A Tale of Two Properties: Why I Sold in Seattle and Doubled Down on Dallas

Last week, Washington State enacted a new rent control law that caps annual rent increases at 7% plus inflation, or 10%, whichever is lower. The legislation, effective immediately and set to remain in place for 15 years, applies to most rental properties—including single-family homes.

As a Seattle-based investor, this development prompted me to reflect on a decision I made not long ago: selling my $700K rental property in Seattle and reinvesting in two properties in Mesquite, Texas (just outside of Dallas). While this new law wasn’t the trigger at the time—it didn’t yet exist—it highlights the increasingly restrictive regulatory environment that influenced my move.

The Seattle Scenario

My Seattle property, financed and rented at $3,000 per month, seemed promising at first. But over time, the operational costs and growing regulatory hurdles steadily eroded its profitability.

• Property Taxes: At 0.9%, annual taxes totaled over $6,000.

• Insurance: Approximately $1,200 annually.

• Rental Registration & Inspection: Under Seattle’s Rental Registration and Inspection Ordinance (RRIO), I was required to register and pay for periodic inspections—about $210 per visit.

• Rent Control: With the new legislation, rent increases are now capped, limiting the ability to keep pace with rising expenses and higher taxation.

• Evictions & Relocation Assistance: The eviction process was slow and expensive, often requiring legal representation, with potential obligations to pay tenants up to $3,000 in relocation assistance.

Combined, these costs pushed my monthly operating expenses above $1,100—leaving little margin and limited flexibility.

The Dallas Decision

In contrast, I acquired two properties in Mesquite, each for around $300,000—and each generating similar rental income. The operational environment couldn’t be more different.

• Property Taxes: Mesquite’s combined tax rate is approximately 1.7892%, translating to about $5,367 per year, per property.

• Insurance: Slightly higher, at around $1,500 annually.

• Regulations: No rent control, no registration or mandated inspections.

• Evictions: Faster and less costly, with fewer legal hoops to jump through.

These conditions keep monthly operating costs around $600 per property—and give me more control over my investment.

Appreciation Considerations

While Seattle’s property values have appreciated at an average of 3% annually, Dallas has experienced a more robust growth of 5% annually over the past five years. This difference impacts both resale value and potential rental income growth.

Conclusion

The decision to shift my investments from Seattle to Dallas was driven by a desire for better cash flow, fewer regulatory hurdles, and greater control over my properties. The recent enactment of rent control in Washington State reinforces the challenges landlords face in highly regulated markets. In contrast, Dallas offers a more favorable environment for real estate investors seeking stability and profitability.

I believe the Washington State legislature is motivated by the aim to protect tenants, but hearing from multiple local landlords, this will impact their decisions in the long run—thereby running the risk of reducing inventory and investment in the area.

Either way, if you’re ready to make a Dallas move, SolMidas is here to help.