Rent or Own in Seattle

[Ira500]

Originally Posted by Ruth4Truth

Funny, Rabbit. My renters always paid my mortgage, taxes and maintenance and repair costs. What's the point of having renters, otherwise?

I agree with you on this, Ruth, but a lot of people don't. They believe that even if the rental income doesn't cover the mortgage, taxes, and insurance, once they sell the place, they'll more than make up for all the losses they took. They're speculating on appreciation. Seems risky to me. It also depends on the particular market. In Seattle, currently, it's hard to buy a single family house, rent it out, and have the rental income cover all the costs. People are doing it. But if I were going to own rental property again, I'd never buy a house to rent out unless I made profit every month. Call me old fashioned.

[StealthRabbit]

Originally Posted by Ira500

I agree with you on this, Ruth, but a lot of people don't. They believe that even if the rental income doesn't cover the mortgage, taxes, and insurance, once they sell the place, they'll more than make up for all the losses they took. They're speculating on appreciation. Seems risky to me. It also depends on the particular market. In Seattle, currently, it's hard to buy a single family house, rent it out, and have the rental income cover all the costs. People are doing it. But if I were going to own rental property again, I'd never buy a house to rent out unless I made profit every month. Call me old fashioned.

It is nice to always start out that way. (renters covering all costs). Over 25 yrs When the county jabs you with 1000% increases in taxes you can't pass that along, or you will be 'over-market-rates'

Don't think for a moment that not passing along property tax increases does not make property profitable (that is pretty elementary thinking, considering ALL costs / expenses.)

I only make 7-9% on Cap rates for my PNW properties (pathetic), but I get on average 14% equity gain in PNW.

My cap rates are FAR better in other income tax free states (I keep my income properties ONLY in income tax exempt states).

I rarely pass on expenses to tenants, even utility increases / (water). Renters are usually TOO strapped to cough up more dough, Mine get 'rental rebates' if they are 100 % on time and NEVER call me for issues. They stay on average 7+ yrs (of course).

I'm called the 'benevolent landlord', especially by my commercial tenants whom I give lots of latitude and free financial counseling / referrals. I'm still eat'n hearty (and driving a 39 yr old 50 mpg car that cost me $35 bucks.)

I still say RENT in Seattle and put your RE dollars to better work for you. Your case may be different. Run the numbers.

[CrazyDonkey]

Ultimately, supply and demand determines how much can be charged for rent. That doesn't mean that most won't charge up to whatever they can, but failing to find a renter is one thing that can moderate that (not really a problem in the current market, however). On the other hand, some charge below market rents because it limits turnover.

Six years ago, I rented a two-bedroom apartment on the west side of Queen Anne for $850/month. Then Whole Foods moved in and they sold the building...

[perigee]

Rabbit, income generated from a rental is fungible. As long as you are not losing money, then yes, your tenants are paying for the property tax.

The OP still asked a naive question. They were worried about paying property taxes and in the greater Seattle area, renters are paying for increased property taxes, along with increased appreciation of the property.

To corrupt a saying, it's good to be the landlord.

[StealthRabbit]

Originally Posted by perigee

Rabbit, income generated from a rental is fungible. As long as you are not losing money, then yes, your tenants are paying for the property tax. ...
To corrupt a saying, it's good to be the landlord.

Not really... They might be 'paying the taxes', but who is then paying the mortgage? The taxes are easier to defer (3 yrs delinquent before the county can start seizing the property). Fungible can be allocated MANY ways! The TAX man just might not be one of those ways. Just imagine how much more INCOME could be fungible! I might even be eating better than my tenants (very unlikely), or have a TV ... They seem to even afford DISH!. Maybe I should specify in my rental contract that if they drive a newer car than I (37 yr old car), they should at least pay the taxes!

Rent or Own? Depends... how you like to allocate your capital. My kid in Seattle would NEVER consider OWNING a primary residence there (He is a capital manager). His money has much higher use / value working elsewhere (than sitting @ (in a ) home).

Your situation might be different. You may have gobs of capital, so no big deal putting $500k on hold while you enjoy weekends caring for your 'asset' (?)