Filed under: General, MMHA, MMHA Apartment Report, NARPM, Property Management, The Landlord Times, Uncategorized | Tags: Chris Hermanski, MMHA, MMHA Apartment Report, NARPM, Portland Metro Apartment Market, Portland OR, rentals
By Mark D. Barry, MAI and Phillip E. Barry, Real Estate Broker
The Landlord Times Metro - November 2010 - Vol.14 Issue 10
In late 2009, there were high hopes that our economy had hit bottom, and would be well on the road to recovery by this time. However, the recovery has slowed down in both the US and Portland, and is losing steam. Issues impacting the Portland economy are high unemployment, lackluster private sector hiring, the 9% across the board proposed state budget cuts, slow single-family sales, and Oregon now having the third highest rate of foreclosures in the country. So just what is happening here with the apartment market as of October 2010?
Portland Economy
Good news of late includes IBM announcing that they will add 600 jobs in Beaverton, Daimler announcing they will continue manufacturing trucks at their Swan Island plant, Greenbrier adding 260 jobs, and Vestas deciding to move forward with a $66 million headquarters project in the Pearl. However, we have actually lost 7,500 wage and salary jobs since January 2010, and our employment rate is 10.2%.
Apartment Construction
2010 will go down as the slowest year for apartment construction since the early 1960′s. Permits have been issued for just 460 apartment units in the four county metro area for 2010 through July vs. an average of around 4,000 units per year for the previous ten years. Apartment construction is dead!
Apartment Vacancies, Rental Rates, and Incomes
Apartment vacancies are reported at 4.0% in the fall 2010 MMHA Apartment Report. The average rent per Sq. Ft. of $0.91 is exactly where it was a year ago in the fall 2009 survey. Apartment vacancies are low to normal in most areas, with only Wilsonville and E. Vancouver showing apartment vacancies over 6.0%. However, our analysis of YTD 2010 operating statements shows that the income at most apartments is basically flat, with slightly more properties showing a decline in income that an increase. The biggest problem impacting landlords is tenants who have lost their jobs and who are forced to move.
Apartment Expenses
We are amazed at the rapid acceleration of expenses in recent years. Property taxes in Portland are up around 4.5 % percent per year over the last four years, while utility cost increases have gone up around 10% per year. In addition, our area had a huge construction boom from 1965 to 1980, and we are amazed at how high the overall repair and maintenance costs have gotten for these properties. With a flat income, expenses up around 10% in two years, net income is down by 5% to 8%.
Apartment Values
A flat income, some increases in expenses, and higher cap rates have impacted apartment values in recent years. Cap rates showed a noticeable increase in the second half of 2009 in comparison with the first half. Co Star figures show a 7.38% median cap rate for the second half of 2009, and a 7.01% median cap rate for the YTD 2010. Our analysis shows a decline in value of 10% to 20% from the peak in late 2007 and early 2008. However, apartment values have firmed up and been stable over the last year. The median price per Sq. Ft. for YTD 2010 is virtually identical with the second half of 2009.
Apartment Sales Volume:
YTD 2010 has continued to be a challenge for apartment brokers, though there was a noticeable improvement in the second and third quarter. There have been 61 apartment sales for $215.1 million in the first eight months of 2010 vs. 81 sales for $281.8 million on 2009. Apartment sales volume averaged $800 million per year from 2003 to 2008, and thus the 2010 sales volume is off by around 60%. However, 2010 will be a better year for apartment brokers that 2009, with sales volume and the number of transactions up by around 15%.
Next – PART II: Forecast for Balance of 2010 and 2o11
Filed under: NARPM, Property Management, Uncategorized | Tags: Chris Hermanski, NARPM, Portland OR, rentals
“Since the end of World War II, the “American Dream” has been defined as owning a house. But it didn’t start out that way. When historian James Truslow Adams coined the phrase in 1931 it meant “a better, richer, and happier life for all our citizens of every rank.”
Adams wrote of the “dream” of America as an opportunity to overcome the old world’s social orders. He specifically said that it has “Always meant more than the accumulation of material goods.”
Adam’s American Dream became co-opted in the post-war years after massive federal intervention in the housing market helped turn America into a nation of homeowners. Before that, there was no stigma attached to renting; as house – whether rented or owned - was simply a place from which to pursue the dream of personal achievement.
Returning to the Way We Were
In 2009, the American Dream returned to the way it was; the way it should be.
As house prices collapsed and the so-called dream of homeownership turned into a financial and emotional nightmare for millions, people began dreaming of more sustainable and rewarding lives. They discovered that you don’t have to buy a house to achieve the American Dream.
Americans of all income levels – even the wealthy – exchanged their mortgages for rent payments, and the conveniences, amenities and flexibility of apartment living once again became chic.
A Pall on Ownership
Homeownership’s near sacred reputation has been tainted by the bursting of the housing bubble. The evidence that homeownership is a risky investment is everywhere. House prices have plummeted 30 percent since the housing market’s peak and are expected to drop another 10 percent. U.S. home-owners have lost about $5.9 trillion in value since housing market’s peak in March 2006, according to Zillow.com.
Eye-opening statistics are abundant: One in seven loans was in foreclosure by the end of September 2009, the highest on record, according to the Mortgage Bankers Association. Moody’s Economy.com expected that 2.4 million homes will have been “lost” in 2009 alone through foreclosures, short sales or deeds in lieu of foreclosure. This follows the 3.2 million households who received foreclosure notices in 2008. Some predict there will be 10 million or more foreclosures by the end of this cycle.
Nearly 11 million homeowners – one in four – are “underwater” on their mortgages, according to FirstAmerican CoreLogic, and analysts at Deutsche Bank Securities expect that number to rise to 21 million by the end of 2010. In fact, price erosion is so prevalent that 11 percent of borrowers who took out mortgages in 2009 already owe more than their house is worth, adds FirstAmerican.
Naturally, many of these disillusioned owners will think long and hard before buying another house. But there is also a psychological ripple effect to their experience. Almost everyone knows someone who lost their house or is debating walking away from an underwater mortgage; those associations will color future housing decisions for millions more. And the children of all the foreclosed owners have learned that owning a house is not a guaranteed path to wealth or happiness.
Already, the bursting of the housing bubble is reshaping our attitudes toward ownership. A 2009 survey by the National Foundation for Credit Counseling showed that almost half of all American adults no longer believe owning a house is a realistic way to build wealth. Another 42 percent no longer own a house and don’t expect to ever own one again.
Rental Resurgence
More than a housing bubble is at work here. Demographics, tightened credit markets, changing lifestyles and new environmental awareness suggest that the U.S. is on the cusp of a fundamental change in the housing market.
Our society is changing in profound ways that mean the kind of housing we want in the future is very different from the kind we’ve been building for the past 50 years. The largest generation of children in the history of the U.S. will be entering the housing market in the next few years.
By 2015, there will be 67 million people aged 20-34 – the prime years for renting, and these young renters aren’t necessarily interested in a house in the suburbs. The painful recession has also taught them that they need to be more mobile to respond to fast-shifting economic opportunities.
At the other end of the spectrum, the number of seniors who no longer want to maintain a house is beginning to skyrocket, creating new demand for rentals close to services they need.
The biggest force at work, however, is a dramatic change in what constitutes the “typical” American household. Married couples with children – the backbone of the post-war suburban explosion – now account for only one in four households; by 2020, that drops to one in five. In their place are a growing number of nontraditional households who are more likely to choose renting – single parents, couples without children and empty nesters.
The debunking of the homeownership myth is liberating Americans to challenge the conventional wisdom and instead choose the housing that best suits their lifestyle. For millions, that’s an amenity-rich apartment in a vibrant mixed-use neighborhood.
How fast are Americans becoming renters? In 2006, Harvard’s Joint Center for Housing Studies predicted an increase of 1.8 million renters by 2015. Instead, we saw a surge of 1.5 million renters from 2005 to 2007 alone. A federal housing survey reports that 2.83 million new renter households were created in the last four years, the biggest such gain in 24 years.”
Source: Metro Mulifamily Housing Association 12th Volume Apartment Report Summer 2010
By Thomas J. Sugrue and excerpted from National Multi Housing Council Annual Report
Filed under: General, Home Maintenance, Home Repairs, NARPM, Property Management, rentals, Spring Cleaning Checklist | Tags: Home Maintenance, NARPM, Portland OR, Property Management
Do those first warm days of spring get you itching to sweep out the winter’s cobwebs? Or do they elicit a groan as you survey the dirty lawn furniture and stuffed garage? Here’s a quick checklist of some recommended home maintenance and cleaning tasks.
Indoor cleaning projects
□ Wash windows and repair screens.
□ Vacuum dusty drapes and window treatments; send dirtier drapes to the cleaner.
□ Defrost the freezer and dust refrigerator coils.
□ Remove grime and grease buildup on kitchen exhaust fan.
□ Clean attic and basement, giving away or discarding unwanted items and clothing.
□ Shampoo carpets and rugs.
□ Steam clean upholstery.
□ Dust corners and ceilings.
□ Wash baseboards, doorjambs, windowsills, doors and walls.
□ Wipe ceiling fans.
□ Clean oven.
□ Wipe refrigerator clean.
□ Clean out office files.
Indoor maintenance items
□ Check attic fan.
□ Inspect caulking around tubs, showers, and sinks; replace if deteriorating.
□ Reseal grout on tile floors
□ Test ground-fault circuit interrupter (GFCI) outlets. A GFCI outlet has a “Test” and “Reset” button. Pressing the “Test” button will trip the outlet and break the circuit. Pressing the “Reset” will restore the circuit. If pressing the test button does not work, then replace the GFCI outlet. If the outlet does not pop when you press the “Test” button, but the outlet still has power, the outlet is miswired and it should be fixed immediately,
□ Tighten garbage disposal drain, connections and fastners.
□ Change furnace filters.
□ Change batteries in carbon monoxide and smoke detectors.
□ Lubricate door hinges and hardware.
□ Update first-aid and emergency kits.
□ Replace leaky faucet washers.
□ Replace incandescent bulbs with energy-saving lightning.
Outdoor cleaning tasks
□ Clean and de-clutter your garage and shed
□ Wash outdoor furniture.
□ Clean your grill and check for dead insects clogging the gas line.
□ Pressure-wash decks.
□ Pressure-wash siding.
□ Scrub porch ceilings and walls.
□ Clean umbrellas and awnings.
□ Clean light-fixture covers.
Outdoor maintenance must-dos
□ Inspect and repair or replace damaged roof shingles. Check around vents, skylights and chimneys for water leaks.
□ Inspect and reseal roof flashing if necessary.
□ Pressure-wash driveway and walkway.
□ Clean and inspect gutters and downspouts.
□ If you have a chimney, have it inspected and, if necessary, cleaned.
□ Check the oil and air filter on your lawn mower. If it runs poorly, take it in for a tune-up and have the blade sharpened.
□ Trim branches and shrubs that touch your home. They provide a pathway for bugs or excess moisture to enter your home.
□ Inspect the exterior surfaces of your home. Touch up any areas that need paint.
□ Check ironwork for rust spots.
□ Reseal deck.
□ Seal drafty doors and windows.
Information provided by: The Costco Connection February 2010
Filed under: 2009 Oregon Legislative Changes, General, NARPM, Property Management, rentals | Tags: 2009 Oregon Legislative Changes, NARPM, Property Management
Legislatures shift over time. Sometimes they are more aligned with landlord interests, sometimes with tenant interests. The 2009 legislative session was a tougher environment for landlord concerns.
This year SB 771 easily passed the legislature making sweeping changes to Oregon Landlord and Tenant Law statutes.
Basics of SB 771:
- 60 day no-cause eviction period for unchanged tenancies greater than 1 year
- Allows formation of a Temporary Occupant Agreement
- Facilitates property distribution when a sole tenant dies
- Reduces types of fees, specifies deposits
No Stated Cause Terminations – Month to Month Tenancy
- Tenant can terminate with 30 days notice
- During the first year of occupancy the landlord may terminate with not less than 30 days notice.
- After the first year of occupancy, the landlord may terminate with not less than 60 days notice.
- “First year occupancy” includes any periods in which any of the tenants have lived in the unit less than one year: i.e.: resets any time new tenants moves in
Temporary Occupancy Agreements
- A Temporary Occupant is not a tenant entitled to occupy the dwelling unit, and does not have the rights of a tenant
- A Temporary Occupancy Agreement may be terminated by the tenant at any time without cause, and the landlord may terminate for cause that is a material violation of the temporary occupancy agreement
- The temporary occupancy does not have the right to cure violation landlord cites.
- Landlord has the right to screen temporary occupant for past conduct or criminal record.
- Landlord may not screen for credit history or income.
- Can require temporary occupant to comply with any applicable rules, can include an end date, and landlord or tenant is not required to give written notice of termination.
- On termination of agreement, temporary occupant must vacate or is treated as a squatter.
- Tenant cannot become a temporary occupant in the tenant’s own dwelling unit.
- A tenancy may not consist solely of a temporary occupancy.
- Each tenancy must have at least one tenant.
Abandoned Property – Death of a Sole Tenant
In order to facilitate the transfer of property as a result of the death of a tenant who was the only tenant, now the following persons have the same rights and responsibilities regarding the abandoned dwelling as the tenant:
- An heir
- A devisee
- A personal representative (defined as a person named in a will or appointed by a court), or
- Any person designated in writing by the tenant to be contacted by the landlord in the event of the tenant’s death
Abandoned Property of a Deceased Tenant who lived alone
- Landlord must mail notice first class to deceased tenant at premises.
- Landlord must mail notice first class or personally deliver notice to any known heir, devisee, personal representative or designated person if actually known to landlord.
- Landlord must mail notice first class to attention of estate administrator of Department of State Lands.
- Follow Standard abandoned property procedures.
- If neither the heir, devisee, personal representative nor Department of State Lands administrator responds according to abandoned property timeframe, landlord shall allow removal of personal property by the designated person of the tenant.
- Designated person would have to contact the landlord in that period and show “reasonable evidence” of their status
- Landlord following these provisions is not liable to another person that has a claim or interest in the personal property.
New Fee and Deposit Disclosure
- Landlord must now provide any applicant with a written list of all deposits, fees and rent that is charged by landlord.
- This list must be provided before applicant enters into a new rental agreement or the landlord accepts any payment form the applicant.
- List may be amended by both parties prior to entering into the rental agreement.
- The Rental Agreement must include at a minimum a description of the fees that the landlord may charge.
New Fee Regulations
The following is a breakdown of allowable fees that must be included in the written rental agreement for the authority to charge:
- Late Rent Payment Fee
- NSF Check Fee plus any bank charges
- Smoke alarm/carbon monoxide alarm tampering/removal fee
Lease-Break fee parameters
- Landlord may charge lease break fee but it is not to exceed 1.5 times the monthly stated rent.
- If lease break fee is assessed, landlord cannot additionally recover any unpaid rent or recover damages relating to the cost of renting the dwelling unit to a new tenant.
New Fee Regulations
Landlords will soon be prohibited from charging noncompliance fees in excess of $50.00 and will only be allowed to assess such a fee for the following types of noncompliance:
- Late payment of utility or service charge that the tenant owes the landlord.
- Failure to clean up pet waste from premises (other than dwelling unit).
- Failure to clean up garbage, rubbish, or other waste from from premises (other than dwelling unit).
- Parking violations
- Improper use of vehicles within the premises.
Current Customary Fees not Allowed
- Administrative fees.
- Move-in/move-out fees.
- Pet fees (pet deposits unaffected).
- Cleaning fees (cleaning deposits unaffected).
New Security Deposit Rules
- The landlord shall provide a tenant with a receipt for any security deposit paid by the tenant.
- A landlord may not charge a tenant a pet security deposit for keeping a service animal or companion animal that a tenant with a disability requires as a reasonable accommodation under fair housing laws.
- A landlord is not required to repair damage caused by the tenant in order to claim against the deposit for the cost to make the repair. Any labor costs assessed for cleaning or repairs must be based on a reasonable hourly rate. The landlord may charge a reasonable hourly rate for the performance of cleaning or repair work by the landlord.
New Carpet Cleaning Parameters
- Defaults and damages for which a landlord may recover from security deposit include but are not limited to:
- Carpet Cleaning, other than use of a common vacuum cleaner, IF:
- The cleaning is performed by use of machine specifically designed for cleaning or shampooing carpets.
- The carpet was cleaned immediately prior to the tenant taking possession.
- The written rental agreement provides that the landlord may deduct the cost of the carpet cleaning regardless of whether the tenant cleans the carpet before delivering possession.
- The loss of use of the dwelling unit during the performance of cleaning or necessary repairs if the cleaning or repairs are performed in a timely manner.
Required Disclosures in Rental Agreement –
HB 2614 – 100 year flood plain disclosure
- If dwelling unit in 100 year flood plain – Failure to disclose makes landlord liable for tenant damages if flood occurs
Carbon Monoxide Legislation
- The 2009 legislature passed HB 3450 mandating carbon monoxide alarm(s) to be installed in most residential housing.
- Effective 7/1/2010 installation of carbon monoxide alarm(s) will be required in dwelling units containing a carbon monoxide source or units located in a structure having a carbon monoxide source according to State Building Code and Fire Marshall Rules.
- A carbon monoxide source is defined as a heater, fireplace, appliance or cooking source that uses coal, kerosene, petroleum products, wood or other fuels that emit carbon monoxide as a by-product of combustion , or an attached garage with an opening directly into a living space.
- Tenant must test and replace batteries, can’t tamper-fee allowed.
Implementation
- After July 1, 2010 dwelling units with new tenancies must comply (turnovers).
- All existing dwelling units must comply after April 1, 2011
- State Fire Marshall will adopt rules establishing minimum standards for carbon monoxide alarms including design, inspection, testing, maintenance, and placement by July 1, 2010.
References
- Bennett, Jeffrey; Attorney at Law, “2009 Oregon Legislative Changes Affecting Landlords”. Retrieved 10/7/2009
- Hahs, Andrew; Attorney at Law, “Oregon Landlord-Tenant Law – 2009 New Legislation”. Retrieved 10/2009
Filed under: General, Internet Rental Scam Alerts, NARPM, Property Management, rentals | Tags: NARPM, Property Management, rentals, tenants
The National Association of Rental Property Managers (NARPM) Governmental Affairs Committee wants to warn you about an internet rental scam that has been making its way around the country.
Scammers are copying information, photos and text, from legitimate online rental ads and then posting that information on Craig’s List. It is listed with a significantly reduced rent and the property manager’s contact information has been replaced by the scammer’s.
In some ads the text is full of misspelled words and bad grammar but not always. This is because many of the scammers are operating outside the country, typically Nigeria, but many cases have also involved local scammers who are able to meet potential tenants in person.
With international scams, the potential tenants are usually required to send the deposit and first month’s rent through Western Union and are promised that the keys will then be over-nighted to them. Local scammers are often able to copy a key or simply break into a vacant property and replace the door lock with their own so they can actually provide the new tenant with a legitimate key.
In one situation an unsuspecting tenant was actually able to completely move into an apartment without the knowledge of the legitimate property manager. The property manager was only alerted to the problem when the tenant called the office to request that the “For Rent” sign be removed from their front yard.
These scammers are often very sophisticated and can play the part of a legitimate property manager well enough to fool potential renters. Make sure you are checking your vacant properties and Craig’s List on a regular basis. If you find an unauthorized ad flag it so that others will know that it may be fraudulent and contact Craig’s List to request that they remove it from their website.
Some property managers have even posted an additional listing with the same name but included, “THIS IS A SCAM” or similar language at the end of the post to help warn people. This way it will come up in the listing right after the fraudulent post and give the property manager an opportunity to provide the correct information.
The FBI has received countless complaints about this and other rental scams but they explained that this type of crime is low on their list of investigative priorities. If one of your properties gets caught in this scam, we recommend you visit www.IC3.gov and report the crime.
The Internet Crime Complaint Center (IC3) is a partnership between the Federal Bureau of Investigation (FBI), the National White Collar Crime Center (NW3C), and the Bureau of Justice Assistance (BJA). IC3′s mission is to serve as a vehicle to receive, develop, and refer criminal complaints regarding the rapidly expanding arena of cyber crime.
If you encounter a potential tenant who has been scammed and made the mistake of providing sensitive personal information such as their social security number, it is highly recommended that they go ahead and put a freeze on their credit.
NARPM.ORG 638 Independence Parkway, Suite 100, Chesapeake, VA 23320 P: (800) 782-3452 | F: (866) 466-2776 | info@narpm.org
Filed under: appfolio, General, NARPM, Property Management, rentals | Tags: Chris Hermanski, NARPM, Portland OR, Property Management, rentals, tenants
12:15 PM – Former NARPM past presidents Chris Hermanski of Mainlander Property Management in Portland, OR and Bob Machado, owner of Homepointe in Sacramento, arrive fashionably late for lunch. On Tuesday, the two presidents squared off in golf. Bob, never shy, tweeted the world that he won the two man tournament on an 18th hole par. Sensitive to his friend Chris, Bob did mention that Chris came in a competitive second.
Past Presidents Chris Hermanski and Bob Machado at NARPM Annual Convention – Oct 22, 2009
