What's Up With Our Housing?

WHAT’S UP WITH OUR HOUSING?

THE CONTEXT

Bellingham, Washington is in a housing crisis and affordable homes keep getting further and further out of reach. Washington State is working to combat this and promote condo development. The Association of Washington Cities has the details on what sort of action the state is taking in supporting these housing types.

THE STORY

For the past 10 years, very few condos have been built in Whatcom County. Condos are a great product to build that targets the new home buyer, and works well in a community that needs diversity in housing styles. 

SO WHAT?

If you are looking for affordable housing, you may be in luck! More affordable inventory will be hitting the market soon. If you own rentals, we don’t anticipate this impacting the core rental market and here’s why: most of the multi-family zoning and growth is in North Bellingham in the Cordata and Bakerview communities. The majority of the multi-family projects permitted in 2018 and 2019 are multi-family buildings for lease. 

So, there will be a shift from lease to condo projects. While more people will have opportunities to purchase affordable housing, fewer rental units will be built. 

NEW STR REGULATIONS

THE CONTEXT

STRs (Short Term Rentals) are a popular hospitality type in Bellingham as our community’s reputation continues to establish itself as a hub for adventure. Platforms such as Airbnb and VRBO have created opportunities for property owners to host guests for under 30 days in a manner that many prefer over the classic hotel experience. 

THE STORY

The City of Bellingham has produced a new series of regulations around STRs for two purposes: balancing economic opportunities with our lack of housing, and rights and safety of guests and neighbors. The cliff notes are this; you must live in your residence at least 270 out of the year, and cannot rent it out for more than 95 days out of the year. However, there is an exception – if you live in an Urban Village or Commercial area, the new regulations do not apply.

SO WHAT?

In many cities, entrepreneurs have acquired properties purely for the sake of renting them out to traveling guests. While this provides a unique economic opportunity and experience for the guests, it does have an impact on housing supply. We’d be curious to hear what you think about the new regulations on Short Term Rentals in Bellingham. Do these regulations impact your investments? Click the link below to let us know. 

From your friends – 

The Cantrell Group

Didn't Win the Powerball?

Author: Erika Buse

The chances of winning the $759 million Powerball were approximately one in 290 million. you're more likely to get struck by lightning, attacked by a shark, and hit a hole-in-one all on the same day. So if you played and lost, it's probably not a huge surprise. If you're looking for more reliable ways to build wealth, consider investing in real estate and generating some passive income. The Bellingham rental market over the past two decades has been robust, with residential rents increasing 9 % since last year. (According to Zillow).

Larry Simpkins, who has been rental owner for over 30 years says, “Being a rental owner has been a profitable endeavor for us over the years.  Using the rental income to pay for the mortgages can be a smart business plan. Owning rentals is not a get rich quick thing but for the right individuals it is a slow and steady way of building financial security”.

Owning rentals is not as cumbersome as some people may think; as you can hire a property management company for less than 6 percent of the yearly income.  Not only are you generating monthly cash flow, but Uncle Sam allows you to take advantage of depreciation which has a significant positive impact on your Internal Rate of Return. Similar to owning stocks, investing in rentals involves a certain level of risk. Understanding the expenses and factoring in potential vacancies is critical to protecting your downside. Not into spreadsheets and calculating deprecation or the IRR? No problem, call us for a sample of our rental income worksheets. These worksheets help us identify good potential buys.

Rentals can also be a good option for folks who are willing to owner occupy. On both conventional Fannie Mae loans and loans backed by the Federal Housing Administration, a portion of the anticipated rental income can be added onto the borrower’s income at application, which helps people qualify for more house than they normally would. The loans are available for owner-occupied properties with 4 units or less.

Investing in income producing real estate is a great way to generate passive income and diversify your investment portfolio. Bonus point: When you invest in real estate, you are buying physical land or property, there is a certain level of security when you can physically see your investment in the ground. Feel free to call us to chat about entering the rental market. *If you are comfortable relying on Powerball to come through for retirement please disregard the above article.

Series: Watergate Part III

Author: Derek Buse 

When it comes to water rights in Whatcom County, namely an update on the Hirst Decision ruling, there is not much to report. ( Wait, what is the Hirst Decision again?) There was an impasse at the State Senate in late July on a bill that could potentially fix or reverse the Hirst Decision. Senate Republicans claim they will not pass a capital budget without legislation aimed at overturning the Hirst decision.  This leaves us at square one, scratching our heads, wondering where to go from here?  If you're a property owner, do you sit on that parcel and wait out a "fix" in hopes that it will be business as usual?  Or do you cut bait and fire sale it now while we are still in limbo on long term legislation that could negatively effect its value till the end of time? At the end of the day, this ruling is now moving Whatcom County into the hot seat and holding it responsible for becoming the water authority.  This has never been the case.  The county is now responsible for determining connectivity and impairment for small scale impacts such as permit exempt wells and they do not have the resources at hand to make these decisions effectively.  It is rumored that the bill is already 20 pages long, It could take years to put into act, a system that allows Whatcom County to monitor water usage at any level with any sort of accuracy.  The point here is that there is probably no quick fix in sight.  

What are the options?

Construction loans for a single family (primary) using rain catchment as the water source are difficult to come by. Many banks say they loan on homes with catchment systems but we are finding this is simply not true. There are few more adventurous lenders locally that plan to start in-house loan programs that may accommodate these types of loans later this year. We have sourced one financial institution who finances bare land transactions without water.  This is a viable option if you plan to buy and wait to build.

Call or email us if you have questions regarding financing vacant land or how Hirst decision affects your property.