Do you have rental properties? Are you a landlord? You may want to listen to this.
Over the weekend, Realogics Sotheby’s International Realty (RSIR) broker Austin Schneider had the pleasure of joining Brian Evans of Madrona Financial to discuss investment Real Estate on his talk show, Growing Your Wealth. The Growing Your Wealth Radio Show airs live on Saturdays at 7:00am on KTTH, Saturdays at 10:00am on KRKO and 3:00pm on KVI. Schneider and Evans discussed the state of the real estate market, where rentals are headed for single family homes, what tenants are looking for these days, and a very practical option if you DO own single family rentals in the Puget Sound area, are thinking about selling, but haven’t because you don’t want to pay sales tax and lose the residual income of your rental property.
Following the conversation, Schneider shared his key points:
- Are rents going to continue to rise?
- Likely not, with the “apartment boom” that’s set to hit our community. You’re going to be facing some STIFF competition of new, higher end apartments with the amenities most renters are seeking.
- According to the Seattle Times, the “Seattle area is set to see almost 10,000 new market-rate apartments open in 2017, nearly twice as many as in any other year in the city’s history. With the construction surge set to continue through the rest of the decade, rent increases that have hit Seattle about as hard as any city in the country are forecast to be cut in half during 2017.”
- The Seattle Times also reports that “the price surge in the local rental market may have peaked in the summer and fall of 2016 and is now in the very beginning stages of a slowdown.”
- Who is the demographic coming to Seattle? Do they want single family homes?
- Our population is growing at a RAPID speed. As Curbed Seattle reports, The Seattle area has grown by more than 1,000 people per week since 2010! Thanks to Amazon, Microsoft, Google, and our healthy job market, they’re coming from around the country and getting paid well. And, a majority of them are millennials.
- Being a millennial myself, I can say that I wouldn’t want to rent a 1925 built single family home. Instead, I want the new apartment that they’re building; rooftop terrace, pool table, amenities, and more. The last thing I want is an old home that is not aesthetic, outdated, rundown, and a place I can’t entertain. This is exactly why they’re responding with new apartment developments throughout the Puget Sound.
- The people that DO want single family homes are generally those right out of college, in college, or just getting off the ground and can afford $700 for the room they’re renting with 2-3 other friends. Is this the tenant you want?
- Is it a good time to sell?
- Given the competition for apartments and projected “flattening” of the rising rental costs; if you own a single family home that has appreciated HEAVILY over time, that’s being rented, NOW may be the time.
- Interest rates are low, we have a lack of inventory, and plenty of buyers out there.
- This doesn’t mean that you put a sign up and people will start calling- work with your agent to make sure you get the most exposure, so you can net the most money for your property.
- But I enjoy the rental income and don’t want to pay the sales tax!
- Good news! The Delaware Statuary Trust, gives you the opportunity to utilize a tax free sale, and invest the proceeds into the types of property that are slated to appreciate. You can invest in hospitals, or even the LUXURY apartments that we see blowing up our city!
- Yes, you’ll continue to receive passive income from this investment, likely netting more than with your rental.
- Contact Brian Evans for more information about this.