Ravenna House // Why We Are Selling One of Our Seattle Rentals

THE RAVENNA HOUSE

Why are you selling the Ravenna House? It’s a question we’ve been asked over and over again lately. So today, I wanted to share all of the reasons we’re selling one of our Seattle rentals. But first, let’s back up and do a quick recap of the Ravenna House.

Master bedroom // rug, sconce, cord cover, bed frame, sheets, blinds

We bought the Ravenna House, a 1926 Tudor, in 2013 at what turned out to be the bottom of the Seattle housing market. The house was in rough shape (an understatement) and priced at only $220k. The “tear down on a small lot”, as it was dubbed, garnered 16 offers, including ours. The seller was the elderly son of the original owner and liked our family enough to sell us the Ravenna House for $270k cash, $16k under his highest offer. Of course we didn’t have $270k in cash so had to beg, borrow, and beg some more from family (more about that here).

Garrett and I then launched into a renovation that covered every square inch of the property. We tore down the dilapidated garage, renovated the main floor of the house, had the old oil tank removed, brought natural gas to the property, installed a new water line to the road, lined the side sewer, commissioned a new furnace and ducting, built a fence, installed sod, and finished the basement before mortgaging the property with a process called delayed financing (more on that here). We lived in Ravenna for 2 years before moving on to our next project, the Dexter House. At that point, Ravenna turned into an Airbnb – our first foray (of many) into short-term rentals – and that’s what it has been for the past 2 1/2 years.

So let’s talk about why we’re selling the Ravenna House.

Kitchen // bowl, candle, cutting board, berry bowl, drawer pulltiles


Why We’re Selling One of Our Seattle Rentals

Capital Gains

Capital gains are the taxes you pay on profits from a home sale. In our case those taxes would be about 15% of the profit and north of $50k. However, if you lived in the house for 2 of the past 5 years then you can exclude up to $500k in profit ($250k for single people). Meaning you don’t have to pay taxes on the profits from your primary residence unless those are over $500k (or $250k for a single person). Tax free money is a rare commodity and with our 2-of-the-last-5-years deadline looming this year, Garrett and I started considering selling.

Accessing Equity

We are lucky to be in one of the best real estate markets in the country. The Ravenna House is now valued at nearly 3 times what we bought it for. Even with the $70k we have tied up in renovations, we’re still expecting to make a six-figure profit in tax free money. Of course accessing equity in a property isn’t usually that difficult – you can do a cash out refinance or take out a HELOC – but not if you’re us. Banks don’t like to loan to ‘unemployed’ folks who have with a high debt-to-income. So selling Ravenna was the only option available for us to access the equity.

Diversifying

One concern Garrett and I have always had with our situation is that all of our metaphorical eggs are in one basket. And that basket is Seattle, single-family real estate. What if that big earthquake finally hits? What if Amazon pulls out of the city? What if there’s another recession and unemployment leaves the renter pool sparse? Seeing problems and liabilities is just what my brain does and I’ll feel more comfortable when our investments are more diverse.

Free up Time for Other Interests

Selling the Ravenna House will free up time (and equity of course) that Garrett and I can spend on new projects that we’re more excited about. This year we got a little burnt out of landlord-ing: cleaning houses, communicating with tenants and Airbnb guests, and driving back and forth to Seattle. Taking one of our Seattle properties off of our plate will give us back some of that time. We love the Ravenna House (I hope that’s obvious) but we’re ready to shift the time we were spending on it to something we’re more excited about.

Upstairs bathroom // stool, door knob, wall tile, grout

Kids bedroom // unicorn, swan, bunny, rug, curtain rod and rings, night standblinds

We spent the better part of August preparing the Ravenna House for sale and it went on the market last week! We’ll be sharing more of our selling process and the work we did over the next month or so, but in the meantime, let us know if you have any specific questions in the comments below.

Related Posts //

A New Roof for the Ravenna House

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9 Comments

Comments

  1. Was one of the people wondering and am so interested in these answers, especially the financial aspect! Thanks so much for sharing; makes total sense what you’re doing. 🙂

  2. Bridgette says:

    I soooo appreciate your transparency on all of your real estate adventures. My husband and I are just starting down that path with one long term rental and working on getting another two old houses back in rentable shape. We think we will do one short term rental and one long term. I have loved reading through all of your thoughts on short term rentals and how you have been able to achieve financial freedom through real estate! Are you guys going to continue doing short term rentals or do you think you will move back to long term because of the increased work load with short term?

    • Oh that’s awesome! We’ll continue to do a mix of long-term and short-term rentals on our properties. Our Dexter House is still an Airbnb, which we decided to do only after we got assistance with the turns from a reliable family member. Honestly, the biggest issue for us is that our rentals are 2 hours away. But we make a lot more on short-term than long-term so that’s a big plus.

  3. Well now I want to know where you plan on diversifying!

  4. Still so impressed with all the work you both have accomplished on that house including the recent staging for sale. I’m looking forward to reading about new projects and once again, super appreciate the frankness of your blog. Especially the transparency regarding lending (I can’t tap the equity in my property without selling either). Your posts have been a great learning platform.

  5. i drive by the ravenna house nearly every day and I’ve been sending you guys good vibes for a speedy sale and great offers! Can’t wait to see what you do next 🙂

  6. Very thoughtful Cathy. I am occasionally hard to lend to as well, and I recently wrote that “getting the funding is harder than painting ceilings!” It seems to be different each time too. My husband does have a steady position/pay check but even with that, I am finding myself looking for cash for a small house I am eyeing now because a lender won’t work this time. It’s stressful.

  7. Thanks for giving us such a good look at the financial side of things. I was one of the people who had asked why you were selling and for the capital gains alone it makes so much sense.

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