Dear Sam, Laurie, and Jessica:
The legislature, in my opinion, has taken progressive steps backward on housing. That is while trying to do the right thing for renters, you are sometimes changing the industry to make things worse for renters.
The first law of ecology is: "Everything is connected to everything else." This applies to housing policy as well.
Three decades ago, I purchased three rentals. I paid the down payments on these with an inheritance I received from my grandparents. They generated enough income from rents to pay the mortgage, taxes, and maintenance, and as they appreciated, I earned a return. I was what is known as a "smallholder" -- an owner with six or fewer rental units.
I think I was a compassionate landlord. I tried to maintain my properties. When things broke, I fixed them promptly. I raised rent no more than at the rate of inflation during a tenancy, moving closer to market when renting to a new tenant. I had a couple of Section 8 tenants. I dealt with occasional delinquencies but never had to evict anyone.
The most extreme case was when a pipe burst in one unit in freezing conditions on Christmas Eve. My tenants had family coming for Christmas Day. The tenants were a young couple, both active duty military. We gave them our house for a family Christmas, as there was no working plumbing at theirs, and we were going to Karen's family for Christmas. They stayed for two nights at our house and had their family and friends over here on Christmas Day. I was able to get the burst pipe fixed on the 26th; it took another week to replace the carpet. That was more than the law required, but it seemed like the right thing to do. I know other landlords that have provided motel rooms for tenants when things broke.
I sold my rentals several years ago because regulation had made it too difficult to be a small landlord. Limitations on how I could advertise, how I could evaluate tenants, and other factors made it more hassle than it was worth. I had to arrange a "babysitter" landlord when I traveled. I didn't like the complexity and didn't want to risk violating the rules. I sold out to a much larger landlord who operated many properties and had a professional property manager. The rents went up sharply. The properties do not appear to be as carefully maintained. I hope the tenants are being well-treated.
I made a reasonable profit on the sale. I invested in boring mutual funds and now have a comfortable retirement.
Several of those retirement investments are in Real Estate Investment Trusts (REITs) which own properties or are lenders to properties. These pay healthy dividends and require no direct effort on my part. I get the benefit of diversification of my retirement portfolio into real estate, without having to know the law, deal with tenants, or fix things at inconvenient times.
One of these investments is in Invitation Homes, which owns and rents a significant number of properties in Thurston County. They are one of the "all-cash buyers" who make offers that sellers often prefer over holding out for the highest sale price. They have some positive qualities, including a guarantee that any tenant can buy the home they are in at a defined price at any time during the lease. But they do raise rent with market conditions, and they have full-time eviction professionals to deal with tenants they want to be done with. Smallholders generally are less aggressive. An ad for one of their properties is pasted below. They appear to focus on the segment of the housing market that can be rented at the "allowance for housing" provided by JBLM (about $2,400 for enlisted personnel; about $3,000 for officers with families).
The smallholders I know have looked at the Invitation Homes listings, and have indicated that their rents, for equivalent properties, are about 15% - 25% lower. That difference pays for professional management and shareholder returns. But it costs the tenants (or, perhaps, the federal taxpayers housing military families) more.
The complexity of being a landlord simply got beyond the hassle I was willing to take on as a smallholder. I have friends who are feeling the pinch and are also considering liquidating their rentals.
Keep in mind, as you pass legislation to "protect tenants" that you are also alienating compassionate landlords in the process. And handing the business over to corporate rental owners.
~ Jim Lazar, Olympia
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JulesJames
Spot on! Rental housing regulations intent on pushing social cause political agendas do so to the benefit of politicians and corporations, and the detriment of tenants and owner-operator landlords. Its that 15% extra rent for management profit to start. But these regulations prevent landlords from taking a chance on a prospective tenant with no credit. They squeeze from the marketplace the landlords interested in capital appreciation through tenant stability more than the loan value calculated from rent rolls (the CAP rate) -- where high rent outweighs the cost of high turnover. They build entry barriers to a profession common to immigrants. The unintended consequences of these regulations hurt the tenants who seek a stable housing foundation from which to flourish in life -- which is pretty much the entire tenant marketplace.
Thursday, February 3, 2022 Report this
DHanig
I am in a similar position to Mr. Lazar - a small landlord who maintains his properties and keeps rental rates significantly below the market. However, like many small housing providers, we are increasingly considering selling the properties in light of the punitive measures passed by the legislature and local jurisdictions. While the intention of these measures may be to stabilize rental housing, the net result will be a steady erosion of rental housing as they are converted to owner-occupied dwellings. Instead, efforts to liberalize zoning and construction regulations, addressing NIMBY concerns and other efforts to increase housing stock would be far more effective ways to address this dire need.
Friday, February 4, 2022 Report this
JournalAndy63
I am a longtime renter, more than two decades. And for smallholder landlords, I do think that many of the new policies are regressive. My issue is with the large landlords. On July 1st last year, my rent was raised 26% effective on September 1st when the rent moratorium lifted. There were no improvements made, no promise to do anything but maintain the status quo. The owner was selling and a new management company took over hoping to get the new contract from the new owner. The company, Prospector, is from Seattle and they were simply slum lords. The new owner is renovating apartments as people move out, due to the rent increase. However, the rent for the renovated apartments are more than $1,000 more (not including utilities) than my rent was prior to the increase last year. I kid you not! These duplexes are more than 40 years old with NO amenities whatsoever. I live with my daughter, who is disabled and we are both on fixed incomes. I'm a Navy Veteran, responsible, reliable and great references! I wish I knew a compassionate landlord that cared!
Sunday, February 27, 2022 Report this