Rent control in Oregon...thoughts???

Rental Property Investor · Anchorage AK... Grants Pass OR...... Scottsdale, AZ · Member since 2018 · 37 posts · 18 votes

I own several rental properties in Southern Oregon....I’m very frustrated with the passage of Senate Bill 608. Any other investors input on this and are you going to still invest in Oregon? I know the area well so it’s tempting to buy more but now I’m not so sure.

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Steve Vaughan

Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes

With an extremely generous rate increase cap of 7% per year, I'd say you could've done much worse and avoided a real nightmare bullet that would've come later and been much worse. Congratulate and thank your LL and Apt Associations for lobbying on your behalf. They wanted a cap closer to 3% I'm sure.

7% is being able to say there is rent control when there actually isn't!

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Steve Vaughan
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
7y
With an extremely generous rate increase cap of 7% per year, I'd say you could've done much worse and avoided a real nightmare bullet that would've come later and been much worse. Congratulate and thank your LL and Apt Associations for lobbying on your behalf. They wanted a cap closer to 3% I'm sure.
7% is being able to say there is rent control when there actually isn't!
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
Originally posted by @Steve Vaughan:

With an extremely generous rate increase cap of 7% per year, I'd say you could've done much worse and avoided a real nightmare bullet that would've come later and been much worse. Congratulate and thank your LL and Apt Associations for lobbying on your behalf. They wanted a cap closer to 3% I'm sure.
7% is being able to say there is rent control when there actually isn't!
YUP politicians placating the mass's
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Greg M.
Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes
7y
Originally posted by @Steve Vaughan:

7% is being able to say there is rent control when there actually isn't!
7% + CPI is placating the landlords into thinking this isn't so bad. Then the 7% gets reduced to 0% + CPI or lower. I would bet money that within 5 years this 7% is significant lower.
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Russell BrazilBusiness Member
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
7y
The law of unintended consequences.
Rents will now be raised higher than the market would have dictated.
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Jennifer Darby
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Rental Property Investor · Anchorage AK... Grants Pass OR...... Scottsdale, AZ · Member since 2018 · 37 posts · 18 votes
7y
@Greg M. exactly! It starts off like this but I guarantee it isn’t going to end well. Any ideas on where to invest next? I’m done w Oregon.
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Jennifer Darby
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Rental Property Investor · Anchorage AK... Grants Pass OR...... Scottsdale, AZ · Member since 2018 · 37 posts · 18 votes
7y
@Russell Brazil exactly! I don’t raise my rents every year but you can guarantee I will be doing it now! Thank you to all the policticians that decided this would be a good idea!
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Matthew Fassett
Rental Property Investor · Lehi, UT (Lehi) · Member since 2018 · 91 posts · 99 votes
7y
The bear definitely stuck his head inside the tent! For now it’s 7% give it 5 years and they will have total control. Let’s pray the rest of America doesn’t follow.
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Connie Chan
Investor · Member since 2017 · 239 posts · 149 votes
7y
@Jennifer Darby I know the ruling was frustrating but I would say don’t let that discourage you from good opportunities. I always think its safer to buy In places that you know well. You’ll have a Better sense of appreciatIon potentIal and rIsk
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Ron Anderson
Member since 2019 · 6 posts · 4 votes
7y
My wife and I have been realestate investing in Oregon for 22 years. About a third of our units are 25% ish under market. We have very long-term tenants, many of them over 20 years. We like keeping our long-term tenants and rewarding their long stay with under market rents. But now we are suddenly caught with inability to refinance at market rate for our property because our collectible rents are now actual rents not market rents under rent control. We just put a construction project on hold due to this new law
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Jennifer Darby
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Rental Property Investor · Anchorage AK... Grants Pass OR...... Scottsdale, AZ · Member since 2018 · 37 posts · 18 votes
7y
@Ron Anderson I totally understand! I’m very frustrated because I can see the writing on the wall...I’m sure the 7% will get whittled away over the next few years.
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Nelson Wong
Member since 2018 · 10 posts · 3 votes
7y
As a landlord in San Francisco, my feeling is you'd better take a long hard look at the regulatory environment. SF passed a very hard version of rent control on older units. It limits annual rate increases to 60% of annual CPI. So you're essentially always losing money relative to inflation. Furthermore the rent board is very anti-landlord. There is a Tenant's Union that will provide free legal aid to any tenant that wants it, whether it's a legitimate issue or they just want to screw the landlord. My family has been moving our assets out of SF residential properties. So are many of our family friends. The hassle just isn't worth it, despite the strong annual appreciation of the properties.
We have occasion to use real estate attorneys. The first question I get from the attorney is "is the property in San Francisco itself?" That should tell you all you need to know about the risks involved.
So if Portland is headed anywhere near the SF type of regulatory and legal environment, I would think twice about continuing to invest in that market. JMO
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Jeff S.
Specialist · Portland, OR · Member since 2010 · 3k+ posts · 1k+ votes
7y
My rents are way below market not because they haven't been raised much but because rents have shot up. The real problem coming up is when you can't qualify new tenants, and you raise rents and people leave, then your risk becomes crazy having to let anyone in the door. I am hanging onto my good tenants but that is just me. I am small and little debt so no sweat
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Ron Anderson
Member since 2019 · 6 posts · 4 votes
7y
There is an interesting you tub vid called Oregon rent control illustrated. Educational for my tenants wanting to know why they are now seeing 10 percent increases for the next few years
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Jennifer Darby
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Rental Property Investor · Anchorage AK... Grants Pass OR...... Scottsdale, AZ · Member since 2018 · 37 posts · 18 votes
7y
@Ron Anderson thanks for the video! Very well done and spot on!
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Ron Anderson
Member since 2019 · 6 posts · 4 votes
7y
Thank you. I think that a lot of people don't understand how properties have just been devalued if you have a below-market rent
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Jennifer Darby
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Rental Property Investor · Anchorage AK... Grants Pass OR...... Scottsdale, AZ · Member since 2018 · 37 posts · 18 votes
7y
@Ron Anderson my husband and I were just talking about that the other day! We tend to keep our rents lower but now we have no choice but to raise them every year.
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Steve B.
Engineer · Portland, OR · Member since 2014 · 1k+ posts · 1k+ votes
7y
@Steve Vaughan the rent cap isn’t the most onerous part of the bill so focusing on that as a win is missing the point. What makes you think the landlords lobby made any effort to counteract the bill? Also how does this in any way preclude or abate further, more restrictive legislation?
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Johann Jells
Rental Property Investor · Jersey City, NJ · Member since 2011 · 1k+ posts · 876 votes
7y
Originally posted by @Ron Anderson:
My wife and I have been realestate investing in Oregon for 22 years. About a third of our units are 25% ish under market. We have very long-term tenants, many of them over 20 years. We like keeping our long-term tenants and rewarding their long stay with under market rents. But now we are suddenly caught with inability to refinance at market rate for our property because our collectible rents are now actual rents not market rents under rent control. We just put a construction project on hold due to this new law
I'm startled a bank would accept you stating your rents should be higher than you were charging. In my experience they go by what your rents actually are, unless they're vacant.
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Ron Anderson
Member since 2019 · 6 posts · 4 votes
7y
Every appraiser that evaluated my properties asked what are current rents. I respond that they range from the newest tenants paying market rents and oldest tenants paying lagging rents. In every case the appraiser used market rent multiplied by the number of units in the complex. but they almost always state that they will validate market rent with comparable market rent from a source other than me. Of course, that was before this new law
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Ron Anderson
Member since 2019 · 6 posts · 4 votes
7y
Steve, you have some good questions. Regarding what aspect of the new law is considered most impactful depends on what youre investment strategy is. For me, I'm sitting on eight one acre lots, each with a single duplex. This ground is being rezoned for accepting multiple units. City water and sewer was just put in. I was about to refinance these eight lots and pull equity out to start funding a multi-phased build project. However, 10 of my 16 units have older retirees paying roughly 30% under market. So with this new law my property is now worth significantly less. The last appraiser used a monthly gross rent multiplier of 130 in evaluation using market rents of which I was collecting with my newest tenants. I now have to wait a few years until I can restore rents closer to market to pull the needed equity to launch the project.
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Ron Anderson
Member since 2019 · 6 posts · 4 votes
7y
Steve, regarding your question about how to abate further restrictive legislation. next year is a short legislative session. The year after that is another long legislative session where incremental tightening, restrictive legislation may come in. Part of my point is legislators are voted in. There are likely legislators up for election within the next two years. we are supposed to keep politics out of these discussions, however these laws are created by politicians. Vote for the politician that you think best represents logical steps forward making sure we have adequate supply of housing for everyone
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Johann Jells
Rental Property Investor · Jersey City, NJ · Member since 2011 · 1k+ posts · 876 votes
7y
Originally posted by @Ron Anderson:

Every appraiser that evaluated my properties asked what are current rents. I respond that they range from the newest tenants paying market rents and oldest tenants paying lagging rents. In every case the appraiser used market rent multiplied by the number of units in the complex. but they almost always state that they will validate market rent with comparable market rent from a source other than me. Of course, that was before this new law
Interesting. Appraisers I get are so incompetent they can't accurately measure a rectangular box without a 15-20% error. YMMV!
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Patrick M.
Rental Property Investor · Red Bank, NJ · Member since 2017 · 1k+ posts · 1k+ votes
7y
I would LOVE to have this legislation in NJ!
Forget about the 8+% rent increase year after year! I want to be able to shove off some old tenants with notice and a months rent!
If you cannot make a profit because of this legislation then it ain’t about the legislation!
You want to up the rent 50%? Fine- give your tenant notice, pay them a months (current) rent and relist it for 50% more.
Man I dream!
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Jennifer Darby
OP
Rental Property Investor · Anchorage AK... Grants Pass OR...... Scottsdale, AZ · Member since 2018 · 37 posts · 18 votes
7y
@Patrick M. the law doesn’t work that way. Read it! It devalues properties and I can guarantee you that the 7% will continue to go down...have you ever seen “taxes” go lower in a liberal run state? Me neither
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Patrick M.
Rental Property Investor · Red Bank, NJ · Member since 2017 · 1k+ posts · 1k+ votes
7y
@Jennifer Darby
Sorry- read it, and it does.
I operated and still quasi- operate (grandfathered) under a 1.5% or CPI, whichever is greater, rent control. On top of that, I cannot remove a tenant unless they violate one of the enumerated reasons contained in the anti-eviction statute.
I did “Read it!” Under the Oregon statute you must give the tenant 90 days notice and pay them 1 months rent to remove them without cause. Just as I said, there is no reason to become unhinged.
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