|my triplex, rear view, after winter 2007 snowstorm|
My current home and real estate investment is a 3-unit building located in the South Park Neighborhood of Seattle, Washington. I occupy the right-hand unit (red door) and basement underneath, and I rent out the other two units to supplement my income.
This Triplex was built in 1981. It houses three identical 2 bed / 1 bath units with a little over 800sf of space each, and a large basement storage area that is currently used as my shop. Once I move out and rent my owner-occupied unit, I will build large storage lockers down there. It has lots of parking off the alley (six spaces, two covered) and a nice yard, and it is located on one of the nicest streets in the neighborhood. It is within walking distance to many neighborhood amenities including the community center, a riverfront park, and multiple shops and restaurants. The commute to downtown Seattle and other surrounding employment centers is easy.
The overall condition of the structure is good, but there is room for improvement. The exterior has typical-of-the-80's T-111 siding that will probably be good for another decade or so. The roof will be good for another 5 years or so. Most of the windows have been uprgraded. The interiors of the units are all quite liveable, but still have some original finishes that are showing their age. Basically, there is room to add value to the structure by improving the units, and then getting a bit more for them in rent.
The South Park Neighborhood of Seattle is one of older neighborhoods of the city. It started out as one of the earliest argricultural centers for Seattle, and eventually grew into a small town. With the creation of the Duwamish Industrial Waterway (by dredging and straightening the Duwamish River), and With World War Two, industrialization and urbanization began to surround South Park. Boeing plants were built just across the river, and other industry began to fill in the fields surrounding the town itself. South Park went through a few decades of low-economic conditions from the 60's through the 90's when everybody wanted to live in the suburbs. South Park was just too close to the city and too close to local industry. However, with the increasing population pressure and dramatic rise in real estate prices in the 2000's, South Park, with its historic homes and walkable neighborhood, and close-in location has been rediscovered, and is now a neighborhood in transition in the (right) direction. It is full of a diverse mix of enthusiastic and involved residents from all walks of life. I was somewhat concerned about buying in the neighborhood based on what I knew about the area, but it has turned out to be a quiet, friendly neighborhood with no more crime problems evident that the more "upscale" neighborhood I moved out of.
Being new to multi-family real estate investing, I don't have the "network" that some of the pros have. So I went about my search in a straighforward way: Watch the market long enough that I had a good idea of what I could afford; then locate an agent to represent me in the search. I did use a real-estate agent referral service called PRESS (Personal Real Estate Support Services) which was run by a fellow who taught a first-time homebuyer class that I took before buying my First House. I was sufficiently impressed with him that I decided to use his service for finding an agent who specializedin small multi-family properties. As it turned out, in the intervening five years since purchasing my First House, the reins of PRESS had been handed over to another fellow whom I was a bit less impressed with (due mainly to his interest in involving me in a an "Assignment" deal that simply presented too much risk of a conflict of interest when he was supposed to be providing me with unbiased advice). However once I declared that I would not participate in an Assignment, I was eventually introduced to an agent whom I am reasonably impressed with. She knew the market for small investment properties and she understood how to evaluate them.
As it turned out, once I got serious and started looking at properties with the intent to make an offer, the process did not take long. I looked at several properties that were at the very limit of my price range (where I would be dependant on rental income to be able to stay in the black). There were several decent properties like this, but there was usually some sort of drawback: Busy street, no storage facilities, no parking, etc. I also looked at a much more affordable triplex in the "Judkins" neighborhood of seattle, another transitional, close-in neighborhood. This one was initially interesting sounding: Good Zoning, Decent area, fixer. But Oh, God. As it turned out, it was occupied by owners who must have inherited the building. They appeared to have no resources whatsoever for maintaining it. As a result the interiors of the units ranged from bare and trashed, to demolished, filled to the ceiling with garbage and stinking. The backyard was under 15 feet of blackberries. Ugh. Shortly after looking at this one, I looked at another triplex, this one in the "Undesireable" South Park Neighborhood. I initially wasn't interested because of the location, but this one was having a rare open house, so I figured what the heck, I'll take a look. Driving up to it, I went down a pretty tree lined street flanked by turn of the century houses, many of which were showing signs of recent work. The triplex had a good looking yard, and the vacant unit was in very liveable condition. Suprise! There was a huge unfinished basement under the vacant unit, and there was tons of parking. And the asking price was less than what I would be able to sell my house for, and less that the sty in Judkins was. The single-family zoning recorded on the title was worrisome, until research at the seattle DPD revealed it had been permitted as a triplex, making it grandfathered legal. I made a full-price offer, and beat out two other bidders. I was able to get a small concession on the price due to the condition of the appliances. I would probably have been able to get more had I tried harder, but bidding wars were still common on any property in the price range I was looking at at the time. The property was mine!
Being new to this whole landlording thing, the first things I did once I decided to trade up from my First House to a small multi-unit, was to buy some books and take some classes in how to find and manage rental properties. Two books I bought were:
After buying the books, I then attended a couple one-day seminars offered by Discover U, a local evening-class program. Like with the books, I took one class that focused on finding and evaluating properties, and another that focused on managing them. These were useful for the more locally relevant information, but unfortunately the presenters were also using the class venue to try and to sell services that they offered outside of the class, though this was fairly minimal.
The final thing I have done is become a member of the Rental Housing Association of Puget Sound. This is a group that has been formed to provide services, advice and advocacy for people who own rental housing units. I haven't had to use any of the services yet, but a wide variety are available, and being on there lists allows me access to a lot of service providers and information I would otherwise not have available. It is worth the relatively small yearly dues.
The research into landlording that I did cost me a whopping 200 dollars or so for all the classes and books. Not a bad investment really, if you are going to do something like this. While I am by no means an expert landlord, I at least know the basics of how to handle tenant issues and management of the property.
I was lucky to inherit two good tenants from the previous owner. I have had no signficant issues with renting to either of them; only some (expected) maintenance issues with their units. I probably spend one or two extra hours per week on average managing and maintaining those rentals. The rest of the time spent maintaining the building would be spent even if it were a single-family dwelling occupied only by me.