We bought our Central District triplex in 2014 for $437,500. The full purchase story is here — this post is about what we’d do differently.
The first year was deceptively easy
We moved into the middle unit and managed the property from inside it. We knew every quirk of the building, noticed things that needed attention before tenants had to tell us, and had good tenants. It felt easy… because it was, under those conditions.
What we didn’t appreciate was how much living on-site was doing for us. The moment we moved out — in early 2022, right before our son turned three; we needed a second bathroom and space for a real dining table — things got harder. We found out about problems when tenants called, which meant issues had usually been going on for a while before we heard about them.
If you’re considering a triplex and you’re willing to live in one unit, do it. Just don’t mistake that experience for proof that you’ve figured out landlording. The real test comes when you leave.
The Airbnb income was great. Until January.
When we bought the property, the upstairs tenant was paying $1,200 a month and the lower tenant was paying $1,000, both below market. We raised the upstairs tenant to $1,500 over time, then to $1,775, and she now pays $1,850 (still not bad for a 2bd/1ba in Seattle). The lower unit we converted to an Airbnb, since it had a cave-like feel that was fine for a short stay but would have been too much for a full-time tenant. That averaged over $2,000 a month, and closer to $3,000 in the summer.
The problem was January and February. We’d sometimes have only 2-3 nights booked the entire month, bringing in around $300. We needed $1,300-$1,500 to cover the mortgage, maintenance fund, and vacancy fund, so we’d be about $1,000 short. We’d spend the rest of the year rebuilding reserves, only to drain them again the following winter.
That was manageable while our long-term upstairs tenant stayed. But we had almost no cushion if she moved out. We should have saved more aggressively from the start.
We saved for vacancy and maintenance. Not for capital expenditures.
We set aside money each month for vacancy and maintenance, and we felt pretty good about that. But we didn’t save for capital expenditures — big-ticket items that don’t happen every year: a new roof, a furnace, major plumbing. We learned this lesson at our Delridge property.
Vacancy and maintenance funds are not the same as a CapEx fund. They cover different things. Think of the CapEx fund like an emergency fund — get to $5,000 first, then work toward $20,000. You can’t replace a roof for $5,000, but having something is better than having nothing. I set aside $500 a month now and plan to increase it over time.
We improved our unit instead of the building
We planned to stay long-term, so we made improvements that made sense for us. We spent $1,100 in materials on new trim for the doors, and we did the work ourselves, so the labor was free. It looked nice. But what we should have done instead was soundproof between units.
Adding a layer of drywall to the ceiling would have been as effective as adding insulation, and our ceilings were high enough to absorb it. This would be more expensive than trim since we couldn’t do it ourselves, but it would have made the apartment more comfortable for future tenants.
Related posts:
How we purchased and house-hacked our first multifamily rental property
Our second home: buying an income property in Delridge
Unforeseen rental expenses for unsexy things
