House investment consultant dislikes gov't interference

Investment consultant firm firmly against statewide rent controls

By Gary Bégin
There are city, district, regional, statewide and federal laws that impact our labor and industry. Many of these government entities also wield the tax-by-levy stick, covering their liability by putting things to a vote, often after a campaign using our tax dollars, to convince the general voting public to buy into the ever-enlarging bureaucracy.
The Wenatchee Business Journal spoke to the owner/operator of a local consultant for investment property owners, CleAnn Goodell of Made in the Shade Investments, about how she feels about lawmakers in Olympia putting caps on the amount of rent that can be charged, possibly impinging on profit margins for the industry.
Whether you are a Libertarian, Republican or Democrat, how would you like it if the politicians in Olympia told you how much to charge for your products or services?
That is exactly what happened when a law was introduced putting a cap on rent prices by over-zealous "social engineers." With a cap in place, profits will suffer. For the sake of brevity, the name of her company has been abbreviated to MSI.
Wenatchee Business Journal: As a consultant for investment property owners, how does it make you feel when lawmakers in Olympia tell you and your industry what the limits are for rent?
MSI: I am a consultant for investment property owners, not a property manager.  I save people the hassle of the day-to-day issues with renters/tenants, that's why I named my business 'Made in the Shade'... you'll have it made in the shade when you hire me as your consultant.
WBJ: Lawmakers who don't have investment property knowledge make their laws for real estate based on what criteria?
MSI: They don't think things through for the long term. For example in Oregon they put a cap on rents hoping to help low income people to be able to afford a place to live. That's all well and good, but now think down the road and try to see the big picture for the long term. The big picture is that investors are who are renting to these people. An investor won't keep a property that doesn't make them a profit because that's not the purpose of 'investment property', they are trying to make an income to support themselves and their family.
So if a lot of investors sell their property because of this new law, another investor won't be buying it, an owner will purchase it to live in and the rental market will decrease.  So if there are less rental properties available, then what happens to the low income people?  I don't know what the answer is for low income and homeless people, but that is a bad law!  There will always be opposing sides for every law, but if we could help people and also not hurt the investors who are responsible for supplying the rentals that would be smarter in my opinion.
I believe the housing market will have to come down before the rental prices can come down. When you buy a property as a business, everything changes. The banks want more money down, they charge a higher interest rate and they reduce your term by 10 years. When you calculate the mortgage payment, taxes, etc. and then figure out what you can rent it for you're either in the red, breaking even or you might see $100 profit per month. $100/mo. isn't worth it, it's not enough when you've just spent a lot of money for your down payment, bank fees, closing costs, appraisal, title search, home inspection... the list goes on.  It would take many years just to recoup what you put into it and break even.  Therefore, it's not a good 'investment'.
WBJ:  So readers understand your position better, please explain how your company not only manages other properties, but also buys, refurbishes and sells your own investment parcels.
MSI: Made in the Shade Investment Properties, LLC is a consultant for investment property owners. We help owners by getting their homes, duplexes, etc. rented to quality people that have been vetted before they sign a lease. We do a credit check, background check, rental reference check and income verification. There is also a written criteria that each person must meet before filling out an application. We do our best to find tenants that will pay rent on time, take care of the owners property and we will get the owners the amount of rent that is market value at the time of the lease signing. Many tenants re-sign leases year after year and are long term renters. My longest term tenant was at the same property for nine years. We also purchase investment properties to keep and rent, rehab and sell or rehab and keep as a rental. Any referral is appreciated and we pay a $500 cash finders fee to anyone who tells us about a property if we purchase it.
WBJ: Does putting a cap on rental rates artificially restrict the market
in the Chelan-Douglas area and if so, are you & your clients expecting
financial loss from this policy?
MCI: As for a financial loss, for the most part, only the people who have their properties paid for won't see a loss. If you have a recent mortgage, you will most likely see a loss. If you bought your investment property many years ago when the cost of housing was lower, you will probably be o.k. It also depends on whether you made a good investment or not. If you purchased a property and couldn't rent it for as much as you thought or had to rehab it and it cost more than you thought it would, you might be in trouble.
WBJ:  "House flipping" has been the subject of many television shows and investment strategies for decades. Will this entrepreneurial idea
continue in Washington state if the government restricts potential
profits?
MCI: If they are flipping it, then they will most likely be selling it and not holding on to it. If the purchase price and the rehab cost is low enough that they can sell it to someone who can rent it for enough to cover the mortgage, taxes, etc., and have a profit, then it will continue. I don't think rehabbing will ever go away. Some people have money in the bank and pay cash for property and don't need to go through a bank or any other type of lender. There are so many different variations of how you can do this that this will never disappear and I think that is a good thing. Also keep in mind that when you rehab a property it improves the neighborhood and people that live there are usually happy to see that.
WBJ: Anything alse to add such as contact info for your companies?
MSI: My business, Made in the Shade Investment Group, LLC, is owned by me, CleAnn Goodell, but I have another business which I use to purchase, rehab, & flip properties called BG Investment Properties, LLC and my brother is my partner.  In addition to that, I use Niche Construction and Consulting, LLC to do small repairs on rental properties as well as major rehabs and my husband, Ward Goodell, owns that business with his two partners, Derek & Nick Schoffen. We keep it all in the family. It works well when I have an appointment to look at a property, I'll just ask my husband when he has time to go with me and then I can get an idea of the cost of a rehab on my first walk through. Working with my husband can sometimes be tough... we don't always agree, but there are also benefits like that one. He also is a partner with Niche Investments, LLC.  Say Niche Investments gets a referral and they decide not to purchase it.  They will let BG Investment Properties know about it and if BG decides not to purchase it then we will spread the word to other investors.
Made in the Shade Investment Group, LLC, can be reached: Office phone (509) 293-5490, cell phone (509) 293-3402.
BG Investment Properties, LLC  same phone numbers.
Niche Construction & Consulting, LLC, cell phone (509) 387-6002
Niche Investments, LLC  same phone number.
Editor's Note: The WBJ is, by nature, a business Journal and not a public projects advocate, therefore I try to show the impact of regulations on the enrepreneurial spirit that has always made America great.