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Duncan Howat on Winning
“I got out in front… and then it was over.”
– Duncan Howat, on taking the overall win in the 2004 Lake Samish Salmon Roe.
Will You Go To Battle?
A quick message to anyone out there thinking of becoming a Realtor, and any buyers shopping for the screaming good deals: You better LOVE going to battle.
I mean, you better think of going to battle to get what you or your clients want and/or need the way most people think of plopping down in front of the television after a long day’s work. It’s just what you do, day after day, like eating and sleeping.
With 2010 not even one month old yet, my buyer clients and I have gone into enough battles this year to wear out Julius Caesar. And we’ve come out on top slightly more than half the time.
But AGHGHGRRRRR those battles that we don’t win BURN like a freeking hot iron! (Can you tell I’ve got a couple competitive bones in my body? Just a couple. AGHGHRRR!!!)
I had such a battle just yesterday. We got beat despite just a WICKED strong offer package and presentation. This was the real estate equivalent of showing up at the Summer Olympics capable of running a 3 minute 40 second mile, and someone comes from out of nowhere and can run a 3:30. Impossible, but there they are. What the heck are you gonna do?
And yet here’s the deal: Today, buyer and I still standing, battle-axes freshly sharpened, shields polished, the tigers are circling the arena and they’re out for blood. And I’ve got only one thought on my mind as we step into the mix:
“Heaven help those poor tigers today!!!”
AGHGHGRRRRR!!!!!!!
Comments: Please leave a comment.A Colossal Failure of Common Sense
I finished a great book recently, and if you’ve come to enjoy this blog, I bet you’ll enjoy the book. It’s titled “A Colossal Failure of Commen Sense: The Inside Story of the Collapse of Lehman Brothers” and it was written by Larry McDonald.
Lehman Brothers was a giant, world-renowned, world-class Wall Street investment bank with nearly 150 years of history, that was, according to McDonald’s telling, driven to bankruptcy in 2008 by a CEO and president both of whom are described as almost inhumanly asinine and greedy.
When men in positions of power with those egregious qualities were faced with the never-before-seen profit margins during the real estate mortgage “free-for-all” it was like the fat kid in Willy Wonka and the Chocolate Factory. Lehman — and a lot of other banks and investment houses — went on a global spending binge the likes of which the world had never seen.
All the while, the rating agencies of Standard and Poor’s, Fitch, and Moody’s were giving the now-known-to-have-been ridiculously risky, bundled sub-prime mortgages full AAA ratings, as if they were as safe as government bonds, as if the gross amount of leverage in the system was somehow sustainable infinitely into the future.
McDonald, a bond trader, was inside the walls of Lehman watching the unraveling first hand. He describes time and again as some of the brightest, most respected minds in all of Wall Street attempt in vain to warn upper management of the over-leveraging… that it MUST and WILL come collapsing down in an apocalyptic market crash.
But to no avail. Inside their ivory tower on the 31st floor, the boss and his right hand man can take only one course of action through it all: Spend! Spend! Spend!!!
I cringed today when I read in the Bellingham Herald that Whistler Blackcomb ski resort is in foreclosure, and may in fact change hands in the very middle of the upcoming Olympic Games. And that, yes, Lehman was involved as a lender for the in-default owner, Intrawest LLC.
Ironic timing. Check out the book, and let me know your thoughts.
Comments: Please leave a comment.Is Having a Roommate a Tax Shelter?
Home-owners Bill and Jane have an extra bedroom in their single family residence. They decide to rent it to Sammy the student for $300 per month. It’s a good deal for Sammy, because the rent he pays covers his share of the utilities, too. AND… he shares the kitchen, bathroom, and living room.
When tax time rolls around, Bill says to Jane, “This has been great. Not only have we helped off-set our mortgage payments, but we can save even more on taxes by depreciating Sammy’s bedroom and a portion of the common areas, as well as write off his share of the utilities!”
Jane looks puzzled. “Bill,” she says, “have you been sipping that ol’ home brew again?” But as she will learn when they visit their tax advisor together, Bill is right.
If you’re renting out a room in your primary residence, you’re a landlord, and you’re therefore entitled to some of the tax-sheltering benefits of real estate. Like any investment property, it takes careful record keeping and some basic calculations to figure out what you’re entitled to, but it’s not rocket science. Let’s review the basics here:
1) Whether you have a roommate or not, you’re allowed to write off the mortgage interest and property tax on your home as an itemized deduction.
2) Residential investment real estate is depreciated (now known as “cost recovery”) over 27.5 years. Remember, only the improvement (the house itself, not the land) qualifies for depreciation, so use your tax assessment, appraisal from when you purchased the house, or home owner’s insurance policy to determine the ratio of improvement value to land value. In this case, let’s say Bill and Jane’s house accounts for 75% of the total value of $200,000… or $150,000. $150,000 divided by 27.5 (years) = $5455.00 per year.
3) Since only a portion of the house is rented, though, Bill and Jane can only depreciate that portion of the $5455.00. The way they figure it is to consider the size of Sammy’s rented room, plus 1/3 (since he’s one of three people living in the home) of the common areas — the kitchen, bathroom and living room. The house is 1000 square feet total. Sammy’s room is 150 square feet, or 15%, and the common areas are another 750 square feet. One third of 750 is 250, or another 25%. So 15% + 25% = 40%. $5455 x 40% = $2182.00.
4) For the purposes of this exercise, we’ll assume Sammy has lived at the house all year, and that it’s his 2nd year there (so we don’t have to bother with mid-month convention (??? — call me, I’ll explain it). So Bill and Jane are going to subtract that full $2182.00 off their annual income, and since they’re in the 25% tax bracket, that means an extra $545.50 in their pocket that didn’t have to go to Uncle Sam.
5) Yes, they also get to write off the 40% portion of their utilities that Sammy’s using, since utilities are a “rental expense.” AND… they may end up depreciating an appropriate portion of certain appliances and furnishings over a 5 year period, rather than 27.5 years.
TALK TO YOUR TAX ADVISOR! This is JUST an introduction to this concept, and there are all sorts of issues to be discussed with YOUR TAX ADVISOR. The rent you’re collecting is taxable income. There are different methods and schedules of depreciation. Then there is cost recovery “recapture” when you sell. Again, TALK TO YOUR TAX ADVISOR to get a full understanding of this concept.
Comments: Please leave a comment.Bellingham Landlord Licensing: The Council Has Met
On Tuesday the Bellingham City Council met behind closed doors to discuss proposed landlord licensing and rental property inspections. The proposal is to introduce a new mandatory license and inspections on tenant-occupied properties in Bellingham — to potentially punish the landlord of a property – as a measure to “have leverage” to crack down on properties considered a nuisance or with safety issues.
Yes, the 95+% of landlords and tenants doing a fine job of keeping their properties clean, quiet and maintained would have to pay the fees and bear the inspections too.
Yes, there are already ordinances and laws on the books to deal with problem properties. Oh my goodness, HERE’s one now! It’s uncannily written to address this EXACT ISSUE!!!
Yes, already-existing government employees are empowered to enforce these ordinances and one would think they’d have quite an important say in this issue.
But No, the Council did not let Police Chief Todd Ramsey speak at the meeting, despite his in-person presence specifically to… speak at the meeting.
Yes, there are owner-occupied properties that are a nuisance and that have safety issues too, but interestingly this proposed legislation doesn’t address those.
Yes, nuisance properties are easy to identify: They have accumulated outdoor trash, excess vehicles, loud music and parties. (Hmm… I wonder if these specific properties could be targeted rather than carpeting the entire rental housing landscape of Bellingham with mandatory licensing? Just a thought.)
Yes, other non-compliance issues in Whatcom County (and the world over) are dealt with by stiffening the enforcement and penalties of actual violators of existing ordinances and laws. In fact, right HERE is an article about the COUNTY Council meeting TODAY to discuss this very approach to zoning non-compliance. Imagine that.)
Yes, tenants should be very, very concerned about this proposal, because who do you think will ultimately bear the cost?
Yes, I find it ridiculous that some of the Council-members’ primary argument is “Other businesses have to be licensed, why shouldn’t landlords?” We’re not talking about simple business licenses here. If the Council wants to develop an entire program for landlord proficiency training, continuing education requirements, mandatory core curriculum and bi-annual testing — the way, say, home inspectors are licensed — then that’s a completely separate issue.
If Council members seriously propose to compare this to a simple business license “just like other businesses have,” why don’t they send the landlords HERE, collect the one-time fee of $40 and call it a day?
According to a story in the Bellingham Herald, when the meeting was over the Council had voted to send their legislative analyst back for more research on creating a license without the property inspection process. The analyst was apparently given no timeline or deadline for delivery of this new research.
To read what the Bellingham Herald reported about the meeting, click HERE.
To read what Whatcom County Assoc. of Realtors Political Action Committee spokesman Perry Eskridge wrote about the meeting, click HERE.
What are your thoughts? Are you a Bellingham landlord or tenant? Do you agree with expanding licensing and legislation into your turf? Can you envision a viable alternative? Is it really THAT hard to target a problem property? Leave your comments below. Stand up and be counted!
Comments: Please leave a comment.Special Whatcom Middle School Alert
The following letter was sent to me by a Whatcom Middle School parent, regarding the near-future plan for either keeping displaced Whatcom students and teachers separated, or possibly finding a solution to bring them back together. Please read and TAKE ACTION!
On Thursday, December 10, at 7:30pm, an important school board meeting will be held. Decisions are being made right now about Whatcom Middle School students’ interim placement for the remainder of this year, and very soon about next year and beyond.
We are a group of concerned Whatcom parents urging parents to:
1. Call school board members directly, now, before Thursday to express your opinion.
2. Attend Thursday’s meeting, if possible.
The board will be meeting with Sherrie Brown, acting superintendant, on Monday, Tuesday and Wednesday, prior to the board meeting on Thursday, which is why they need to hear our opinions during this time.
Our belief is Whatcom kids and staff must be kept together. We want the school district to look at solutions that keep our children and teachers unified in one place. We do not want them to split up the kids and teachers among various schools, a distinct possibility. The rebuild is suggested to take 2-3 years at a minimum, so these decisions also affect elementary school parents. See our petition text at the end of this message for our full view.
Get Involved: Parent Meeting
We will be holding a meeting for interested parents, especially Whatcom and its elementary feeder schools, on Tuesday, December 8, 7:30pm at the Fountain Community Church at 2100 Broadway (and Halleck). Our goal is to organize a speaker(s) for the school board meeting.
Take Action: Phone calls & emails
We need as many people as possible to call board members and to use the “Listening Post” link in the next few days. The board notes the numbers of calls and emails they receive from parents and community members. WE MUST MAKE OUR VOICES HEARD NOW! Please don’t delay.
School board contacts: The new board members have not yet been sworn in, so this is the current list.
- Kenneth Gass 671-1993
- Kelly Bashaw 220-4006
- Melody Rhode 738-6017
- Stephen Schoenfeld 756-0498
- Ann Whitmyer 671-7404
Listening Post district link: https://www.piersystem.com/go/survey/420/968/.
You can also send a letter to 1306 Dupont Street Bellingham, WA 98225.
Attend The Meeting!
We would also like to have as many parent representatives as possible in attendance from all the “feeder” elementary schools (Columbia, Parkview, Roosevelt, Sunnyland, and Silver Beach). Please forward this on to parents in these neighborhoods.
It’s easy: Copy from our Petition Statement!
Feel free to draw from the petition statement (Located HERE) when addressing board members. We need to present a united front.
Questions? Contact Joanna Nesbit at joannanesbit ‘at’ comcast ‘dot’ net or 671-3251, or Todd Donovan at 647-8520 or donovan66 ‘at’ msn ‘dot’ com.
Comments: Please leave a comment.Update: Bellingham Landlord Licensing
The Bellingham City Council meets on Monday, December 7th, to discuss the proposal of licensing rental-unit owners. I blogged about it earlier in the week HERE after learning about it from the Rental Housing Association of Puget Sound.
Yesterday, the Whatcom County Assoc. of Realtors Political Action Center, led by Perry Eskridge, sent an e-mail to Realtors with more facts and a list of hard questions for the Council as they consider this proposal.
The following are excerpted from Perry’s e-mail to the Realtors:
There is a single document that will form the basis for the Council’s discussions. It is a 2008 whitepaper drafted by the Council’s Legislative Analyst, Mark Gardner. You will find the paper here (27 pages).
When you read through the paper, there are several items of note. First, I am surprised that there seems to be a lack of discussion concerning the problems in Bellingham. I am aware that there are the college party houses, but there are no statistics concerning the breadth of the problem. Are there 10 houses or 100 houses. The costs, and hence the need, for a solution begins to dwindle substantially when the number of problems is small.
Second, there is a large portion of the report dedicated to Western Washington University populations. The report provides that 30% of students live on the campus, meaning that 70% live elsewhere. However, there is no discussion of whether these are primarily non-traditional students living with families or other situations where dorms are not appropriate, there is no discussion of the impact rising tuition will have on this situation, etc. In short, the analysis is not very complete if WWU “overcrowding” is really the issue.
Next, I was struck by the lack of concern for similar issues found in owner-occupied housing in single family neighborhoods. If any of you have visited the REALTOR® office on Northwest Avenue, you know something of what I mean. Our neighbor to the South has such clutter that your staff are constantly finding vermin in our parking lot (5 dead rats last week alone), there are four vehicles parked on the lawn, two dogs, a couple cats, and so much “junk” around the yard that it defies explanation. This whole regulatory scheme would do nothing to solve the problem that is in our backyard, literally.
There is also the issue of other laws, already enacted, that allow tenants or others to monitor the quality of rental housing. There is no real discussion of the Washington Landlord-Tenant Act, the City of Bellingham nuisance ordinances, the building codes, etc. The Council had urged staff to review these existing regulatory issues but the proposal contains no such discussion. Furthermore, there is no consideration that the City stated it would have a meeting with interested individuals prior to taking any action, however, that has not happened either.
Finally, there are the fees. The paper, which is only a proposal, suggests that the City would add almost $456,000 if the city charged $35 for a single-family residence rental and $30/unit for all other rental housing. What is missing is any discussion about the expenses for the 3-4 inspectors that would be necessary to conduct the inspections that would be mandated or for the costs of prosecution of violations that are discovered during the inspection process. Knowing what the expenses are for 3-4 city employees, that $456,000 is not going to go very far if, indeed, it covers the expenses of such a program at all. What is really curious is that this large, new regulatory program comes after the budget discussion and public hearing.
The Committee of the Whole is scheduled to meet at 2:20p.m. in the Bellingham City Council chambers, 2nd floor of Bellingham City Hall, 210 Lottie Street, Bellingham. Perry also explained:
…that this is a committee meeting, so there is no formal requirement that the Council take public testimony. It is not unusual, however, that if a large number of the public arrives for a council meeting, that the chair will let some people, usually representatives of larger groups, speak. In any event, it is a good opportunity to be present and see where the council’s intention is focused.
Comments: Please leave a comment.Will Bellingham Landlords Need a License?
This e-mail, pasted below, hit my inbox early this morning, sent by one of my colleagues at RE/MAX. If you own rental property in Bellingham, you’re not going to want to miss this meeting on December 7th. Here’s the e-mail:
“Over the past several months RHA (Rental Housing Association of Puget Sound) has been in contact with Bellingham City Council, as well as other groups, in discussing options available to the City in lieu of mandatory inspections to help the City in cleaning up some chronic nuisance rental properties in the city of Bellingham.
On Monday, December 7th @ 7:00 pm, the Bellingham Council is set to hear a 15 minute presentation from city staff regarding options to clean up rental housing. Among the tools highlighted are mandatory inspections of all rental housing.
The draft reviews licensing programs in other cities with universities that are currently licensing rental property owners. The draft mentions previous rental problems and efforts by the city to institute a licensing ordinance. Comparable cities used as a reference have institued licensing fees, which may be as much as $1500 for an initial license with annual inspections of rental units at $150 per unit. Penalties for failure to license could be as much as $1000-$5000 and up to 90 days in jail. Inspection for repairs may require 30 days compliance (inspections based on the International Maintenance Code i.e. egress, regress, venting, railings, habitable space) with added city verbiage requirement that a description of permitted bedrooms be posted in each rental unit. Nuisance calls (i.e. loud parties) up to 3 may result in revoking license and condemning the structure as a ren tal property.
RHA is encouraging all rental property owners in Bellingham to attend the Dec. 7th meeting and voice their concerns about the effect this ordinance will have on tenants and rental property owners. Rental property owners have thus far been left out of this process. Now is the time to voice your opinions on rental owner licensing/inspections and make suggestions about possible solutions to the main problems listed above.”
Here’s a link to the Bellingham City Council members. Get in touch and voice your concerns…
Comments: 1 Comment »A Gift Idea for the Serious Adventurer
Bellingham is plenty dark on either end of banker’s hours in the winter months — like now, for example. If you’re like me and head home from the office around 5:30 or 6, and you still want to get some outdoor adventure or exercise in for the day, you better be geared up with some serious light.
Enter Fenix. I first learned about Fenix flashlights from my friend Charlie Buell, the Seattle home inspector and world class blogger. Charlie was over for dinner a couple months back and literally lit up our home’s surrounding forest with his new Fenix TK40.
Recently, Fenix introduced their first headlamp, the HP10. It runs off 4 AA batteries and has four brightness setting ranging from 7 lumens, such as for reading, up to 225 lumens, such as for guiding in a 747! Seriously, 225 lumens is ridiculously bright. The headlamp is rated to cast its beam at that setting for 120 meters, or nearly 400 feet! On top of that, it’s also rated waterproof up to 2 meters for 30 minutes continous lighting.
This is a professional grade headlamp that would be sincerely drooled over by any biker, walker, runner, kayaker — or any home owner who has occasion to traverse the attic or crawl space, or just take the garbage out after hours. The headlamp sells for a totally reasonable price of <$70.
Pick one up for that special someone this Christmas… and grab an extra one for your favorite Realtor!!! 
Where to Invest in Bellingham
The blogosphere was intended less to be a megaphone and more to be a round table. Blogs were intended to encourage discussion, not just spout the thoughts of the blogger, as most do, and as this one has done mostly up to this point.
But I want to start this post by saying right up front that I’m asking for your thoughts on this topic. I’m asking for your input. You don’t even have to be from here — you can live in Islamabad! — to submit your thoughts on the subject.
The subject is where to invest in Bellingham. Let me narrow that down a bit for you by saying that I mean to talk about non-owner occupied properties. Investment, income-producing, rental properties. Not flips, but rather buy-and-hold single and multi-family properties.
I’ve sold several this year, and I can honestly say they have all been properties I would’ve bought myself. Single family up to three units. Core Bellingham neighborhoods, no-car-required type locations in the 98225 (west of I-5, that is).
I’m on the constant look-out for more of the same for several clients, and I LOVE investment real estate. Personally I like multi-families and smaller single families. The multi’s offer a good hedge against total vacancy for any period of time when there’s a move-out. The smaller single families are constantly in demand and are less prone to developing groups of tenants with different last names.
When it IS time to sell, there’s always a market in Bellingham for starter homes in the core neighborhoods. (Right now, in all of B’ham, the group of listed houses priced under $280K has a 38.5% pending ratio! More than 1/3rd are pending).
Another category, because Bellingham is a college town, is college rentals. Some people love them and scoop them up left and right, while others shy away.
But you tell me, Bellingham and across the U.S. : Single or multi family? College or not? High-end or lower? East or west of the freeway? Brand new or broken in? Section 8? — Gov’t subsidized rental assistance. (I’ve got an old family friend in the midwest who has made his fortune buying, rehabbing and managing Section 8 rentals exclusively. BIG multi-families.)
Or does Bellingham have qualities (read: price) that are making you invest elsewhere right now, or not at all? Some believe that, for sure, while others flock here from Vancouver, California, and more and more Asian countries to buy it up.
What do YOU think? Stand up and be counted. Let the comments flow…
Comments: 3 Comments »
