Owning rental properties in Seattle or the surrounding suburbs can be an ideal way to make a passive income, but it requires an influx of time, money, and dedication, especially upfront.
The process of becoming a landlord – and protecting your investment long-term – is more complicated than some people may think, but the challenges are by no means insurmountable. With the right preparation, research, and financial backing, owning rental properties is a worthwhile investment that can provide you a steady stream of supplemental income for years to come.
How to Become a Landlord
For the first time landlord, the main question is, “How do I even get started?” There are numerous responsibilities and regulations that go along with being a landlord. You want to be adequately prepared to handle those properly so you can mitigate the risks of renting properties. This first time landlord checklist will give you an idea of what you need to do and know before renting residential and commercial properties in Seattle.
1. Learn City and State Regulations
Both the City of Seattle and the state of Washington have laws that govern the landlord-tenant partnership and with which you should familiarize yourself. For instance, the city of Seattle in 2017 passed an ordinance that prevents landlords from including criminal records in their screening criteria, according to Westside Seattle. Seattle also has what is known as its “first come, first served” rental law, which was designed to prevent discrimination in the rental industry. The law requires landlords to publicize their criteria for prospective renters and then select the first candidate who correctly files paperwork and meets that criteria. Other anti-discrimination and fair housing laws require property owners to offer payment plans for security and pet deposits. You can research the Department of Housing and Urban Development website and talk to local officials to find more information about federal, state, and local fair housing laws.
Related reading: 8 Reasons Why Burien Is the Best Place to Invest In Washington Real Estate
2. Prepare a Rental Agreement
The written lease or rental agreement you develop will serve as the basis of your relationship with your tenants, so make sure it is thorough and includes crucial business details. You can avoid a variety of disputes by covering all important issues, even those not required by law, in the document and clearly informing your tenants of their rights and responsibilities. Make sure you also include any disclosures that are legally required by the state of Washington, such as information about fire protection, safety procedures, whether fees are refundable, and the people authorized to act on your behalf.
3. Set a Reasonable Rental Rate
It can be difficult for first-time landlords to know what to charge on their new rental properties. You don’t want to set rent too high and risk pricing yourself out of the market, but you also need to bring in enough money to maintain the property, cover administrative costs, and make an income. You should take stock of local market trends to ensure your rate is commensurate with what other landlords are charging for similar properties. Additionally, the state of Washington regulates numerous rent-related issues, including the amount you can charge a tenant who bounces a check or how much you can increase rent. As you’re developing not only your rental rate but also associated procedures for raising and collecting rent, review Washington’s termination for nonpayment of rent, eviction, and other tenant/landlord rules.
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4. Properly Handle Security Deposits
Security deposits tend to be one of the main sources of dispute between landlords and tenants, according to NOLO.com. In Washington, you must return a security deposit within 14 days of the tenant moving out of the property. You can help avoid disputes by sharing a landlord-tenant checklist that incorporates this information as soon as a new tenant moves in. When they move out, send a written security deposit itemization for their record.
5. Maintain Habitable Housing
According to the “implied warranty of habitability,” you are legally required to keep you rental premises in Washington livable. That means fixing a broken heater, removing rot and mold, ensuring the property is structurally sound, and ensuring the property is safe and habitable for your tenants. If you neglect to do these things, your tenant can withhold rent or repair the damage and deduct the cost. As you prepare to become a first-time landlord, establish a repair and maintenance system to implement across your rental properties.
6. Consider Having a Partner
Being a landlord can be stressful. If you don’t comply with state and city laws, you risk being fined, being sued, or facing other penalties. Tenants can call you about issues at their rental property at any time of any day. Having a partner you trust can help alleviate some of the stress as you work together and share responsibilities. You may choose to have a financial partner with whom you make the investment into rental properties. Additionally, you can collaborate with a property management company, which will help you stay abreast of changes to local and statewide regulations and be in a better position to handle the common problems first time landlords face.
Related: How Much Does it Cost to Hire a Property Manager?
Managing New Rental Properties
Powell Property Management offers a suite of services that can help first time landlords in Seattle as they venture into real estate investing. With Powell managing your properties, you can feel confident you are in compliance with state and local regulations and getting the best return on your investment. From tenant acquisition and rental marketing to collecting rents and handling maintenance and repairs, Powell Property Management can positively enhance your experience as a first time landlord.
“What’s it take to be a landlord on Seattle’s west side?” WestsideSeattle.com. Accessed online at https://www.westsideseattle.com/robinson-papers/2018/02/12/whats-it-take-be-landlord-seattles-west-side
“Top 10 Landlord Legal Responsibilities in Washington.” NOLO.com. Accessed online at https://www.nolo.com/legal-encyclopedia/top-10-landlord-legal-responsibilities-washington.html
“Overview of Landlord-Tenant Laws in Washington.” NOLO.com. Accessed online at https://www.nolo.com/legal-encyclopedia/overview-landlord-tenant-laws-washington.html
“7 ways to get into real-estate investing.” The Seattle Times. Accessed online at https://www.seattletimes.com/business/real-estate/7-ways-to-get-into-real-estate-investing/