rental housing journal metro november 2015

Circulated to over 6,000 apartment owners, on-site and maintenance

personnel monthly.

Call 503-221-1260 for more information

Advertise in Rental Housing Journal Metro

3. Americans Think Homeownership is a Sound Investment

4. 9 Tips For Getting Started in Real Estate Investing

5. Our Voice Can Be a Call to Make Changes

Published in association with: METRO Multi-Family Housing Association; Rental Housing Association of Oregon; IREM & Clark County Association

www.rentalhousingjournal.com • Professional Publishing, Inc

Rental Housing Journal Metro November 2015

Portland/Vancouver

...continued on page 8

6. Ask the Secret Shopper

9. Selecting a Contractor

10. Transitioning from T12 to T8, T5 or LED Lighting for Commercial Buildings

13. Find Your Life Path and Navigate it Carefully

15. Is It Really Rent Control?

17. Portland City Council Acts to Stall Evictions and Rent Increases



Long-term Hold InvestingFor Owner/Managers

The rental property investing strat-egy for a hold time of 15+ years is signifi cantly diff erent, than a short

term real estate investment strategy. Th is is even more critical for owners who plan to do their own property management. Owning and managing a property for 15-20 years is similar to raising a child, from birth through high school. Price is always important when buying any property. If you are planning to own a property for decades, do not consider purchasing a po-tential “problem child”, because it is cheap. Bad purchases are oft en made when in-vestors feel they must purchase quickly. Adapt the motto that “I can always spend my money” and keep shopping to you fi nd the “right” deal. Investors need to serious-ly consider the location, quality of con-struction, target tenants and fi nancing for a long term hold rental property:

Location Properties should be located within 30

minutes of where you reside. Anything longer than an hour round trip drive will become cumbersome over time. It is al-

ways a wise idea to geographically diver-sify your rental portfolio. Th erefore, own-ing properties in diff erent neighborhoods. Within 30 minutes of your home, is pref-erable to owning all your properties, in one neighborhood.

Target property purchases in desirable residential neighborhoods with a low per-centage of rental properties. Initially, the annual cash and cash return will proba-bly be less, than what could be bought in less desirable locations. Rental properties in more desirable locations usually are

priced at a lower capitalization rate, than rental properties in less desirable areas. Over time, the quality of tenant, ease of leasing, and appreciation potential will compensate for the initial lower return. Buying in a neighborhood, that you feel may decline, is a big mistake. You can change many things about a property, but you cannot change its location.

Are You Leaving Money on the Table?

By Cli� Hockley CCIMPresident, Bluestone & Hockley Real Estate Services

Most real estate investors tend to operate their properties with a simple rule in mind: If money

appears in their checking account by the end of the month, their property is healthy. As long as they see the same amount every month they’re happy.

However this rule inevitably leaves money on the table. Sophisticated inves-tors know that they need to plan for their properties to be successfully operated. Th ey need to buy the right property and

operate it with a vision in mind. Th at vi-sion should include an annual focus on rent increases and tenant relations.

Rent IncreasesResidential: Multifamily or single

family investors have the opportunity to increase rental income at least once a year through the annual budgeting process.

Th is process starts with an annual in-spection, followed by a local area renewal rate review (rental comparison survey). Keeping your property well maintained is the key to managing long term rental increases. Tenants will not be as hesitant to pay more if you treat them with re-

Five Real Estate

Investing Fundamentals

By – Je� Watson, � e Je� ery S. Wat-son Law Firm LTD, General Counsel National REIA

One of my favorite movie moments is when Ernest Borgnine, por-traying the legendary football

coach Vince Lombardi, stood in front of the world champion Green Bay Packers at the beginning of training camp and held aloft an oblong object proclaiming, “Gen-tlemen, this is a football.” What Vince Lombardi taught the Green Bay Packers then applies to real estate investing today.

Master The BasicsPractice them over and over again. Con-

sistently do the fundamental things that make you a successful real estate investor.

Repeat Your Successes And Keep Re-peating Them

Th e vast majority of “investors” to-day suff er from what I call “squirrel or shiny-object syndrome.” Th ey have a lit-tle success in one area, but then they are suddenly distracted by something else and go to another area, and then another, and then another. Th e bottom line is they lose their focus and intensity, and they don’t continue to practice the same thing over and over again. Let me remind you, slow and steady wins the race!

Establish Your ParametersIn addition to becoming good at the ba-

sics, I urge real estate investors to estab-lish their investment parameters.

• What kind of investments or deals do you want to do? Are you going to do loans? Are you going to use options? Are you going to buy rentals or tax liens? Are you going to invest in commercial properties? Pick two or three (no more than that) of these things and get very good at doing them. Do them over and

Professional Publishing Inc.,PO Box 6244Beaverton, OR 97007

PRSRT STDUS Postage

PAIDPortland, ORPermit #5460

2

Rental Housing Journal Metro

Rental Housing Journal Metro · November 2015

Did You Know?Did You Know? The City of Portland recently passed a 90The City of Portland recently passed a 90-The City of Portland recently passed a 90-day notice The City of Portland recently passed a 90The City of Portland recently passed a 90The City of Portland recently passed a 90 day notice day notice day notice period for End of Tenancy notices AND for notices of period for End of Tenancy notices AND for notices of

rent increase thatperiod for End of Tenancy notices AND for notices of

rent increase thatrent increase that’period for End of Tenancy notices AND for notices of period for End of Tenancy notices AND for notices of period for End of Tenancy notices AND for notices of

rent increase thatrent increase that’’s more than 5%. period for End of Tenancy notices AND for notices of period for End of Tenancy notices AND for notices of

s more than 5%. s more than 5%. This change goes into effect on November 13th.This change goes into effect on November 13th. This change goes into effect on November 13th.This change goes into effect on November 13th.

The Multifamily NW forms collection is prepared for The Multifamily NW forms collection is prepared for this sudden law change and has made necessary legal this sudden law change and has made necessary legal edits to several forms and created the new Portland

End of Tenancy Notice, #M049.End of Tenancy Notice, #M049.End of Tenancy Notice, #M049.

Changes were also made to the Notice of Rent Increase #M011, the Renewal Changes were also made to the Notice of Rent Increase #M011, the Renewal Offer #M065, the ResidentChanges were also made to the Notice of Rent Increase #M011, the Renewal

Offer #M065, the ResidentOffer #M065, the Resident’Changes were also made to the Notice of Rent Increase #M011, the Renewal Changes were also made to the Notice of Rent Increase #M011, the Renewal Changes were also made to the Notice of Rent Increase #M011, the Renewal

Offer #M065, the ResidentOffer #M065, the Resident’s 30Changes were also made to the Notice of Rent Increase #M011, the Renewal

s 30s 30-Changes were also made to the Notice of Rent Increase #M011, the Renewal Changes were also made to the Notice of Rent Increase #M011, the Renewal Changes were also made to the Notice of Rent Increase #M011, the Renewal

s 30s 30-day Notice to Vacate #M014 and the standard Offer #M065, the ResidentOffer #M065, the ResidentOffer #M065, the Resident s 30s 30s 30s 30s 30 day Notice to Vacate #M014 and the standard day Notice to Vacate #M014 and the standard day Notice to Vacate #M014 and the standard End of Tenancy Notice #M019.

day Notice to Vacate #M014 and the standard day Notice to Vacate #M014 and the standard End of Tenancy Notice #M019. End of Tenancy Notice #M019.

Additionally, the Rental Additionally, the Rental Agreement forms, both Agreement forms, both

standard #M001 and the standard #M001 and the Singlestandard #M001 and the SingleSingle-standard #M001 and the standard #M001 and the standard #M001 and the SingleSingle-Family #M201 are SingleSingleSingle Family #M201 are Family #M201 are Family #M201 are updated for the Portland updated for the Portland law changes. However, law changes. However, these forms will update these forms will update again in January 2016 again in January 2016

with legal changes from with legal changes from this year

with legal changes from this yearthis year’

with legal changes from with legal changes from with legal changes from this yearthis year’s legislative this yearthis yearthis year s legislative s legislative s legislative

session.s legislative s legislative

session.session.

Visit MultifamilyNW.org to get the forms you need.Visit MultifamilyNW.org to get the forms you need.

16083 SW Upper Boones Ferry Road Suite 105

Tigard, OR 97224 503-213-1281

Fax 503-213-1288 [email protected]

3



Americans Th ink Homeownership

A vast majority of Americans be-lieve that buying a home is a solid fi nancial decision, and most be-

lieve they could sell their home for at least its initial purchase price, according to a new survey from the National Association of Realtors®. Th e 2015 National Housing Pulse Survey also found that a prepon-derance of Americans think that now is a good time to buy a home.

Th e survey, which measures consum-ers’ attitudes and concerns about housing issues in the nation’s 50 largest metro-

politan statistical areas, found that more than eight in 10 Americans believe that purchasing a home is a good fi nancial de-cision, and 68 percent believe that now is a good time to buy a home. Seventy-one percent believe they could sell their house for what they paid for it, a jump of 16 per-centage points from 2013.

When asked for reasons about why homeownership matters to them, respon-dents’ answers did not change signifi -cantly from past years. Building equity, wanting a stable and safe environment,

and having the freedom to choose their neighborhood remain the top three rea-sons to own a home.

“Homeownership is part of the Amer-ican Dream, and this survey proves that dream is alive and thriving in our com-munities,” said NAR President Chris Poly-chron, executive broker with 1st Choice Realty in Hot Springs, Ark. “Realtors® be-lieve that anyone who is able and willing to assume the responsibilities of owning a home should have the opportunity to pursue that dream in a safe, responsible

way, which is why NAR advocates home-ownership issues and educating potential buyers about achieving their property in-vestment goals.”

Th e number of renters who are now thinking about purchasing a home has increased since the last survey in 2013, up from 36 percent to 39 percent. Six-ty-one percent of renters stated that own-ing a home is a priority for their future. According to the survey, 80 percent of respondents believe that pre-purchase counseling programs and classes are very or somewhat important. Forty-fi ve per-cent of homeowners who said they did not take a counseling program, reported they would have taken part in one had it been easily available to them.

Attitudes about the housing market have improved in recent years. Forty-nine percent of respondents indicated that they feel activity in the housing market has in-creased in the past year, compared to 44 percent in 2013 and 12 percent in 2011. Eight-nine percent expect home sales in their area to either increase or remain the same. Concern about foreclosures has also declined, with only 15 percent of re-spondents indicating that foreclosure is a major concern.

In addition to improved attitudes about the housing market, survey participants also showed an improved outlook regard-ing the economy. Only 36 percent think that job layoff s and unemployment are a


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9 Tips for Getting Started in

By JC Underwood, Crown Properties

Treat Th is As A BusinessOne of the biggest mistakes I see

new investors make is to treat real estate investing as a hobby instead of a profession. If you’re counting on real es-tate investing to provide income now and retirement income later you must treat it like a business. Real estate investing is now your profession. Treat it like one.

By that I mean you have to advertise, devote time to it, show up for appoint-ments on time, act professionally, do your paperwork properly and treat your clients professionally.

Most real estate investing isn’t passive. Unless you are a private lender most in-vesting takes real work. Even a landlord using a property manager has work at the outset and should continue to remain ac-tive in oversight.

Th is is not a get-rich-quick scheme. It takes time to build client lists, credi-bility, partnerships and associations. A well-grounded business is built over time unlike “overnight sensations.” It will take you 3 to 5 years to become a real success in this fi eld.

Learn About The Business and Stay Informed

“If you think education is expensive, try ignorance.” Derek Bok

You can lose more money with a mis-take than you can learning how to avoid one. Even if you have been at this busi-ness for years, you need to keep up with current trends and laws. You never get to the point where you know it all or even know “enough”. Some investors honestly believe that there is nothing else that they really need to know to be successful, then a law changes, the market turns, or a new strategy begins to be used. Th ey either miss changes coming in their community that will majorly eff ect their profi ts, put themselves in a position of huge liability, or miss out on time and money saving

tips because they just didn’t take time to stay informed.

In the real estate business, like every-where else, knowledge is power and for investors it’s profi t too.

There Are Many Profi table Strate-gies In Real Estate

Most new investors get into real estate investing aft er hearing about one specif-ic strategy. Th ey have a friend or family member that has participated in real es-tate, they saw a TV show or infomercial or they went to their fi rst REIA meeting and heard a charismatic speaker that made

them want to pursue a specifi c invest-ing strategy. Th ey begin to invest using that strategy because they are drawn to the certainty and proven success of the individual that is in front of them. Af-ter the new investor has any success with one strategy they oft en develop the idea that other strategies are less profi table, more diffi cult to execute, and generally inferior to the one they are using. Sud-denly they develop a certainty that their particular strategy is the supreme strat-egy so there is no earthly reason to even consider anything else.

Following a one particular strategy as a beginning investor can be extremely valuable for the overwhelmed new in-vestor since it allows him to really, really learn how a particular technique works. Th e downside of being so narrowly fo-cused is that it limits the new investor’s opportunities. If you believe that your investing strategy is the only strategy worth pursing, to the exclusion of all others, you will have a narrow viewpoint of what a “good” deal is, and pass up a lot of opportunities to profi t with anoth-er strategy.

Don’t get so stuck in a mindset that you can’t even see good deals if they are out of your comfort zone. Th at being


Real Estate Investing

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5Rental Housing Journal Metro · November 2015

John Sage,RHA Oregon President

10520 NE Weidler, Portland, OR 97220(503) 254-4723 • Fax (503) 254-4821

[email protected] • www.rhaoregon.org

President: John Sage • President Elect: Ron Garcia | Past President: Elizabeth CarpenterSecretary: Lynne Whitney | Treasurer: Elaine Elsea | Offi ce Manager: Cari Pierce

Our Voice Can Be

I have been privileged in my time as president of RHA Oregon to work with some very dedicated and caring

property owners. Th ey not only take great care of their units, but of their tenants. Th ey make diffi cult decisions on how to operate their businesses and how to deal with diffi cult choices when it comes to their tenants. Some would have you think that they view their tenants as ATM’s. Th at their only focus is to see how much they can squeeze out of them in the name of profi t for themselves. If you believe this, then you haven’t really gotten to know these people. Th e RHA Oregon offi ce receives calls every day from property owners wanting to know if they are doing the right thing when it comes to evicting a tenant or raising the rent or any other myriad of complicated choices that have to be made when you own rentals. I have ex-perienced what it is like to make a diffi cult choice when it comes to how to handle a tenant. In the past I have worked with a property owner who was being sued be-cause of a choice that he had made to ad-vise a prospective tenant on which unit to pick. He was concerned about their small children possibly falling out of a second story window. So he advised the tenant to take the fi rst fl oor unit. Was this the right thing to do? From a humane perspective, I would have to say “Yes”. I would have a hard time looking at this as something that he did out of anything other than concern

for a child. However, we all know that this is called steering according to fair housing law and thus he was sued for doing so.

I didn’t bring up this point to have a discussion about Fair Housing. We at RHA Oregon support and train on Fair Housing. Th e reason that I bring this up is to show the caliber of the property owners that I work with all the time. Th ey care about their communities and the people that are in them. Th ey serve on the boards of non-profi ts and as you know they do-nate time, money and of themselves to or-ganizations like RHA Oregon, JOIN, and numerous others. Our late Vice President Robin Lashbaugh was always reminding us to gather coats and socks and other articles of clothing for the homeless. He would then gather them up and deliver them to a shelter. Property owners are not the “Bad Guys”, greedy and only looking out for themselves as some would have you believe. I, myself, am tired of being

portrayed in the media as such when we all know better. Property owners (land-lords) are hoping to fi nd the same thing that we all want. Good neighbors that care about the area and home that they live in, have a good sense of community and want to see that everyone benefi ts and prospers. Pretty simple really!!

On October 14, 2015 the City of Port-land city council voted unanimously to amend City Ordinance 187380; this new regulations requires landlords increasing rent by more than 5% in a 12-month pe-riod or choosing to terminate tenancies for no cause must give a 90-day notice to tenants. Th is new regulation goes into eff ect November 13, 2015. Will the changes that were recently approved by the Portland City Council be a solution or even a step in the right direction for creating more aff ordable housing? What will be the long term eff ects of their short term changes? Why wasn’t something be-

ing done about the shortage of aff ordable housing long before it became a “crisis”? Th ese are the questions that I have heard asked and have myself been asking for some time now. Vice President of RHA Oregon Phil Owen and lobbyist Cin-dy Robert, asked the same things of the Portland City Council when they went to the council meeting to testify on behalf of property owners. I really appreciate them taking the time to go to the council meeting and listen to the boo’s and scorn from the tenant advocates that were there. Th ank you Phil and Cindy!!!

We need to keep asking these questions and watching what is going on with hous-ing in Portland. RHA Oregon is watching what is happening in the rental industry and listening to the conversations at City Halls and the State legislature. As an or-ganization our voice can be a call to make changes that are in the interest of all con-cerned. So I urge you to get involved, pay attention to the choices being made by our local and state government that aff ect our industry. Watch the emails, alerts and newsletters for information and calls to action from RHA Oregon.

Sincerely,John Sage, President RHA OregonStegmann Insurance Agency Inc.

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SK THE SECRET SHOPPER

Available for a limited time! Only one of its kind! Off er expires at midnight! Th ese and similar

phrases are used to make people “spring boldly into action.” Th ey conjure up im-ages of people rushing into department stores and retail outlets to take advantage of incredible off ers on quality merchan-dise, especially during the holiday sea-son. Th e advertisers and merchandisers are trying to create a sense of urgency in the minds of their customers; which will motivate them to take immediate ac-tion. Th ey are in the “sales” business and want the customer to immediately pur-chase a product and part with some of their money!

You may not have to meet monthly or quarterly sales “quotas,” but undoubted-ly you have specifi c occupancy standards which must be met and maintained. Th erefore, you need to rent a certain number of apartments each day, week or month to achieve the goals set for your community. It’s no secret that in the Pa-cifi c Northwest, many prospective rent-ers decide to hibernate for the winter and dig in their heels until aft er the holidays. Th e phone isn’t ringing off the hook like it was in July, and the few people who are moving, may or may not make it to your community before they decide to rent somewhere else fi rst. A vacant apartment today, could be “ringing in the New Year” with you on January 1st.

Th e Secret Shopper phoned three communities, looking for immediate

availability. Each leasing person seemed interested in helping me, but only one motivated me to visit.

My fi rst call was answered promptly by a friendly voice. I stated that I was new to the area and needed to fi nd a place right away. Th e consultant asked where I was moving from and what was bringing me to the area. She then asked for my name and began to inquire about the specifi c needs and requirements I had. It was a pleasant exchange that went on for sever-al minutes. Once the consultant learned what was important to me, she began to talk about various openings. She said that I had called at a good time because there were a couple of great apartments to choose from. Th e consultant invited me to visit and told me the offi ce hours. She said, “If I’m not here, anyone in the offi ce can help you.” She gave me directions and closed with, “I hope to see you soon.”

Th e next call I made was answered with a great deal of enthusiasm. Th e consultant asked for my name right away, and I could hear the smile in her voice as she spoke and off ered her assistance. I explained that I was new to the area and needed to fi nd a place to live right away. Th e con-sultant asked questions to determine my needs and fi nd out what was important to me. She told me there were only two apart-ments available, and briefl y described the positive attributes of each one. She asked when I would like to come by, and we dis-cussed the driving distance and the fact that it was raining. Th e consultant said,

“It’s been kind of slow today because of the weather. If you want to wait and come by tomorrow, I’m sure the apartments will still be available.” I said, “I think I’ll do that.” Th e consultant said, “Great! I’ll see you tomorrow!”

My fi nal call was met with an ener-getic greeting and an immediate off er of help. When the consultant learned that I needed an apartment immediately, she said, “Well, you better get right over here because I only have one left !” I laughed and asked if she could tell me a little bit about it fi rst. Th e consultant described the apartment interior, as well as the view. She explained that the “view apartments” don’t open up very oft en, and said this one was especially nice because of its south-western exposure.

Th e consultant said she had a model to show, and she could take me by the loca-tion of the apartment for rent. She told me they were still getting it ready, but that I could move into it by the week-end. Th e consultant asked if I had time to come over right now. She said she had another appointment in an hour and if I waited, the upcoming apartment would probably be gone. I agreed to come over within the next twenty minutes. Th e consultant then gave directions carefully, since I had stat-ed I was new to the area, and said, “Call me if you get lost.” Before we hung up, she asked for my number to be able to check back with me if I didn’t make it by. Th e consultant thanked me for calling and ended with, “I look forward to meeting

you. I’ll see you when you get here.” What are you doing to create URGEN-

CY when the telephone rings at your com-munity? How do you convince the caller that what you have to off er is worth their time and consideration? Your communi-ty may be just one of a dozen competing for their attention. Why should they vis-it YOUR place, and why should they DO IT NOW? Is there something about your apartments or community that stands out from all the rest? Could it be a unique fl oor plan or desirable location? What about the easy access to area convenienc-es or your sensational staff ? Whatever it is, use it to create urgency to get your call-ers to visit TODAY! Tomorrow is TOO LATE! By then, they will have already rented from the leasing consultant who invited them to visit YESTERDAY!

If you are interested in leasing training or have a question or concern that you would like to see addressed, please reach out to me via e-mail. Otherwise, please contact Jancyn for your employee evalu-ation needs: www.jancyn.com

Ask � e Secret Shopper Provided by: Joyce (Kirby) Bica Former owner of Shoptalk Service Evaluations Consultant to Jancyn Evaluation ShopsE-mail: [email protected] © Joyce (Kirby) Bica

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9 Tips for Real Estate Investing ...continued from page 4

said. You can’t try to participate in a doz-en strategies at once…see number 4.

Have A PlanAll businesses need a game plan. You

can’t just wander aimlessly hoping to find a deal. You also can’t rent an of-fice, decorate it and then sit behind your desk waiting for the phone to ring. It just doesn’t happen that way. You need to de-cide upon a strategy, learn what you need to do, set your goals and make it happen! Have a plan. Pass out 50 business card

Surround Yourself With Like-Mind-ed People

Real estate investing can be “creative” and a bit non-traditional, which means that this profession won’t appear on the Forbes top 100 professions. Because those participating in real estate often do so by working for a corporation or as a realtor, investing as an independent isn’t a main stream career choice. Thus, most people you speak with will tell you it won’t work. Some of your friends might even ask if you bought a course from a late-night television “guru.” They may even laugh and call you “gullible.” Attorneys and other professionals may denounce it because it sounds unusual. Keep in mind that these people are either threatened by their own lack of success or are looking to protect their own butts.

The first thing you should do is join a local real estate association connected to National REIA. These associations will help you keep your thoughts in the right place and prove to you that invest-ing with a plan really does work. You will be connected to investors that have had great successes, those that can share what they learned from their not so suc-cessful deals, and to those who are just starting in the business just like you.

Be PersistentAnyone who’s ever been in sales will

tell you that being persistent is the key to success. Just because a person says “No” to an offer the first time doesn’t mean that’s the final answer. Waiting a couple of weeks and checking back to see if the


a week (or whatever goal you decide is appropriate for the amount of business you want to generate). Talk to 50 people by phone. Make 10 offers a week, spend $100 a month on advertising – whatever your goal is, make it happen every sin-gle week – day in and day out – work the market. Eventually you will start to see results.

Americans Think Homeownership ...continued from page 3

big problem, a substantial drop from 45 percent in 2013.

Perceived obstacles to homeowner-ship have remained mostly unchanged compared to recent years; 78 percent of respondents point to college debt and student loans as the main obstacle to making a home purchase affordable. Seventy-six percent of participants said they have a full-time job but still did not make enough money to purchase a home. Seventy-four percent believe they do not have enough money for a down payment and closing costs.

As the market has improved, concern about the cost of housing has increased. Two-thirds of survey participants said that home prices are more expensive than they were a year ago. There is ad-ditional concern over the lack of avail-able housing; 41 percent said the lack of affordable homes is either a very big or fairly big problem in their area, an in-crease of 9 percent points from 2013.

For adult millennials under the age of 35, the burden of student debt is their chief concern, with 86 percent of respon-dents naming college debt as an obstacle to homeownership. Over half reported that their housing costs are a financial

strain on their budget, 65 percent are concerned about high rental prices, and 60 percent are concerned about high home prices. However, millennials tend to have a more upbeat and positive view about the future of the nation than older Americans, with 42 percent of millenni-als saying that the country is headed in the right direction compared to only 20 percent among those aged 50 and older.

The 2015 National Housing Pulse Sur-vey is conducted by American Strategies and Myers Research & Strategic Ser-vices for NAR’s Housing Opportunity Program. The telephone survey polled 1,000 adults nationwide in the 50 most populous metropolitan statistical areas. An additional 250 interviews were con-ducted with millennial adults (born af-ter 1981) from the same geography. The study has a margin of error of plus or minus 3.1 percentage points.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.1 million members involved in all aspects of the residential and com-mercial real estate industries.


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Long-Term Hold Investing ...continued from page 1

Quality of ConstructionProperties that are built in quality

materials and workmanship tolerate the abuse of tenants, time and the elements much better, than marginally construct-ed properties. Tile, metal or shingle roofs last longer and require less maintenance than fl at roofs. Copper plumbing is pre-ferred to galvanized plumbing. Tenants damage themselves, rather than interior walls, when they punch a plaster wall. Solid wood cabinets will last decades lon-ger than press-board or veneer cabinets. Even if you intend to remodel a property, choose one that has good “bones”.

Target TenantWhen you preview properties, form a

realistic mental picture of who would be a potential tenant(s) for that property. Is it located near a college or a senior cen-ter? Is there a major employer or a hos-pital nearby? Does the rental have a pri-vate outdoor patio? Covered or enclosed parking for a newer car?

With the number and size of bed-rooms, how many people could realisti-cally live in the space long term? What does the property lack, that the potential tenant might desire?

Now that you have formulated a men-tal picture of your tenant(s), think how it would be interacting with that tenant(s), or a succession or variation of that ten-ant(s), for the next 18 years. If the mental picture you are formulating is not pleas-ant, keep shopping for the right property.

FinancingInvestor loans are fi xed rate amor-

tized loans, up to 30 years, for 1-4 family properties. When you purchase 5 unit or

larger properties, it is considered a com-mercial loan. Institutional lenders fi x the interest rate for 3-10 years, and then it is variable or renegotiable, on commercial loans. Sometimes you can fi nd a fi xed 15 year fully amortized commercial loan. If you are going to hold a property long term with a commercial loan, de-velop a game plan for dealing with in-terest rate adjustments or renegotiation, before purchasing.

Formulating a long term rental prop-erty real estate investment strategy in-volves more than analyzing the numbers on paper. Location will be a huge factor in future appreciation and convenience of management. Quality of construction will determine long term maintenance and capital expenditures. If you self manage your properties, the tenants you choose and your relationship with those tenants, will contribute or detract from your quality of life, for decades. Securing stable long term fi nancing, while inter-est rates are historically low, will insure strong cash fl ows until the properties are paid off . Incorporate the importance of location, quality of construction, target tenants and fi nancing strategy into your long term invest portfolio strategy.

Jade Bossert is a licensed Real Estate Bro-ker in Tucson, Arizona that specializes in multifamily property sales. She has been successfully selling real estate in Arizona for over 35 years. She can be contacted at 520-797-6900 or [email protected].

5 Real Estate Investing Fundamentals...continued from page 1

over again.

• Determine what you are looking for in each of your potential investments.

Th ese are just some of the parameters you need to establish for yourself. Th ere is no one book, manual or class where you can learn all this information. No, it requires your spending some time work-ing on what you think is best for you. Th at means you may have to do one of those activities in which investors should engage on a regular basis but oft en don’t – think and plan. As you think and plan, you will be able to clearly defi ne your in-vestment parameters in a way that you can clearly communicate with others who may want to do business with you.

Do Your Essential Due DiligenceAnother key component of real estate

investing involves your due diligence process. Th ere are two very crucial ques-tions to be asked at the beginning:

• Who is involved?

• How are they involved?

Allow me to explain why these ques-tions are so important. It doesn’t mat-ter how papered-up or how careful your lawyer is when draft ing the agreements. If the person on the other side is a per-son of weak or poor character whom you know has a tendency not to honor their word, it will not be a good deal.

You want to be in a situation where someone you know who has very high character and is a capable investor is involved in the transaction. You still need to know HOW they are involved. Are they going to be involved in a way that will make sure the deal goes well, or are they just on the periphery and their

• How much capital per investment are you willing to put at risk?

• How much time will you put into this investment?

• What is the length of time you want your capital to be out working?

• What is the projected rate of return you are seeking?

• What is the minimum rate of return you want from your cash and/or time in each of your investments? When I say “rate of return,” I’m not just talking about an interest rate.

• Do you want your investments to re-sult in your receiving monthly income payments, either interest only or some-thing else, so each investment is gener-ating a monthly cash fl ow to you? ...continued on page 19

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Selecting a ContractorTia Politi, is the Lead Property Manager for Acorn Property Management, ROA

Board Member, and the co-owner of five rental properties.

As renovation season approaches, you may be planning projects for your rental properties. How

can you know you’re hiring an honest, competent person who is capable of performing an effective repair or up-grade at a reasonable price in a timely manner? Many people hire contractors without fully screening them and pay the price in poor quality work, high prices, and projects that go on far beyond the promised end date.

One of the best ways to locate a good contractor is a referral from someone you know and trust. Ask around, and read the endorsements in the ROA bulletin. Of course, you can always ask prospec-tive contractors for referrals from past clients. Even though they will only give you the good ones, you can gain useful information if you ask the right ques-tions. Did the contractor begin the job when promised, or were there excuses? Was their bid accurate, or did costs get added on and if so, were they reasonable? Did they clean up after themselves daily and when the job was complete? Was the job completed to their satisfaction? Did they finish on time?

When you seek bids from contractors, the more detailed the bid, the better. This is the preliminary outline of your con-tract for services and will become very important if there ends up being a dis-pute about the job. Bids should include everything you can think of, including specifics about exactly what materials will be used, down to the thickness and

brand of plywood, to the size of nails, screws, etc. Remember the Chinese sheetrock used in many construction projects a while back? Turns out it was toxic. These details are very important, and if they aren’t spelled out can result in problems for you with no recourse against them, so get it all in writing. Also, who will actually be doing the work? Who will be supervising? Who will be obtaining permits and paying the costs of those?

Timelines are one of the biggest sourc-es of conflict between contractors and their customers. To be a successful con-tractor requires juggling multiple cli-ents and multiple jobs. You are just one client and while they are trying to keep you happy, they are also working to keep their other clients happy. You will likely maintain a good relationship with your contractor if you accept some flexibility in the timeline, but hold them to their commitment. The squeaky wheel does get the grease.

A more positive way to hold contrac-tors accountable (and keep you from having to nag them) is by adding time incentives or penalties. That’s what gov-ernment agencies do and it can help keep a project on track. For instance, the con-tractor may get a bonus of X number of dollars for finishing on time, but the bill is reduced by X number of dollars for each day the project runs over the con-tracted end date. Another useful tool in this regard is to divide their payments into thirds. One third at the beginning of

the job so that they can purchase materi-als and get going; another third at some specified mid-point of completion; and the final third only when every single part of the entire job is complete.

When my daughter accidentally set her bedroom on fire, that’s the deal I struck with the restoration company and it came in very handy when they delayed completion, but still wanted to get paid in full. I received a bill that had late fees on it and I very politely called the con-tractor to inquire (and then his super-visor, when he failed to return my three phone calls). I reiterated the agreement and made it clear once again, that they would not get any part of the final pay-ment until every last part of the job was done and they had failed to finish the trim work on the siding. Gosh darn, they finished up right away! Always keep that final payment on hold, or you will lose your leverage.

A word of caution: While you as an owner are allowed to be an unlicensed individual while performing most re-pairs on your properties, this is not the case with hired help, nor is it the case when dealing with hazardous materi-als such as asbestos or lead-based paint. And ignorance of the law is no excuse! Make sure that if you are dealing with hazardous materials that your contrac-tor has the proper certifications, such as lead-based paint certification if they are disturbing more than two square feet of paint on a property built before 1978, or are hiring a qualified company to dis-

pose of asbestos. Because in the end it’s not only the contractor can be held lia-ble, but you as well. Fines can run into the tens of thousands of dollars. Think hiring a contractor with the proper certifications is expensive? Not hiring one can cost even more. Please refer to the Environmental Protection Agency website for more complete information about hazardous materials in renova-tions. www.epa.gov

The Construction Contractors Board is the agency that oversees licensed con-tractors. On their website, you can find information on all licensed contractors in the state of Oregon, including wheth-er or not they are licensed (Go figure, but some folks actually lie about this.); the kind of license they hold; how long they have operated under a specific li-cense; and whether there have ever been complaints lodged against them and/or any punitive damage awards against their company or their bond. Take a few moments and save yourself a lot of time, trouble, and money.

https://ccbed.ccb.state.or.us/ccb_frames/consumer_info/ccb_index.htm

This column offers general suggestions only and is no substitute for profession-al legal advice. Please consult an attor-ney for advice related to your specific situation.

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...conintued on page 11

Transitioning from T12 to T8, T5 or LED

By Cli� Hockley, PresidentBluestone & Hockley Real Estate Services

Electric lighting is responsible for over one quarter of the energy used in commercial buildings in

the USA. One reason why it continues to be a major contributor to operating costs is because many commercial buildings are still equipped with T12 light bulbs.

As of July 14, 2012, the U.S. no lon-ger manufactures or imports most T12 lamps. Th ese include most standard four foot T12 lamps, eight foot T12 lamps, and two foot T12 U lamps used in commer-cial buildings. Th e EPA recommends retrofi tting all T12 fi xtures in an eff ort to reduce the use of mercury and fos-sil-based fuel, and to support this eff ort, utility districts have created incentive programs to encourage property own-ers to upgrade their lighting. T12 light bulbs can be easily retrofi tted to T8 light bulbs which are smaller, use less energy, and have less mercury in them than T12 bulbs. Th e other alternative, not as easily retrofi tted, are LED bulbs that have no mercury in them at all.

Defi nition of lamp typesFluorescent lights are tube shaped

lamps with a chemical phosphor coating on the inside of the tube. Th e have small pins on each end that fi t into the ballasts located in light fi xtures.

T12 lamps have a diameter of 1 ½ inches (or 12/8th of an inch.)

T8 lamps are fl uorescent lights one inch (or 8/8ths) in diameter.

T5 lamps are 5/8th in diameter. LED lights use light emitting diodes

to produce light very effi ciently. An elec-trical current passes through semicon-ductor material, which illuminates the tiny light sources we call LEDs. LEDs do not contain mercury.

Effi ciencyTh e smaller the lamps the more en-

ergy effi cient they are. T8 bulbs use about 35% less electricity to produce the same amount of light as a T12. T5 bulbs use about 45% less energy than T12s. For some applications, one T5 bulb can replace two T12 bulbs, providing even greater energy savings (a process called “de-lamping.”)

Th e process, however, can be more complex than plugging in a new bulb. Older bulbs, like T12s, used magnetic ballasts while newer, more effi cient T8s and T5s use electronic ballasts. T8s can be retrofi tted into T12 fi xtures. In some cases, changing to T5s requires replacing or rewiring the whole light fi xture, add-ing signifi cant cost and complexity in the interest of improved effi ciency.

LED lightingTh e typical T12 four-lamp fi xture uses

172 watts of power between the lamps and ballast. LED equivalents typically use only 50 watts, 71% less energy per fi xture. Not only are they brighter per watt, they also last longer than even the preferred fl orescent bulbs. T8 and T5

bulbs can last up to 4 years maximum, which sounds good until you learn that LED bulbs can last up to 10 years in a new fi xture. With replacement lights, there is almost no price diff erential be-tween LEDs and T5s. With the energy savings being so great the no-brainer is to go with LEDs.

In a 2013 article, Michigan-based Hovey Lighting, an energy effi cient com-mercial lighting provider, argued the advantages of retrofi tting with direct re-placement LEDs (where you don’t need to replace the ballast) over T8s. Here are some of their reasons:

“LED Replacement Bulbs are 30% More Effi cient

So not only do you get more light from a LED replacement bulb, they use less watt-age. LED replacement bulbs only use 22 watts vs 28-32 watts with T8 making the LED 30% more effi cient.

LED Still Give Off Light At End-of-Life

A fl uorescent bulb at the end of its life is very simple to spot, because it is DEAD, nothing left . A T8 bulb is considered end-

of-life at 60% of its light output, which equates to roughly 14,400 hours.

LED replacement bulbs on the other hand, calculate the end of life at 70% which is approximately 50,000 hours.

In order to keep up with LED, you will have to replace the T8 bulbs 3.5 times.

LED Replacement Bulbs Have No Mercury

One of the most important diff erences lies in the fact that there is no Mercury or Glass Content with LED lighting.

In the State of Washington alone, over 10 Million lamps are disposed of in landfi lls each year. Th ose 10 Million lamps hold roughly 400 lbs of toxic Mercury waste that gets deposited each year.

Washington State estimates that only 2 out of 10 bulbs are eff ectively recycled.

LED Does Not Give Off UV

LED replacement bulbs do not emit any light in the non-visible light spectrum (UV). UV/IR light causes colors to fade in fabrics, signage, while also being the lead-ing cause for eye strain and eye fatigue.

Fluorescent T8 bulbs emit UV/IR light.

LED Makes Air Conditioning More Effi cient

LED fi xtures contribute little to none in regards to heat gain in a room or air con-ditioned space. Th e LED generates less heat. Less heat means that the Air Con-ditioning system does not have to work as hard.

Th is is vitally important if you are doing a new build or upgrade as you may be able to utilize smaller A/C systems to heat the same area.

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9 Tips For Real Estate Investing ...continued from page 7

situation has changed can make all the diff erence, or changing the terms of the off er slightly to accommodate the seller can jump start negotiations.

Have a good follow-up system for tracking contacts, leads and conversa-tions you’ve had with both buyers and sellers. You’ll get to the point where you’re so busy you can’t possibly remem-ber all the conversations you’ve had with everyone – it’s important to be able to pull up that information so you know where you are in the negotiation pro-cess. Anyone who has ever been in sales will tell you that few deals are ever made on the fi rst try. Use a system that allows you to schedule follow ups and keep a running history of calls and conversa-tions. One of the National REIA benefi ts is a huge discount on Realefl ow, but you could also use ACT by Sage, an Outlook or Gmail plug-in or one of hundreds of apps for your phone or iPad. It doesn’t matter what soft ware you use as long as you actually use it.

Have a Team On Your SideDon’t wait until you have a big deal

pending and need to ask questions be-fore assembling a team you can turn to. You need to go out and cultivate rela-tionships with reliable professionals you can depend on. Here’s who you need on your team:

• Attorney – preferably someone who’s familiar with the needs of a real estate professional. Make sure they under-stand the specifi c real estate strategy that you are using and that they’ve had some experience in that specifi c strategy. You don’t need to know all

the insurance products they sell are right for investors. We have needs that are far diff erent than your average home owner.

• CPA or Accountant – fi nd one that’s a real estate investor – they’ll know the ins and outs of the business and when to be aggressive. You can lose $1,000s in deductions and tax breaks without a professional that knows the most up to date tax law as it applies specifi cally for investors.

• Contractor – you need a reliable pro-

...conintued on page 16

Transitioning from T12 to T8 ...continued from page 10

of the real estate laws that will aff ect your business but you need an advisor who does.

• Insurance Agent – you need one that also understands your strategy and investors in general. Make sure

Th e beam angle of the LED replacement bulb is 110 degrees. Th is means that all of the light generated by the LED bulb is focused in the 110 degree area.

Th e T8 bulb on the other has a beam angle of 360 degrees. Th at means the majority of the light generated by the T8 bulb is go-ing out the sides and top of the bulb, which does not benefi t the intended target.”

Th is may lead you to consider retrofi t-ting your commercial building to save en-ergy. But is the initial investment worth it? In our offi ce building the owner sends a technician to replace burnt out light bulbs monthly. At the very least, the lon-gevity of LEDs would save this labor cost.

Retrofi tting Th e decision to retrofi t a building can

be a diffi cult and potentially expensive one, but many resources are available to help. In the Portland, Oregon / Vancou-ver, Washington metro area companies like Pacifi c Lamp Wholesale, Phoenix Electric and Pacifi c Energy Concepts lead the way in energy retrofi ts. Th ey conduct a lighting retrofi t analysis, draft an implementation plan and introduce owners to the applicable cash incentive programs off ered by the Energy Trust of Oregon (or the local electricity supplier / utility district). Th ese programs change all of the time and need to be reviewed at the time that you are ready to make a retrofi t decision. Th ere are currently no federal or state tax credits available for commercial building retrofi ts.

Recycling old lampsAs previously mentioned, all fl uo-

rescent lights contain mercury, and the ballasts for old long-tube lights contain PCBs, so when you do decide to dis-card your old fl uorescents, remember to recycle rather than tossing them in the trash. For large retrofi ts, the com-pany you contract with will most likely dispose of the old lamps, but for smaller jobs, many local governments and com-mercial retailers off er no cost recycling drop-off s. Among the larger retailers, Home Depot, IKEA, and Orchards Sup-ply Hardware off er fl uorescent recycling. Another option is your city’s hazardous waste facility.

It makes total sense to retrofi t build-ings and even portions of buildings when you are leasing to a new tenant so you can include it in a tenant improve-ment plan. Retrofi tting the lighting in commercial buildings is a logical step since it saves you money on your elec-trical bill while improving the lighting. You use less electricity and it makes your building more attractive to lease and easer to work within. So consider retro-fi tting your lighting as you make deci-sions to update your commercial build-ing, especially when you are moving in new tenants. Tie the cost to your tenant improvement package.

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12



spect and keep the property looking well maintained. A clean property with great looking landscaping, a current paint job without any mold or a refinished roof will net you more rent. Yes, it will cost more to maintain, but in my opinion the payback will be in the form of higher rent, longer tenancies and lower turn-over costs. Don’t forget, tenants want to be appreciated just like you do. If you have a property manager you work with, have them help you draft an annual bud-get and forecast the annual increases. Think into the future; plan your rent in-creases and capital expenses two to three years ahead so you can better control your long term destiny.

Commercial: Owners of office, retail or industrial buildings need to think through the same process. They need to develop a plan that lasts through the initial lease term and includes details regarding the tenant’s options to renew, (since commercial tenants tends to stay for 3-10 years, even more planning is in-volved in controlling the costs and the rental increases). Annually, property owners need to review the comparative position of their property. They need to be realistic regarding the value of their real estate. Just as with residential in-vestments, they must consider the con-dition and location of their investment. Commercial landlords need to have a long term plan in place that keeps rent increasing on an annual basis

If you make a concession regarding a starting rent to get a tenant in, plan to step it up to market value within three years. Aim for a minimum of 21/2 % to 3% in annual increases based off the pre-negotiated step increase or per-centages that increase on the basis of a business’ success (typically used by re-tail businesses). I am not a huge fan of CPI (consumer price index) increases because the government has too much control of those numbers. Don’t permit expense caps unless you can stay ahead of the expenses, regardless of the caps.

Landlords and their property manag-ers should not automatically cave into very low or zero rent increases at lease renewal time, even if the tenant threat-ens to move out. Run realistic scenarios regarding the cost of re-tenanting. In-clude vacancy rates, leasing commis-sions and tenant improvements in these calculated scenarios. Consider also, the moving costs an existing tenant will face. Understand their business and business goals, their staffing and their success at your location.

Most importantly while they are rent-ing from you, fix repairs that are required by your lease, and fix them quickly. Show your tenants you appreciate them by treating them how you would want to be treated, otherwise they will blame you and possibly hold back rental payments, do the repairs themselves or, worse yet, move out.

We once had a client who took two months to repair the air conditioning units on a newly leased space. It was wintertime and it was raining; the tenant

was livid and hired an attorney to pre-serve their rights under their lease. The landlord wanted absolutely the lowest price for the repairs and getting the low-est price took over 30 days of negotiating with vendors. The tenant almost moved out because it took so long, and alterna-tive cooling systems needed to be pro-vided. The experience drove them to be-come a hostile tenant. These bad feelings could have been prevented and we could have agreed on rent increases and lease renewals with this tenant if the landlord would have allowed the property manag-er to be more proactive. Note: Typically property managers have vendors they work with that are reasonably priced who respond quickly, but they may not be the absolute – lowest, period.

ConclusionInevitably, attention to detail, future

planning, a current understanding of the marketplace, and a fair and realistic approach to taking care of your proper-ties will yield higher returns for real es-tate investors. A key component to prof-itability is a focus on current and future rental incomes. Sticking to the basics with an annual planning process and taking care of your tenants will increase your annual yield and keep reliable ten-ants in your properties.

Are You Leaving Money ...continued from page 1

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13Rental Housing Journal Metro · November 2015


Find Your Life Path and

I believe most people eventually arrive at a place in life where

they realize that the path they’ve taken to get to their current career des-

tination has been dotted with numerous learning opportunities. Although per-haps not fully appreciated at the time – these shaped and created the individuals they are today. In this month’s writing I rewind my own career and note a few valuable pieces of advice I have picked up along the way.

Be humble.When I graduated college I felt ready

to take on…or was it “take over”...the world. It was going to be so simple to obtain gainful employment in any fi eld of my choosing. Aft er all I had this sa-cred piece of paper called a college de-gree. I was bulletproof, young, vibrant, and good-looking! Who would turn all that down? Well…quite a few people as it turns out. Th is is the season when I learned the rewards of tenacity, self-sell-ing, and perseverance and learned how to take “no” for an answer…but the most valuable lesson was never, never, never give up!

Watch your step.Understand that politics are every-

where and learning how to navigate those of the offi ce and workplace is vital to both

smooth survival and attaining success.Navigating offi ce politics is a learned

art and takes time. Learning diff erent personalities and how they react in dif-ferent situations is essential for harmony and growth in any offi ce setting. For ef-fective leadership… it is essential.

Clothes make the man/woman.Dress for the next level up. When I

began my career in property manage-ment back in the early 90s I started as a site manage at age 25. I was leaving the fi nancial services fi eld where my daily uniform was a suit and tie. Th is carried over to my new industry as every day I wore my same Wall Street commando

outfi t and carried a briefcase to the leas-ing offi ce. Dressed for success, I could place myself in the mindset of achiev-ing and “see” the next promotion in my head. It was and is powerful. What we visualize in our head subconsciously guides our actions.

“Do” then “be”….not “be” then “do”.It is important not to get ahead of

yourself. It may look quite impressive to have that corner offi ce given to you…but remember there are steps to getting there. No shortcuts exist…and if they are taken, the stay is usually short-lived. Achieving success takes time, hard work and tenacity. “Do” the work necessary to

Navigate it Carefullybecome an Executive Offi cer and even-tually you will “be” just that. Reversing the order simply does not work.

Be on time. Establish yourself as punctual and you

defi ne your image as someone who is de-pendable, hard working and respectful of others. Th is also shows self-respect and an appreciation for being organized and in-control.

Stay healthy - eat right and exercise.I have always said that when you feel

good you maintain a sense of having a physical edge. And when there is a phys-ical edge, there is a mental edge. Nour-ishing your body and nourishing your mind with healthy choices is essential to success. Do things that make you feel good about yourself and the universe will bring good things into your life. Smile more, frown less.

Develop consistency and maintain balance.

Anything done to excess is potentially harmful. Seek moderation and balance in your work and home life. Obsessing about the job or personal issues can be harmful to both mental and physical health. Seek harmony through relax-ation techniques. Take that vacation you need. Turn off the phone and un-plug

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15



Is It Really Rent Control? New tenant protection ordinance passed by the

Portland City Council in October of 2015By Cli� ord A. Hockley, PresidentBluestone & Hockley Real Estate Services

On October 14, 2015 the city commissioners of the City of Portland unanimously voted to

modify the laws that govern landlord / tenant relations in the City of Portland. Th eir stated objective was to help tenants manage the low city vacancy rates. Th ese low vacancy rates are especially diffi cult for low income and disabled tenants to manage, because in order to move they need to save for moving costs, deposits and rent. Most low income tenants live from paycheck to paycheck (or public assistance check) and fi nd it diffi cult to save enough money to move.

To help those tenants, the city com-missioners passed the following addi-tional renter protections.

• 1. Th ey extended no cause lease ter-minations from 30 and/or 60 days as established in the Oregon Landlord Tenant Law to 90 days.

• 2. Th ey limited rent and/or utility in-creases to fi ve (5%) percent within a 12 month period if the tenant is given less than a 90 day notice of the increase.

• 3. Th ey put teeth into the enforcement section of this ordinance, penalizing a non-compliant landlord with an amount of up to three months’ rent as well as actual damages, reasonable at-torney fees and costs.

Th e bottom line is that the city com-missioners bought tenants more time to be able to get together the funds they need to move. Th ey also preserved the rights of landlords to pass through rent increases, albeit with a longer lead time. Th e major downside for landlords with this new language is that if you have a problem tenant you need out right away, you will have to use a for cause notice.

I have attached the language as passed by the City of Portland and codifi ed as section 30.01.085.

30.01.085 Portland Renter Addition-al Protections.

• A. In addition to the protections set forth in the Residential Landlord and Tenant Act, the following additional protections apply to Tenants that have a Rental Agreement for Premises cov-ered by the Act. For purposes of this chapter, capitalized terms have the meaning set forth in the Residential Landlord and Tenant Act.

• B. A Landlord may terminate a Rental Agreement without a cause specifi ed in the Act only by delivering a written notice of termination to the Tenant of (a) not less than 90 days before the ter-mination date designated in that notice as calculated under the Act; or (b) the time period designated in the Rental Agreement, whichever is longer. Th is

requirement does not apply to Rental Agreements for week-to-week tenan-cies or to Tenants that occupy the same Dwelling Unit as the Landlord.

• C. A Landlord may not increase a Tenant’s Rent or Associated Housing Costs by 5 percent or more over a 12 month period unless the Landlord gives notice in writing to each aff ected Tenant: (a) at least 90 days prior to the eff ective date of the rent increase; or (b) the time period designated in the Rental Agreement, whichever is longer. Such notice must specify the amount of the increase, the amount of the new Rent or Associated Housing Costs and the date, as calculated under the Act, when the increase becomes eff ective.

• D. A Landlord that fails to comply with any of the requirements set forth in this section 30.01.085 shall be liable to the Tenant for an amount up to three months’ Rent as well as actual damag-es, reasonable attorney fees and costs (collectively, “Damages”). Any Tenant claiming to be aggrieved by a Land-lord’s noncompliance with the forego-ing has a cause of action in any court of competent jurisdiction for Dam-ages and such other remedies as may be appropriate.


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fessional that shows up on time, com-pletes the job within budget and knows how to make suggestions that will save you money. Free estimates don’t hurt either.

• Mortgage broker, private money lender, hard money lender or other money professional – fi nd one that’s experienced with investors, knowl-edgeable and creative. You can never have too many people who are willing to fund your deals.

• Mentor – someone who’s been there and done that.

• Title or Escrow Company – fi nd one that caters to investors. Make sure they understand double closings, land con-tracts, etc. Your local REIA group has local and

national providers to use to build your team. Th ese professionals work dai-ly with investors and understand their special needs and requirements. It is a

beautiful day when you realize that you can fi nd people to add to your team that can do all of the things in your busi-ness that you hate.

Don’t Waste Time With Unmotivated Sellers

Th is is possibly the most common mistake new investors make. Some be-ginning investors waste time talking to sellers who are only marginally motivat-ed. Even worse, they drive by the house and look for comps without even talking to the seller fi rst. Th ere’s a diff erence be-tween being persistent with a seller or buyer who hasn’t yet made up their mind about what they want to do and dealing with a seller who really has no intention of selling anytime in the near future. Don’t waste your time if the seller falls into the latter group.

Never Forget Th at Real Estate Is Re-ally About People

In the end real estate isn’t about the

land, the house, or even the money. On a practical note and an altruistic note, it really is all about the people.

Many people go through their fi rst years of real estate investing making all their off ers based on the properties. Th is is a huge mistake. Th ese investors worry about making really low off ers because they are concerned that it will make them a “bad” person to “take advantage” of a seller, especially one in a tough situa-tion. What they don’t understand is that many people will happily forgo profi ts if other benefi ts are more important to them. Some people need speed, some need ease of exit, some need someone else to blame. I’ve heard more than one investor tell a story about a seller who happily sold below market because their son, sister, nephew – pick a relation – wouldn’t pay rent or move and they hon-estly just wanted to sell the house and let you deal with the situation!

Th ere is a scale of client motivations, the Hustead Scale, that concisely de-scribes the level of motivation a seller has. Th e most motivated sellers will pay to get out of a house. Something in their life makes being out of that property so important that they will pay you to take the property.

Many investors make off er aft er of-fer, receiving rejection aft er rejection,

never bothering to ask the seller what they want, assuming they already know. Making off ers on the properties because you think you understand the value is far less eff ective and far less profi table than making an off er that provides the seller an option they didn’t know existed, a solution to their problem.

Th e moral of the story here is that if you listen, and I mean REALLY listen, and try to solve the seller’s problem you will always make more money than if you try to just apply your cookie cutter approach. Zig Ziglar used to say “You will get all you want in life, if you help enough other people get what they want.” He’s right. Th is business, at its core, is about people. We provide housing, we provide solutions, and sometimes most importantly, we provide options they didn’t know were available.

Th ere you have it. Follow these nine simple steps and before you know it, you’ll be an outstanding real estate investor.

9 Tips for Real Estate Investing ...continued from page 7

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Portland City Council Acts

On October 14, 2015, the Port-land City Council approved law changes to increase the amount

of notice given to tenants for a no cause termination notice and on rent increases of 5% or more within the city of Port-land. State law requires a landlord give 30 days notice when issuing a without stat-ed cause termination notice for a tenancy less than one year, and 60 days notice to terminate a tenancy that is over one year. The new law requires a 90 day notice to terminate a tenancy for without stated cause in either situation.

State law requires a landlord to give 30 days notice to increase rent in month-to-month tenancies. The new Portland ordi-nance requires 90 days notice to increase rent, including associated housing costs, by 5% or more in any 12 month period. In addition, the city council discussed a proposed $25,000 tax on demolition. All changes only affect property within the city limits.

Obviously, this will have some effect on how landlords and developers do business in the city of Portland. Sam Johnson, owner of Landlord Solutions Inc, a Portland based evictions service provider, has received numerous calls from concerned landlords wanting to know how this will effect them, and what they need to do to when the laws go into effect on November 13, 2015.

Sam recently sat down with Portland landlord - tenant attorney Mark Pas-sannante to discuss the matter. The fol-

lowing questions are based on concerns from real landlords:

Sam JohnsonA landlord in the city of Portland gave a no cause notice per the State laws before the rule changes went into effect and the termination date falls after the Novem-ber 13, 2015 law changes. How does this affect the notice?

Mark PassannanteThe text of the ordinance appears to oper-ate on the notice itself so likely would not affect a termination notice given prior to the effective date. While the ordinance text is consistent with the above analysis, there is always some uncertainty in how a new ordinance will be applied by the court, which I could not fully analyze in a brief answer to the above question.

SJLets say that a landlord sent a 30 day rent increase notice of above 5% before the new law went into effect, but the

to Stall Evictions and Rent Increases

first day of the higher rent comes after November 13, 2015. What is your un-derstanding?

MP My understanding is that the intent of the ordinance from persons at the meet-ing was that it would affect notices issued after November 13, 2015. However, the text of the ordinance appears to operate on the increase. While the comments of the city council can be used by the courts in resolving some ambiguity in the or-dinance, given the text I read, it seems more likely that a court would apply the ordinance to notices served before the ef-fective date, but that take effect after the effective date.

SJA landlord wants to raise the rent 4% and only give 30 days notice to stay be-low the threshold of the new law. Is there a limit to how many times rent can be raised by 4% or less in one year?

MPThe ordinance prohibits increases of rent and associated housing costs in any one year. So a 4% increase is not affect-ed, but another increase of 1% or more for 12 months would require 90 days written notice.

SJA tenant moves out that was paying $1200/month and the landlord wants to raise rents to $1700/month for the next tenancy. Are there any restrictions on that activity for new tenancies?

MPThe ordinance does not apply to the orig-inal rent and associated housing costs provided in a new tenancy.

SJSpecifically, do these laws address the problem of inventory and lack of hous-ing that we are seeing in the market?

MP Not in my opinion.

Sam Johnson is Principal as Landlord Solu-tions, Inc, Oregon & SW Washington’s leading evictions service provider. Sam can be reached at [email protected]

Mark Passannante is attorney licensed in Oregon and Washington that been practicing for 21 years with significant trial experience in residential landlord tenant matters in both Oregon and Washington. Mark can be reached at (503) 294-0910

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If Resident, wi a ustification, fails to vacate on the date set forth above, Owner/Agentwill suffer s because of inability to gain access for maintenance or turn-overwork or to al ents to move in and Resident will be responsible for such damages.Thes mag but are not limited to: (i) the value of any rent accruing from thee r of the Rental Agreement until Owner/Agent knows or should know

uished possession of the unit; (ii) loss of rent due to delays ina new resident; (iii) any amounts due a new resident because of

any ent’s ability to provide possession; (iv) the costs of Owner/Agent’semplo with the delayed delivery of possession; and (v) costs imposed by

racto ndors rescheduling their work.

OPTIONAL: Owner/Agent may, but is not required to, include an explanation of the reason(s) for the termination. If an explanation is included,this notice is still given without stated cause, Resident does not have a right to cure the reason(s) for the termination and Owner/Agent need notprove the reason(s) for the termination in a court action.

Reason(s) for termination: _______________________________________________________________________________________________________________________________________________________________________________________________________

_______________________________________________________________________________________________________________________________________________________________________________________________________

DATE __________________________________________ PROPERTY NAME / NUMBER ____________________________________________________ _____ ___________________________________________________________________

RESIDENT NAME(S) ___________________________________________________________________________ __________________________________________________ _____ ____________________________________________________

___________________________________________________________________________ ____________________________________________________________ _______________________________________________________

UNIT NUMBER ___________________________________ STREET ADDRESS ______________________________________________________ ______________________________ _________________________________________________________________

CITY __________________________________________________________________________________________________________________________________________________ _____ _________ ZIP _____________________________________________________________

and all others.

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PORTLAND, OREGONEND OF TENANCY NOTICEMONTH-TO-MONTH OR NON-RENEWAL OF LEASE

Pursuant to Oregon landlord / tenant law and City of Portland ordinances, THIS IS YOUR 90-DAY NOTICE OF THE OWNER/AGENT’S INTENT TO TERMINATE YOUR TENANCY.

c This notice has been served personally and is effective at least 91 days later at midnight (end of day) on ____________________________________.or

c If written rental agreement allows, this notice has been served by posting on the main entrance door of the dwelling unitand mailed first class mail. It is effective at least 91 days later at midnight (end of day) on ____________________________________.

orc This notice has been served by first class mail only and the effective date is extended by four days including the date

mailed. It is effective at least 94 days later at midnight (end of day) on ____________________________________.

THIS NOTICE SHOULD ONLY BE USED WHEN THE UNIT IS LOCATED WITHIN THE CITY .

DATE

DATE

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OWNER/AGENT ____________________________________________________________________________________________________________________

ADDRESS ____________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________

TELEPHONE ____________________________________________________________________________________________________________________

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LAST MONTH ACCOUNTING - ESTIMATED

For the period of ________________________ thru ________________________DATE DATE

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18 Rental Housing Journal Metro · November 2015

Find Your Path ...continued from page 13

for a while. It can be rejuvenating!

Stay true to your moral compass. Be true to yourself and you can be true

to others. Be false and the opposite will follow. Do not give in to gossip. Follow the golden rule and never compromise your integrity or your word.

Do it right the fi rst time. My dad, a weekend carpenter, is fond

of saying “measure twice and cut once”. Striving to produce top quality work re-fl ects a pride in your performance. Pre-paring in advance reduces stress and lends to better output and production. Strive to “put your signature” on all you do.

Choose your friends wisely. It has been said that a person’s char-

acter is refl ected in the character of the friends he or she keeps. Surround your-self with people that keep you feeling and acting positive and you will thrive in good times and weather the low-times. Fly with high altitude people and you will attain new heights yourself.

And lastly, protect your reputation. Th e only thing more diffi cult than es-

tablishing a good reputation is recover-ing from a bad one. Making careful and wise decisions regarding your business practices, your personal choices, and your private life will go far in establish-ing how you are perceived by associates, family, friends and within the local busi-ness community.

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11/11/2015 NALP: Eff ectively Meeting the Needs of Current Resi-dents

11/11/2015 SOLD OUT - Washington Landlord Tenant Law11/12/2015 Reverse Trade Show11/12/2015 November Board of Directors Meeting11/13/2015 It’s the Law Lunchtime Series: Am I the Referee? Domes-

tic Violence Obligations and Inter-Tenant Disputes11/13/2015 SOLD OUT - Client Trust Accounting11/16/2015 Advanced Tax Credit Workshop11/16/2015 Oregon Landlord Tenant Law - Part II11/17/2015 HD Supply class: Electrical & Plumbing Topic11/18/2015 November Luncheon: Disaster/ Emergency Preparation11/25/2015 Maintenance Tips, Tricks & Pitfalls12/2/2015 Fair Housing Basics with a Historical Perspective12/3/2015 NALP: Th e Market Survey Presentation

12/11/2015 It's the Law Lunchtime Series: Cutting Edge Topics: A 2015 Retrospective

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5 Real Estate Investing Fundamentals...continued from page 8

appropriate outside professionals and other parties to the transaction (yes, get a professional review each time).

By always working from a baseline document, you have a template in place so you aren’t reinventing the wheel ev-ery time. You are also able to maintain a greater degree of privacy and security over what you’ve done with other deals. I oft en see individuals who grab the last document they used (last lease, last trust agreement, last operating agreement, etc.), and they begin making edits to that one for the next deal, not realizing that there may be holdovers, both dig-itally and facially, in tvhat document. Has that ever happened to me? Embar-rassingly, yes. I have taken steps, how-ever, to prevent it from happening again in the future. Th at’s why I’m sharing this concept with you.

Whatever the type of document, whether promissory note, mortgage,

deed of trust, option agreement, due dil-igence checklist, or borrower question-naire and loan application, have them saved in a baseline format that you can quickly modify it for the particular deal on which you are working. Th is will al-low you to be much more organized as you prepare these documents on your own to be sent to your lawyer or other licensed professional for review and then used in the transaction.

Remember, it’s all about getting good at the basics. Make sure you master the basics of real estate investing, establish your parameters, do thorough due dil-igence regarding those with whom you are working, and work from the same, consistent set of documents so you can continue to repeat your successes.

name is just being “borrowed” for mar-keting or window-dressing purposes?

Once those key questions have been answered and you understand who is involved and how, and you have done some basic due diligence on them, then you are able to determine if you want to proceed with further due diligence on the deal or investment.

Even though you may have a long, suc-cessful track record of doing multiple deals with individuals, it never hurts to check up on them again to see if things have been going well in other aspects of their lives. Allow me to share a brief sto-ry to illustrate this point.

A client of mine indicated that he had made a series of large-dollar, hard-mon-ey loans to a rehabber who always got the properties fi nished in great condi-tion, and they sold for top dollar. Aft er doing several of these deals, he began to feel very comfortable with this borrower.

Unbeknownst to him, this borrow-er was having marital problems. Once those problems grew to the point where domestic relations court and lawyers be-

came involved, this individual’s rehab-bing business fell apart, and one of my client’s loans was put in a great deal of jeopardy. Fortunately, things worked out and full payment was made, but it was late and destroyed my client’s belief that this rehabber could be counted on to perform and pay on time.

Make sure you develop the type of relationship with the individual with whom you are doing business that allows you to look them in the eye and ask them how they are doing and what else is go-ing on in their life so you can pick up on what issues may be on the horizon that could aff ect the way you are doing busi-ness with them.

Organize Your Deal PaperworkTh ere is one last fundamental prin-

ciple that investors need to understand that I want to share with you. You need to organize your paperwork. You need to have all your baseline transactional documents saved in Word format so you can easily do your own word processing and create nearly-completed draft s of your documents to be reviewed by the

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rental housing journal metro november 2015

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