On the show today we have an… Update on Rentals & Regulations with Enrique Jevons!
Listen on: Apple Podcasts | Stitcher | Spotify
Show Links:
– Enrique’s Contact Info enrique@jevonsproperties.com
– The last great podcast that we did with Enrique was SIC046
– JevonsProperties.com
– The Big Badass Real Estate Expo is still on the books!
Show notes for Update on Rentals & Regulations with Enrique Jevons!
The Vantastic Life is…
– is in Enumclaw WA!
Welcome Enrique back to The Nuts & Bolts of Real Estate podcast! We haven’t had you on since before Mind.
Julie
Give us an update on you and your portfolio.
Enrique
Yeah, at the moment I’m in King, Yakama, and Pierce counties, but am open to more. I just need to have all the pieces come together.
Julie
Great! So what’s the update.
Enrique
I remember when I was at Sanford graduate housing making sure the elevators were still running from Y2K. And midnight came and we went on with our lives.
The same thing is happening with the Corona virus, there was this big fear, and everyone was asking what’s going to happen April 1st. The FED passed a bill that said any property secured with an FHA mortgage would have a non eviction law for six months.
There was even an article saying that 30% of all of the tenants didn’t pay the rent in the US. But most tenants did end of paying rent on time.
There are pockets of the US where there are a lot of folks unemployed that have a greater number of people that haven’t paid.
Now we’re on the 2nd month, and we did notice a little higher amount of people that didn’t pay, but really much to do about nothing.
So are are in a recession or depression… it really depends on your situation.
For the most part this all worked out pretty good.
The state of WA government said no evictions until June 4th, and no late fees or rent increases until that date.
It can be super frustrating because you want to sell, or increase the rent…
Julie
Are people letting renters go month to month?
Enrique
For WA, you can do month to month. But the city of Seattle has a law that says for month to month you must do an eviction with cause. You can’t simply service of notice to vacate.
The city of Seattle has a list of 18 just causes.
In the city of Seattle you want to have a lease with an end date. Do a 3 month lease with a set rent.
Julie
How are you doing the renewals?
Enrique
You don’t have to do them within a specific time, as long as both parties are signing. But you do want to make sure you’re getting a signature in advance.
If there’s going to be a les than 10% rent increase, 30 days is fine. But is more than 10% you need at least 60 days.
BUT right now (in Seattle) you can’t increase your rent at all.
Julie
Are the just causes hard to enforce?
Enrique
You do have to have some good documentation showing what your are saying they are doing. You need to also make sure you’re enforcing you leases the same across the board equally.
Julie
For the record, this is not meant to be an us vs. me conversation. All of our friends are trying to work with the tenants.
Are there any landlords…. well let’s talk more about the BS things that are happening.
Enrique
I highly recommend that if you have a rental… join your landlord association that’s specific to where you live. If there are multiple, narrow it down to your specific area as much as you can.
This way you will share with others in your same situation, but you will also get all of the forms. Which will be better than the generic forms you might get elsewhere.
Also, there are certain areas that have vastly different ordinances.
The price is very minimal.
Gone are the days that you can figure that you’re a nice person and won’t do anything wrong so you’ll never get sued. That used to be the case, but now days there are so many non intuitive laws out there… that without having a property manager (which I highly recommend) you have to be cautious about these things.
At lot of the first time fines are $5000! And that’s a hard hit for a lot of people.
Julie
Let’s get under the surface here. Like the rules on screening, or first come first serve. Or having to register your rentals with the city.
Enrique
Some of the bigger cities have a rental registration ordnance. Where you have to register your rentals.
If you don’t… If you go to evict, you’ll get nailed at that point. There can be big fines involved.
If you get a disgruntled tenant that calls the city, that way they could find out.
Or if you go to get permits… the city of Tacoma will not issue a building permit if you aren’t registered. Or in Tacoma, you’re going to do a big rehab of the property, they won’t issue permits unless you’re giving 120 days notice to vacate, and relocation assistance.
It’s only 20 days statewide, but each city can change that.
Also, the city of Tacoma requires 60 days for a rental increase.
Tacoma is turning into Seattle.
Julie
Are you seeing that some of the landlords are getting tired of all of this tightening of the screws?
You’ve been at this for some time.
Enrique
Yeah, it’s getting much more difficult. It’s not quite the passive income that it used to be.
Julie
You mean the passive part is gone.
Enrique
Yeah. It still can be a great income source.
As with anything, you can hire it out. Just like a housekeeper, or gardener.
Julie
Sometimes I get the feeling that people are tired of getting another rule.
Enrique
Exactly.
Julie
The thing about the first come first serve and spread out the deposits. What’s that all about?
Enrique
It’s still a money making activity, but there are more rules that you have to be aware of.
Julie
Where can people find the rules?
Enrique
There is no single place to find all of the rules.
There are the RCW’s, but there’s nowhere that shows what changed. And changes don’t just happened on Jan 1st. So, you have federal and state laws, county and city.
That’s the reason you should join your local landlords rental association because they will have things compiled and will come out with announcements around what’s been passed, and what’s coming up. You can also talk about voting on thing that are coming up.
Julie
That makes me sweat!
Enrique
Yeah, go to your local association because they’ll have an attorney that will be looking at these.
I’ve been interviewed many times by reporters, and the one or two sentences they will use are the things to scare people.
Julie
Have you heard that property owners will be keeping with it? I’ve been getting landlord calls.
Enrique
I have been seeing that. I do know AirBnb’s are getting very nervous. If you have an AirBnb I would consider selling it.
Also the student housing. There are entire towns that are driven by the students. And all the students are gone. It doesn’t matter how low you drop the rents.
Are you UW you can drop your rent and get some tenants, but places like Ellensburg there are people that just aren’t going to make it.
Julie
Yeah, I didn’t think about that.
What’s going on with you?
Enrique
Essentially all I’ve ever done is the BRRRR strategy for the last 15 years.
I always tell people to have a plan so you’re never reacting.
So, when the market is going up, my plan is to refinance, raise rent, fix places up, and keep refinancing. I do 5 in 1 ARMs personally.
When property values start going down… I start looking to buy. So I’m conserving cash and looking to buy. For the last several years I’ve been doing private money loans. But right now I’m not doing loans, I’m brining it in as cash, so I’m ready to buy.
My advice to others is to make sure you’re as liquid as possible. Make sure you’re credit is in line.
Julie
What about your 5 in 1 ARMs, are any of those coming up?
Enrique
I don’t have any coming up. I don’t wait until the last min to refinance, so I’ve taken care of that. I make sure that my credit is good. Not all of my money is in real estate, I also have money in the stock market that I can sell quickly.
As great as real estate is, I don’t think anyone should put all their money in real estate.
Julie
What will you be buying, and when do you think it’s right?
Don’t catch a falling knife.
Enrique
It’s hard to time the market. I think this is going to be a faster bounce than what we saw in 2008. Things bottomed out in 2010. I bought things all the way through 2007, 2008, 2010. As long as it’s a good buy, I wouldn’t worry about if it’s the Best Buy ever.
The longer you can hold something, the more likely you’ll be ok.
Julie
What’s your buying criteria?
Enrique
While I do have some specific numbers, a bit of it comes to location, age of the property, and what I believe will be the rate of return. There’s so much that goes into that… school district, employment in the area. I’m looking for more stability.
Julie
Are there construction styles that you look for or not?
Enrique
I’m looking at what kind of value can I add, and what kind of competitive advantage can I use.
One advantage I have is that I can take down properties with cash only.
But there are also times that a seller doesn’t want that, and I’ll tell them about creative financing options. Like seller financing.
Julie
Are you having to put any money down on seller financing?
Enrique
Most has been with no money down. But most of them have been with a level of trust, so I’ve known the people for a few years.
Julie
What are some tips on someone that turns out to be a bad tenant. What about background checks.
Enrique
The percentage of people not paying rent is very very low.
But… anytime that I get someone that doesn’t pay rent on time… I look at their rental application to see if we can see any red flags.
One thing I’ve found is that people have had lower Fico scores.
A lot of times I hear stories about people not doing the background checks or letting things slide because they liked the people.
Former landlord checks aren’t always accurate. And the same goes to employment. They might change jobs.
Julie
As far as someone that’s at more high risk of losing a job, is there a way to discuss that?
Enrique
No, that’s where you might get in trouble.
So, if you decide to give a military discount, it’s actually against the law. You can’t discriminate against source of income. Even first responders.
You need to be careful with that stuff.
Julie
They can check Fico scores…
Enrique
Criminal history, registered sex offenders can be checked.
Julie
In the city of Seattle do you still have to take the first applicant?
Enrique
Yes, you must accept the first qualified applicant. Which in most places you are able to take the most qualified applicant.
Julie
Have you had any issues with Seattle?
Enrique
I don’t want to discourage people from buying in Seattle, you just have to be aware of the rules.
For example, you can’t do a criminal background check in the city of Seattle. This is where I think the FICO score is valuable. Criminals don’t usually have high credit scores.
Julie
What are you thinking for the rest of the year?
Enrique
We have some interesting things about trying to pre market rentals when someone is leaving. We can usually enter with a 24 hour notice to show the property. But right now we can’t fine them if they deny the entry. So we are just saying to not show the property until the old tenant moves out.
Get the place cleaned up and fixed up, and then show/rent it.
Julie
I have a very awesome thing to offer you if you need a bunch of work done and want it paid at closing. Call me if you want to hear about that.
So, we don’t really have any bad news for you.
Enrique
Know the rules and be patient.
Julie
And check in with your local property manager. You are a modern, systems oriented property manager.
How can people get in touch with you?
Enrique
Enrique@jevonsproperties.com is my email, or do a google search for Enrique Jevons, and definitely shoot me an email.
I‘M also actually separating from Mind, and will be doing a bunch of guarantees to elevated all of the fears.
Julie
Wow, we saved the best to the last.
Join us on Thursday’s at 11:30am by going to meetup.com/seattleinvestorsclub, we’d love to have you!
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