part thereof, for such rent and upon such terms and conditions as Manager may deem reasonable and proper, PROVIDED HOWEVER that Manager shall not enter into a lease for a period longer than _24_ months, unless written consent is given by Owner.

b.      To collect rents and revenues from the Property.

c.       To maintain and keep the Property in a reasonable state of repair and to expend such part of the rents and revenues from the Property which it collects, as may be necessary in so doing; PROVIDED HOWEVER, Manager shall not spend more than  _$1000_  in repairs during any 12 month period unless and until first receiving the consent of the Owner to do so.

d.      In the event that repairs or improvements are needed or necessary, which repairs or improvements exceed $500    per occurrence, then in that event, with the consent of Owner, Manager will act as general contractor on behalf of Owner to cause said repairs or improvements to be made. The Owner will pay to the Manager the cost of said repairs or improvements, plus 15% of said cost as a fee for Manager acting as a general contractor for said repairs or improvements.

e.      To employ such attorneys, agents, contractors and workmen as Manager may deem reasonable and proper in connection with the handling, managing and control of the Property.

f.        Generally, to handle, manage and control the Property and to execute such agreements, contracts or other documents or do such other acts as Manager from time to time may deem reasonable and proper to carry out the duties stated in this agreement.

2.      Manager shall keep proper books of accounting of this agency, which said books shall be open to inspection by Owner during regular business hours of the Manager. The books and records shall reflect at all times the rents and revenues received and the disbursements made as to the Property. Manager shall furnish to Owner a monthly statement showing the rents and revenues received, the disbursements made and the other transactions had with respect to the Property.

3.      Manager is NOT authorized by this Agreement to either make any capital improvements on the Property except as herein provided, or to sell any of the real estate constituting a part of the Property, or to create any mortgages, liens, or encumbrances against the Property, unless and until first instructed by Owner to do so.

4.      Owner agrees that Manager shall be under no duty to undertake any action, other than as herein specified, with respect to the handling, managing, and controlling of the Property, unless and until specifically agreed to by Manager.

5.      Owner agrees that Manager shall have a lien against the Property to secure payment of Manager’s compensation and any advances Manager may make from other funds.

6.      Owner’s objectives in the management of the Property are:

a.      Maintain 100% occupancy and maintain rents at market rates

b.      Maintain the appearance, upkeep and marketability of the Property

Manager shall manage the Property accordingly.

Article II – Rights Reserved by the Parties:

1.      This agreement may be altered, amended, or modified at any time by a written mutual agreement signed by Owner and Manager.   

     

2.      This agreement may be terminated by either Owner or Manager giving to the other at least thirty days written notice of intention to terminate this Agreement on a certain date specified in such notice; provided however the termination of the Agreement shall not affect the right of Manager to receive leasing commissions or fees which have accrued on the date specified in such notice that have not been paid.

Article III – Manager’s Compensation and Right of Reimbursement

1. For service hereunder, Manager shall be entitled to receive and retain 10% of gross rents and revenue collected from the Property as compensation for the performance of such services. Owner agrees to pay Manager upon demand any fee for services rendered by Manager and/or out-of-pocket expenses incurred by Manager in the handling and managing of the Property, where Manager does not have available funds from the rents and revenues from the Property from which to be reimbursed. Any fees for services rendered by Manager and/or out-of-pocket expenses incurred by Manager NOT PAID by Owner on demand shall, after thirty days, bear interest at the rate of one-and-one-half percent (1.5%) per month or eighteen percent (18%) per annum until paid.
2. Owner promises and agrees to indemnify Manager and hold Manager harmless from and against any and all losses and liabilities incurred by Manager as a result of any action in good faith taken or not taken by Manager pursuant to the terms and conditions of the Agreement.

Article IV – Miscellaneous

1. Owner and Manager agree that late fees and interest on funds held in escrow for Owner if any, shall be considered earned by and paid to the Manager each month to help offset Manager’s time, check and banking charges.
2. Owner and Manager agree that

Manager will maintain the tenant’s deposit balance in escrow, the amount to be adjusted as the total deposit balances change.

If you are interested in renting out your Seattle house, seasonally or year-round, please contact me at HomeLandInvestment@gmail.com

Happy Investing!

Home Investment Shifts

Several noteworthy articles in Sunday's Seattle Times. Front page news that Millennials are not buying houses. I reported on this trend in my recent blog on homeownership, and the reasons for the decline. The fact that young Millennials ages 25-34 are not buying houses is a big part of this decline.

Since 2007, homeownership for young adults in King County has dropped nearly 13 percent. The rate of decline here has been more than twice as fast as the national average. A big reason may be that real estate here is so expensive.

The delay in marriage age and the record high level of student debt exacerbate the difficulties for Millennials to look at purchasing rather than renting. Whether Millenials are renting because they have to or because they want to is causing a major demographic shift in the rental market here, where competition for apartments and rent prices keep going up.

The long term forecast is very good for landlords and investors who hold rental property here.

The second article I found fascinating had to do with EB5 Visa program. EB5 allows immigrant investors and their families to get permanent residency visas, in exchange for investing at least $500,000 in US projects that create at least ten full-time jobs. The program was originally intended to target low income and rural communities.But at least 2 Billion dollars in current projects in the prosperous Seattle metro area are being bankrolled by EB5 monies.

The US Senate just passed a bill to reform the program weaknesses and "restore the program to its original intent, by ensuring that  much of the capital generated and jobs created occur in rural areas and areas with high unemployment."

Why would I care about that, you ask?

Because a revised EB5 would allow small developers like me to take on riskier projects - like my Van Gogh Studio Lofts project at the Rainier Beach Light Rail station - in communities that really need development. As it stands now, it is impossible to lure foreign investors to a market that cannot demonstrate nor promise the kinds of investment returns that can be achieved in more prosperous parts of Seattle.

Lots of implications in both articles for Seattle real estate investors....

Happy Investing!

Seattle Rental Inspection Program

The Seattle Rental Inspection Program is now underway, and affects all rental properties located within the City of Seattle. Here is some information about it from the City of Seattle website:

What Is It?

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. See the ordinance for more detail.
• 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 must be registered by March 31, 2015.
• All properties with 1 to 4 rental housing units will be registered from 2015 to 2016. We will base specific deadlines for these properties 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. See the ordinance for more detail.

This ordinance does not cover complaint-based enforcement of City housing standards. We will continue our complaint-based process for housing code violations. Our City housing and zoning inspectors will continue to enforce all housing code standards and other applicable codes.

As an investor, I would be watching this closely, as I believe it has several implications for rental properties, owners and investors in the Seattle market. What do you, my readers, think?

 Tomorrow I will post some of my thoughts on the implications of this program for real estate investors in Seattle.

 Happy Investing!

Rents Up 7.9%

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.

Happy Investing!