Portland, OR Landlords -- Please Take Note
Chico, CA · Member since 2016 · 12 posts · 2 votes
Portland, OR Landlords -- Please Take Note
Most Popular Reply
Rental Property Investor · Portland, OR · Member since 2015 · 338 posts · 332 votes
9y@Steve Moody the relocation subsidy would still apply for notices given before today. So if you gave a non-renewal of lease notice ("no-cause eviction") in December, the tenant is still eligible to receive the subsidy.
For any notices given before the ordinance was passed (a few hours ago), landlords have 30 days from now to either:
- Pay the fee
- Rescind the notice
- Amend the notice (e.g. increase rent to 9% instead of to 10%)
The fee does not apply to week-to-week tenancies, but it DOES apply in cases where a lease is simply not renewed.
In the case of a 10+% rent increase, the tenant has 14 days after a new notice is given (from today going forward) to inform the landlord, in writing, that they are moving. I believe they also have 14 days starting today even if the notice was previously given. If the tenant notifies the landlord within the 14 days, the landlord will be required to pay the relocation fee.
Based on what I read, it sounds like if the tenant notifies the landlord AFTER 14 days, the landlord would not be required to pay the fee.
The ordinance was amended today to exempt owners of a single rental unit (e.g. ADU in the back yard), and another amendment pushed the fee payout date to 45 days after the notice was given. This would help to address Steve's concerns about tenants not paying the last 3 months' rent. Says Chloe Eudaly.
The ordinance is tied to the "Housing State of Emergency," which is up for renewal/reelection this October. But this ordinance is not the end. Eudaly clearly wants rent control and will push for it as strongly as she possibly can. She will do this by pulling on heartstrings and making it impossible for the other commissioners to oppose her. Once you have a tenant crying at the mic because her kid has to move schools etc., it's over.
While I wholeheartedly agree that low-income tenants need protection, it's not the job of private landlords to provide a move-out subsidy. That's my issue with the ordinance. The burden should be shared by ALL members of our community--just as for food stamps--rather than scapegoating a small minority of individual housing providers.
If you want to subject yourself to the entire 6 hour session and hear the testimony and decisions, you can find the February 2nd video here: https://www.portlandoregon.gov/video/player/. My testimony is at 4:50:00. @Mike Nuss gave testimony towards the beginning. The reps from MFNW, whom Eudaly asked to speak to "represent the other side" before the public testimony, were abysmal IMHO.
Speaking of my opinion, many landlords did not present themselves that well today. Everyone's time was cut, yes, but there was a lot of talk about using no-cause evictions because they're easier and faster than for-cause evictions for bad tenants and don't go on the tenants' records. Some talked about how expensive it is to be a landlord, etc. Neither of these arguments carry any weight in this context when you compare it to what certain tenants have had to endure. The only type of appeal that would work is an equally disturbing emotional one, and landlords just don't have comparable stories to the ones we heard in advance of the public testimony. The other type of appeal that might have worked is if we could demonstrate that the ordinance is structurally invalid, in violation of some greater rule or law, the local version of unconstitutional. But in the end, it would have been a PR nightmare for any commissioner or the mayor to vote against the ordinance after hearing some of the terrible stories that some tenants told.
66 Replies
- Rental Property Investor · Portland, OR · Member since 2015 · 338 posts · 332 votes9y
@Ellie Hanson of course you're fine with the new ordinance that penalizes landlords of under-market rentals and has virtually no effect on high-end market rate units! That's what's so insidious and poorly-considered about the law--it hurts low-income renters whose landlords have already been providing a private rent subsidy in the form of under-market rents!
If a landlord purchased a building last year and kept the inherited tenants at their, let's say 60% of market rent (let's say their rent is $720 but market rent is $1200), then according to the new law, rather than the landlord gradually raising rents to market over 2 or 3 years (by, say, $160/month each year, so $880 in year 1, $1040 in year 2, $1200 in year 3 etc.) and keeping the tenants in place, the landlord can only raise rents 10%.
At 10% ($72), it would take 7 years to bring rents to market (this is simple math that doesn't compound rent increases but also assumes no increase in market rent over that same time, so it's probably close to a wash). 7 years is unrealistic and makes no business sense. The landlord would therefore be incentivized to cut their losses on Day 1 by issuing non-renewal of lease notices and paying any penalties so they could bring the units up to market. Assuming these were 2 bedroom units and the fee $4200, it would take 8.75 months to recoup that cost (over receiving the $720 rent vs $1200 rent), which is much more tenable and realistic than 7 years.
- Investor · Jackson, MS · Member since 2014 · 1k+ posts · 769 votes9y
Rankin County is KKK country.
- Investor · Portland, OR · Member since 2013 · 143 posts · 105 votes9y
Originally posted by @Susan Maneck:
Rankin County is KKK country.
I prefer Bob Ross to Bill Alexander...
Any other opinions that have nothing to do with what we're talking about on this thread?
- Investor · Portland, OR · Member since 2013 · 143 posts · 105 votes9y
It appears from your profile that you rehab your properties. I don't know about you but a lot of the distressed properties I come across are occupied by someone other than the owner, which is why they have become distressed. Distressed properties still occupied by tenants will also become more common since the sellers will now have to pay to get them out. You could ask the seller to evict before the sale and eat the cost but after the market cools and the sellers aren't just cutting 3% off the check they'll be getting you'll find they'll be less willing to work with you on that. Which means you get to pay for it and your profit on that flip just dropped roughly 5k over this ordinance. Multiply that by the 12 houses you intend to flip in a year and you just dropped your income by 60K in one year because of an ordinance that is currently illegal in the State of Oregon.
@Account Closed
How dare you bring logic and math into this! Its not supposed to make sense its supposed to make everyone feel good! :-|
- 9yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Account Closed right now cost of doing business like you said half a year and you recoup.. move on and lick your wounds before full blown rent control comes in
- Rental Property Investor · West Linn, OR · Member since 2016 · 30 posts · 11 votes8y
I am about to make an offer on a 4plex in Portland with rents undermarket by nearly 50! What were some strategies that you PORTLAND investors are using to overcome this ordinance? Or at least soften the blow.
- Rental Property Investor · Portland, OR · Member since 2015 · 338 posts · 332 votes8y
Originally posted by @Susan Herschell:
I am about to make an offer on a 4plex in Portland with rents undermarket by nearly 50! What were some strategies that you PORTLAND investors are using to overcome this ordinance? Or at least soften the blow.
Some strategies people are doing is, they just don't buy the building.
If you don't mind kicking people out and you plan to reposition the building, then you would need to factor the relo fee into your cost of doing business (I've had success presenting a table with all the expenses I anticipate, and subtract that from the asking price to come up with a below-offer purchase price. Typically I do this after inspection, but you would know that the fee applies when you present your first offer.)
Otherwise, if the tenants are good, you could opt to keep them and raise rents 9.9% each year. At 50% of market, you won't reach market within the next decade, likely.
Since you don't own the building, you could also ask the current landlord to evict them or raise rents, if you want to do that. That would make it much easier for you, if you were going to do that anyway. But it may not make your offer look very enticing. (I don't really remember the changing details, but I think the tenants have 45 days after getting a 10+% increase to collect the relo fee, so if you went that route you'd want to wait at least until that amount of time before closing )
Do you plan to live in the building? That would affect my strategy, if it were me. I'd probably want to choose the tenants, if I lived there.
Essentially, you can't get around the fee if you raise the rent over 10% and they decide to move as a result, unless you don't buy the building.
Join the conversationCreate a free account to reply, vote on answers and follow this thread.