Gem?

Dave0 · July 2008

http://www.redfin.com/WA/Seattle/5112-L ... me/2078412

At first glance this looks like a great deal. It's listed at $579,000, so I'm guessing it would cost around $3,900/month or so to hold onto (including mortgage, maintenance, insurance, etc.) but with $4,328/month coming in from rents it seems like that should cover it.

I'd like to hear what the doomers and gloomers think about this listing. Someone should counteract my optimistic mood about it.

Alan · July 2008

I would guess that a rental with six unrelated tenants on individual leases would result in higher maintenance costs than normal.

On the plus side, you might be able to reduce your variance in tenant occupancy. The place will never be completely empty and you will always be bringing in money.

If it takes you two months on average to find a tenant, then you will have an average of five tenants at a time. That comes to $3600/month. I don't know how difficult it would be to fill the 6th space for a house with 5 people already in it.

rose-colored-coolaid · July 2008

Agree with Alan. And contrary to your request I wouldn't be doom and gloom about this. The estimate of about $720 a month per unit is probably about realistic in Seattle. There is probably some short-term risk of rents declining in King County. So you might have short term exposure in that regard. Especially if the recession worsens before it gets better.

It could be that this is a rare example of prices meeting rents. But it's a good sign that things are moving in the right direction.

Dave0 · July 2008

Thanks Guys. The fact that I can't get someone on this forum to scream "DON'T BUY!" seems like a good sign to me. I might have to go look at this listing in person soon.

uwp · July 2008

Strange house. I would want to see it just to see the layout of a 6/6 in 2100 square feet. How many entrances, common space, etc.

Report back if you go Dave.

Dave0 · July 2008

It's a bit small, but the last picture they have posted is a floorplan of the place. It looks like there is one entrance that leads to a common hallway. I can't tell if there is a laundry room or anything in there.

WestSideBilly · July 2008

IMO $720/mo for a ~350 sq ft studio w/ a shared kitchen is pretty high.

The current owners would be grossing about $600/month with 5 occupants and over $1300/month with 6 based on what they paid two years ago (100% amortized). Not sure why you would walk away from that unless you were desperate for capital. Given that you're basically renting out dorm rooms, I'd imagine the repair/maintenance to be a bit higher than average.

Definitely worth looking into...

Gem?

Comments