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Thinking about renting out your Seattle-area house? Read this first
June 2, 2023 at 6:00 am Updated June 2, 2023 at 6:00 am
Gordon Haggerty is a homeowner and landlord of his home in Seattle’s Eastlake neighborhood. The house is a restored Victorian, over a hundred
years old, and now a five-unit apartment that has a wait list to get in.
The current longest-rented unit has been occupied since 2014. (Ken
Lambert / The Seattle Times)
Gordon Haggerty points to the Eastlake neighborhood on a 1891 map which
hangs outside one of the apartments in his Victorian Eastlake house in
Seattle. (Ken Lambert / The Seattle Times)
1 of 7 | Gordon Haggerty is a homeowner and landlord of his home in
Seattle’s Eastlake neighborhood. The house is a restored Victorian, over
a hundred years old, and now a five-unit apartment that has a wait list
to get in. The current longest-rented unit has been occupied since 2014.
(Ken Lambert / The Seattle Times)
By Jenny Cunningham
Special to The Seattle Times
What goes up must come down. That old saw is true of the Seattle area’s housing market. After years of pandemic-fueled growth, high mortgage
rates and cooling home prices have forced buyers and sellers alike to
take a pause and consider alternatives.
For would-be sellers, this scenario has turned some into accidental
landlords.
“The financial incentive to rent outweighs the risk of putting the
property on the market with the present economic conditions,” says
Bellevue real estate agent Adriano Tori.
In recent weeks, Tori says, he’s had two clients who bought new homes
and rented out their old ones.
Steven Bourassa, the director of the Washington Center for Real Estate
Research at the University of Washington, agrees that renting now makes
sense. “If you don’t need to sell the house, rent it until mortgage
rates go down,” Bourassa says.
Not that the rental market is on fire. It’s kind of lukewarm too. In the Seattle metro area, the median asking rent fell 3.2% year over year in
April, according to Redfin’s Rental Market Tracker. But for homeowners
with equity, renting can still be a moneymaker.
Reality check
It sounds good on paper, but is it a good idea on the ground? No one can
answer that better than some small landlords and the experts advising
them at a May workshop in SeaTac. The workshop was hosted by the Rental
Housing Association of Washington, which represents mom-and-pop
landlords, most of them with fewer than 20 units and often just one single-family rental house.
In a session that’s equal parts legal seminar and group therapy, members brainstormed how to handle tenants with pets. “You can use DNA tracing
to figure out which dog is pooing on the lawn,” one landlord suggested. “I’ve had pets do $10,000 of damage,” another landlord said. His solution, “I will never rent to people with pets again!”
Landlords have seen it all: Tenants who drove a car into their rental
house, plumbers who started a gas leak, a neighborhood fight that
escalated into a shooting.
That shooting happened in a small Seattle apartment house that Gordon
Haggerty lived in and owned in the 1970s. Haggerty sold that building,
but he’s still a landlord and still in love with his 1890s’ house with a mansard roof and fish scale shingles that he bought for $30,000 in 1971.
“We had lots of energy and no money. The housing inspectors were nice
and gave us a correction plan,” Haggerty recalls.
It took him years to restore the house, one of the first homes built in Seattle’s Eastlake neighborhood. Today, inside the house there are five charming apartments.
“It is a labor of love,” Haggerty says. “I enjoy the joy that our
tenants get from living there.”
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Know your tenants
How do you find joyful, trustworthy tenants who won’t make you regret
your decision to become a landlord?
Ann O’Connell, a real estate attorney and co-author of the book “Every Landlord’s Legal Guide,’ recommends a thorough screening for all tenants.
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“My No. 1 rule of thumb is to get applications from every adult who
wants to rent your property and pick up the phone and talk to
references,” says O’Connell, adding it’s also legal to set a high bar
for standards as long as they apply to all applicants.
Prepare your home
Beyond finding the right tenant, you need to protect your property to
reduce landlord headaches. It is important, especially if your home has
never been a rental, to repair anything that needs to be fixed before advertising your property. That broken stair, wonky lock, furnace that’s making death throe noises: Remedy problems before tenants move in.
“You’ve got to treat your property with care,” says Sean Flynn,
executive director of RHAWA. “If you don’t, the people renting won’t treat it with care.”
Something that might take some of the sting out of spending money before you’ve seen a rent check, repairs are tax deductible for rentals
including $5,000 of startup costs in your first year.
Landlord and renter’s insurance
“My top tip is to get a good landlord insurance policy,” says McKinley Storey, who has a detached accessory dwelling unit in his backyard in
West Seattle. “And make sure your tenants get a renter’s insurance policy.”
Landlord insurance protects against liability if a tenant gets injured
on your property and can give rental property owners coverage for
wrongful eviction. Renter’s insurance offers coverage for a tenant’s possessions like furniture and jewelry.
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Consider a property manager
If you can’t stomach midnight phone calls about a leaking dishwasher or
that funny gas smell in the basement, a full-service property manager
might be the solution. They usually charge between 3% and 12% of the
monthly rent. Some property managers operate in a more a la carte
fashion — for example, charging a fee to find a tenant for your house.
A Yelp search will demonstrate that there’s no love lost between many landlords and their managers, so research managers thoroughly. “No one
will manage your property like you will, and no one will be as careful
or as attentive as the owner,” cautions Seattle Windermere real estate
agent Marlow Harris.
Learn Seattle regulations
Seattle has gone above and beyond in introducing laws that ensure fair
access to housing, but for some landlords, navigating these regulations
can be dizzying.
“No city has gone as far as Seattle to regulate rentals,” says
O’Connell. She ticks off laws that require landlords to offer their
rental to the first qualified candidate, require landlords to rent to
family members of tenants even if the relatives don’t meet the owner’s criteria, prohibit landlords from refusing to rent to someone based on
criminal records.
Asked for comment, a spokesperson for the Seattle Department of
Construction and Inspections said the City Council created legislation
to “ensure tenants have fair access to available rental housing.”
The ordinances may be having unintended consequences. According to the
city’s data of registered rentals, between July 2018 and August 2022, landlords who own 20 units or fewer pulled more than 11,000 rental homes
off the market.
Since more than 2,400 of those registered rentals were one-unit
properties, the good news is that if you decide to rent your
single-family home in Seattle, there will be plenty of demand.
Delaney Wysingle, a Black landlord with two single-family rentals in
Beacon Hill, says he’s always been fair with tenants. But he worries
that one problem tenant could ruin him. “The City Council is piling up
stuff to make it more challenging to rent in Seattle.”
Wysingle has two pieces of advice for people thinking about renting
their house in Seattle. “Don’t do it.” But if you do, join RHAWA. “If it
wasn’t for them and I had to hire an attorney every time I had a
question about the laws, I couldn’t afford to rent the places,” Wysingle says. It costs $250 a year to join and includes access to forms like leases.
And speaking of costs, remember that as a homeowner, you’re still on the
hook for mortgage payments, property taxes and upkeep.
“Anytime you work on a house, nothing is cheap, and all of this falls in
the landlord’s lap,” Wysingle says.
Community joy
Despite all the costs and things that can go wrong for landlords, Flynn,
who owns rentals in addition to his role with RHAWA, says offering safe, affordable housing is a vital community service. And most of the time,
he says the tenant-landlord relationship is amicable. Sometimes, you can
even be part of a wedding. “Two of my tenants married each other and
asked me to officiate at the wedding,” says Flynn.
Longtime landlord Haggerty has a similar heartwarming story. When a
tenant couple decided to tie the knot, they had the ceremony in the yard
of his Eastlake house.
“I was delighted to set up a tent and things like that for the wedding,” Haggerty says. “It did a lot for our apartment community. It fostered a
good community vibe.”
Jenny Cunningham
54 comments
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As I pack up my Seattle house and plan to rent it, these comments are
daunting. I get that City rules have made renting far less appealing,
but the idea of selling to developers after years of caring for the
place was just agonizing. Thanks for the tips ST, since I may need them.
As an owner of a single property, my advice is to pay a property
management company to find, vett and install your renters. Yes, you will
have to pay a month's rent in the fee to the company but you will know
they have dotted the i's and crossed the t's. They are pretty ruthless
about doing everything by the book. We have done this for 10 years and
have had zero problem with our renters over the years.
As a small-time landlord with a small 4-unit property in Renton within
walking distance to the Boeing factory, I'd like to thank the Seattle
City Council clowns for their ruinious regulations that have pushed so
many renters my way, thereby increasing demand--and thus driving up
rents--in Renton.
Hey Seattle City Council, could you please completely outlaw evictions
in Seattle? But wait--first, let me buy another Renton property to rent.
It's not that complicated I was a landlord for 17 years.
you do your due diligence and vet and get good tenants.
have the damage/ security deposits in place.
we sold our property paid off another property live happily ever after...
With the new laws it’s more first come, first served. Less vetting allowed.
Did you sell it before the recent law that tenants can move in with only
a small deposit and pay the rest of the deposit over the next three
months? Unless they decide to squat and trash the place instead of
paying rent.
Got out 4 years ago....
Avoided the whole pandemic fiasco...
The only people who benefit from the rental regulations imposed by the
Seattle City Council are huge multinational Real Estate Investment
Trusts, who have the means to buy up all the low income properties and
convert them into luxury apartments and townhomes.
The 45th President of the United States is a well known real estate
investor. So in addition to campaigning for Donald Trump in 2016 Kshama
Sawant has also helped him accumulate more wealth!
Way to go Kshama! What a movement you have!
She's all but gone. Time to move on.
True but the damage she caused, like the damage George W. and Donald J.
caused lives on.
So is Hurricane Katrina, but you can still see the damage in NOLA.
I agree with Mr. Wysingle, if you are contemplating renting your
property in Seattle: Don't. The social engineering scheme that the
activist City Council for the last ten years embarked upon resulted in
11,000 dwellings being pulled out of the market in Seattle! If we
calculate 2.5 occupants per deweling that translated into 27.5K
individuals that have to fight over what is left on the market... at the
same time, the state passes banishment of single family zoning on a red
herring research that has no basis: one million new arrivals within the
next 10 to 20 years? I wonder who is coordinating all these policies,
seems to me they are working against each other most times? Who benefits
from these confusing maelstrom of "new" regulations and laws, the people?
In theory many homeowners in Seattle could become landlords by renting
space, building ADUs and DADUs, or renting out their homes but most will
not because it isn't worth the trouble.
The economic return for building a new ADU or DADU seems doubtful and questionable compared to alternative investments. The renter protections
are well meaning, but increase the risk of things going wrong and
unexpected expenses roo much..
Its a dilemma because many homeowners are living in larger spaces than
they need, but can not find smaller attractive spaces which match their
needs. Meanwhile those who might use the space are left out and clamor
for more housing while some developers build megahomes which waste even
more space..
I'm just waiting for the 2026 World Cup in Seattle. Word on the street
is my Madrona home will go for $1000/night or more as short-term rental.
Yes!
Yes because World Cup futball fans are well known around the world as
well behaved teetotalers, who would never trash their AirBnB.
I would rather rent a bunch of RVs and then park then in SODO and rerent
them for $500 a night.
LOL, the homeless have am RV lock on that area 😉.
Delaney Wysingle, a Black landlord with two single-family rentals in
Beacon Hill
Please explain why it was necessary to mention his race. That wasn't
done for any of the other people quoted in the article.
Our family sold all of our longtime owned apartment buildings in Seattle
last November and have enjoyed lower stress and we actually are better
off financially now than owning and managing the buildings.
The rules and regulations in Seattle drove us out.
Don’t become a small landlord in Seattle-
You will regret it.
Thanks ST and Jenny Cunningham for running an article that helps expose
some of the issues small landlords are seeing in seattle. I know a lot
of ground was covered but the risks and issues with few of these
ordinances were IMO understated. For example
Roommate ordinance: "Family" is defined so broadly that a tenant can
pretty much buy a coffee for ANYBODY and call it a date, then under the ordinance that other party is considered family, and the tenant can move
them into the rental with effectively NO say by the landlord. Sure, the ordinance says they can be screened, but the result of the screening
cannot be used to prevent the move in. There is also no wording
preventing the original tenant from moving out and leaving nobody but unscreened roommates in occupancy.
Deposit Payment Plans: I have been burned by this one personally, albeit
under the recent state equivalent law not in seattle. But its the same
rules effectively and same risk. Deposits are in part a mechanism to
help screen applicants who are able and willing to save some money
successfully which is an indicator of responsibility. The law defeats
the purpose of the deposit, and also means that if problems occur very
early in tenancy there is no deposit to withhold if there are damages
and the tenant leaves. This is what happened to me recently.
First in Time - On paper it seems relatively fair but in practice the
issue especially for mom and pops and inexperienced landlords is the
risk of a situation not called out specifically in screening criteria,
which then legally the landlord can't consider. Not being (legally
allowed) to respond to an applicant with "sorry I really don't think
this is going to work" based on legitimate concern but not written down
ahead of time is a real risk.
Renter's insurance: More importantly (for the landlord AND tenant) than
just covering the tenant's things, it also covers tenants LIABILITY for
damages to the unit, injury to other people, etc. I had a tenant cause
an accidental kitchen fire. Nobody hurt and minimal damage to unit but professional cleanup and repairs still exceeded $5K. They were supposed
to have tenants insurance per their lease but had dropped or never
obtained it. They were stuck with a $5K bill they had to pay personally.
Annual Eviction Moratoria and Tenant right to counsel: Especially for
the school year moratorium, combined with tenants right to counsel and
usual timelines to access the courts, it is basically possible for
tenants with kids in school, or any relationship to the school system at
all to effectively live rent free forever in your unit. You can't bring eviction suit til summer, and they can game the system, and delay action
on the suit until the next school year, then repeat.
Wow. Thank you for your detailed comments. Anyone would be a IDIOT to
become a landlord in Seattle.
A homeowner in Seattle would have to be brain dead to even consider this choice.
Renting in Seattle has a huge risk, and excessive legal burdens, placed
on the landlords. I would never rent a home/condo as a landlord in
Seattle. NEVER.
A lot of investors with enough capital will however. I think your
Council is going to change some and make the regulation problem better
but the main problem still is some people get into the business without
enough capital with fantasies of getting rich quick. That just isn't how
it works. There will always be and should be regulation since landlords
are providing housing which is an essential and basic need for everyone.
11,000 units no longer are rented. How many bedrooms in that 11,000 units?
That is how many were pulled from the market by small time landlords.
How many units have been added at the same time? will those 11k units be
sold to other investors? The market fluctuates all the time. Using that
figure without further context is not a valid indicator of the impact of
the regulation. Too many other variables.
I read it as mostly single family, mom and pop homes, which noise more
than than the average one bedroom apartment unit. I would guess
22-35,000 bedrooms lost.
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