January 2020
A monthly newsletter published by the Rental Housing Alliance Oregon
rha est. 1927
Happyy
www.rhaoregon.org
In this issue:
RHA Calendar of Events .................................... page 2 President’s Message ..... page 3 2020 Education Calendar............................... page 4 Dear Maintenance Men................. ....................................................page 5 1031 DST & Me....................page 6 Office of Economic Analysis...................................page 7 I can see 2020.................page 8 Winter checklist & Frozen pipes.......................................page 10 Tax Basis...............................page 11
Neww Yearr
OJanuary Dinner MeetingO
Where:Ernesto's Italian Restaurant When:Wednesday January 15, 2020 Price:$35.00 per person if registered by end
of business January 10, 2020. 45.00$ per person if registered after end of business January 11, 2020
Menu: Buffet
Appetizer: Bruschetta Caesar Salad Sauteed Vegetables Spaghetti with Meat Sauce Fettucine Alfredo Meatballs Chicken Cordon Blue
Location: 8544 SW Apple Way Portland, OR. 97225
Speaker: TBA
To register or for more information visit https://rhaoregon.org/event/january-2020-dinner/
Registration/Cancellation Policy: To qualify for the early bird registration rate you must have your registration into the RHA office no later than 4:59pm on the listed early registration date in the advertising for the event. Deadline for refund/credit or cancellation of registration is up until 48 hours prior to the date and time of the class/seminar, up until 48 hours prior you will be refunded 100% of the cost to attend. If a registered guest/ member does not cancel and/or does not show to the scheduled class/seminar then the registered guest/member will be required to pay the full amount of the class/seminar. All registrations are non-transferable. Those with prior registrations to the class/seminar will be seated first. Once the maximum capacity for the class or room is reached, walk-ins will not be accommodated. Registered attendees who arrive 15 minutes after the start of the class/seminar be aware that your chair may be filled. Our venues do have a limited capacity therefore at times registration to an event may close prior to the event. LOCATION TIME INFORMATION DATE EVENT 01/01
New Years Day
RHA Office
Closed
01/08
Board Meeting
RHA Conference Annex
4:00pm
01/15
Dinner Meeting
Ernesto’s Italian Resturant
6:00pm
01/18
Mentor Round Table
RHA Conference Annex
11:00am
02/12
Board Meeting
RHA Conference Annex
4:00pm
02/19
Dinner Meeting
TBA
6:00pm
02/27
Mentor Round Table
RHA Conference Annex
6:00pm
In Observance of New Years Day See above for more info.
DATE
CLASSES
LOCATION
TIME
INSTRUCTORS
01/07
Online Tenant Screening Class
RHA Conference Annex
11:00am
Marcia Gohman w/National Tenant Network
01/09
Relocation Fee’s and No Cause Terminations
RHA Conference Annex
6:30pm
Amber Clark w/The Garcia Group
01/10
Online Tenant Screening Class
WebEx
7:00pm
Marcia Gohman w/National Tenant Network
01/14
How to Use Landlord-Reference.com
Join.me
7:00pm
Robert Collier w/Landlord-Reference
01/16
Landlording 102
RHA Conference Annex
11:30am
Jeffrey S. Bennett w/Warren Allen LLP
01/21
Applying Fair Housing Application
RHA Conference Annex
6:30pm
Shyle Ruder w/Fair Housing of Oregon
01/22
How to Use Landlord-Reference.com
Join.me
7:00pm
Robert Collier w/Landlord-Reference
01/24
Online Tenant Screening Class
WebEx
11:00am
Marcia Gohman w/National Tenant Network
01/28
Online Tenant Screening Class
WebEx
7:00pm
Marcia Gohman w/National Tenant Network
01/30
How to Use Landlord-Reference.com
Join.me
7:00pm
Robert Collier w/Landlord-Reference
02/04
Online Tenant Screening Class
RHA Conference Annex
11:00am
Marcia Gohman w/National Tenant Network
02/07
Online Tenant Screening Class
WebEX
7:00pm
Marcia Gohman w/ National Tenant Network
02/13
Fair Access in Renting-PDX Ordinance
RHA Conference Annex
6:30pm
Charles Kovas w/Charles Kovas Law
02/20
Insurance Class
RHA Conference Annex
11:30am
John Sage w/Stegmann Agency Farmers Insruance
02/21
Online Tenant Screening Class
WebEX
11:00am
Marcia Gohman w/National Tenant Network
02/25
Termination Notices
RHA Conference Annex
6:30pm
Sam Johnson w/Landlord Solutions
02/25
Online Tenant Screening Class
WebEX
7:00pm
Marcia Gohman/National Tenant Network
For additional class/event information visit: https://rhaoregon.org/education 2
RENTAL ALLIANCE UPDATE January 2020
www.rhaoregon.org
President’s Message Ken Schriver, RHA Oregon President
Welcome 2020!
I will say that 2019 is a year I’m happy to see in my rear-view mirror. As I begin my second year as president of Rental Housing Alliance Oregon, I am optimistic about several things: First, RHA is growing with increased membership, additional educational offerings, new office staff, and an active board including two new members and two more likely soon. I am thrilled to report that from a fiscal standpoint, we finished the year in the black, allowing us to add a full-time marketing and membership services staff person to replace the part-time position being vacated by Diana Lindemann, who (as a landlord herself) has joined the RHA board. Also welcome to the board Melinda McClellan, another small landlord like most of our members. The board held its annual retreat in early November and set several goals for 2020. We plan to continue growth through recruitment and expanded educational offerings. We are expanding our support of affiliate and dual members that provide goods and services to our industry: we will be holding a Vendor Fair in March and will be bringing back Affiliate Member Spotlights to our dinner meetings each month. The rental housing industry, like so many others, is experiencing an increase in the use of technology to simplify operations and ensure regulatory compliance. RHA is committed to helping our members access these resources; in 2020 we are expanding our calendar to include online training sessions presented by affiliates that provide web-based services to landlords. These services can range from showing vacant units to applicant screening to arranging maintenance services to collecting rent. This will be a great year to evaluate whether adoption of a web-based service might streamline your operations as a landlord or property manager. We will increase our outreach to other entities to find solutions to community housing problems. This will range from increased participation on local and state advisory boards and coalitions to support of non-profit organizations like SnowCap Community Charities and Portland Homeless Family Solutions to the backing of political candidates at all levels of government that are willing to listen to our positions and take action based on sound analysis of the evidence. Finally, the Oregon legislative assembly in 2020 is a “short” session that will likely be focused on proposed cap-and-trade legislation. Regardless of your position on that subject, this should mean that landlords will be able to spend 2020 adapting to the several regulatory changes passed last year at the state and local levels. Nevertheless, RHA’s Legislative Committee has a full agenda in 2020. As our past-president Ron Garcia is now running for Oregon’s 37th House District seat, he is stepping back and I will be chairing that committee in 2020. Closely connected with the efforts of the Legislative Committee, RHA is networking with other rental housing organizations in Oregon, California, and Washington. Stay tuned for more information on how we hope to stem the tide of overly burdensome regulations on housing providers like ourselves all along the West Coast.
It’s going to be a great year! www.rhaoregon.org
RENTAL ALLIANCE UPDATE January 2020
3
2020 EDUCATION CALENDAR
4
RENTAL ALLIANCE UPDATE January 2020
www.rhaoregon.org
Dear Maintenance Men by Jerry L’Ecuyer & Frank Alvarez
Dear Maintenance Men: I have an opportunity to buy a small power snake for cleaning out kitchen & bathroom drains. At the rate my tenants block their drains it should pay for its self in no time! Is this a good idea? Dale Dear Dale: We understand that almost any excuse is a good reason to buy a power tool! However… most bathroom and kitchen drains can be cleared with a three-foot hand snake. The tub or shower will typically have a hair stoppage just past the tub shoe and the bathroom sink will have a toothpaste and hair stoppage in the trap before the wall. The kitchen sink will typically be stopped on the garbage disposal side because of improper usage of the disposer. If both sides of the kitchen sink are blocked, then it may be necessary to use the power snake. Power snakes can be very dangerous. Most operate with a ¼ to ½ horse motor, which packs quite a punch, especially if your finger or arm gets caught! If you buy this snake, we highly recommend that you get some training on your machine. Power drain cleaning is very much an “art” when done well. Knowing the difference between hitting and clearing the stoppage and when the snake is snagged comes with experience. A broken snake cable in your drain system will be far more expensive than simply calling an experienced plumber when needed. Another thought is; most kitchen stoppages are caused by grease. Your snake will only temporarily clear the stoppage. Getting a company to “Hydro-Jet” your drains once a years may help cure your chronic grease stoppages. We recommend doing a mainline drain maintenance just before the holidays each year. Dear Maintenance Men: I have a parking area at my building with concrete bumper stoppers. The problem is that when the cars touch the stopper, they move. How do I attach them to the parking lot? Bill Dear Bill: If you have an asphalt parking lot, it is quite easy. Most concrete bumper stoppers have two holes that go through from top to bottom. These holes are just the right size to fit a piece of half inch rebar rods. Pick up two 12 to 18 inch pieces of rebar for each stopper. Place the rebar through the holes in the stopper and then use a sledgehammer and pound the rebar into the asphalt. www.rhaoregon.org
If your parking area is concrete, use a hammer drill with a ½ inch concrete bit to drill a hole in the concrete. Use your existing parking bumper as a guide. Either drill down through the holes in the bumper stop to the concrete below or use powdered chalk poured down through the bumper stop’s holes to mark the concrete. Then drill all the way through the concrete until you hit dirt. Hammer your rebar into the bumper and concrete. If the fit is loose, pour some concrete into the parking lot holes and then insert the rods. Dear Maintenance Men: I’m about to start a rehab project in one of my units. Can you give me some tips on drywall repairs? The previous residents were very hard on the walls and I want to learn how to do the repairs. Thanks, Benjamin Dear Benjamin: If there are holes in the drywall, you can use mesh drywall patches (Available at any hardware store.) and drywall mud to do the rough repair. If the holes are larger than six inches in diameter, cut the damaged area out. Cut out enough material to reach a stud on either side of the repair. (Typically a square hole is best.) Cut a new piece of drywall and nail or screw it into place using the exposed stud on either side. After completing the rough drywall repairs, comes the finish work. Use wallboard joint compound and joint tape on all seams, nail or screw holes and corners. Joint compound can be found at any hardware store and comes in quart, gallon and five-gallon buckets ready mixed. Plan on applying three coats of compound material letting it dry between coats. When doing repairs to joints or cracks, be sure to use wallboard tape to reinforce the joint. The tape comes in paper or fiberglass and will ensure the joint will not crack in the future. Using a ten-inch taping knife, apply a thin layer of joint compound. Then immediately press the joint tape into the compound and use a fourinch taping knife to smooth out the tape and let dry. Again using your 10” knife apply another layer of joint compound over the tape and let dry. Finally, apply the finish layer of compound and let dry. Use sandpaper or a wet sanding sponge and sand the joint until it is smooth. After all is dry; texture to match surrounding walls. WE NEED Maintenance Questions!!! If you would like to see your maintenance question in the “Dear Maintenance Men:” column, please send in your questions to: DearMaintenanceMen@gmail.com Bio: If you need maintenance work or consultation for your building or project, please feel free to contact us. (continued on page 9) RENTAL ALLIANCE UPDATE January 2020
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1031 DST & Me: The Investment Tool You Need to Know About Today When it comes to tools available for real estate investment, the options can be overwhelming. Every choice seems to come with stringent deadlines or severe limitations and, in some cases, both. Kay Properties & Investments wants to let investors know about an opportunity that seems to be flying under the radar. “A lot of people still don’t know about the 1031 DST structure,” says Dwight Kay, the company’s founder and CEO, who has published multiple white papers on the topic of DSTs as well has a published book on the subject. After working for a national commercial real estate brokerage firm, Kay began focusing on 1031 exchanges, helping his clients move from management intensive properties, via the 1031 exchange, into more passive options. He started Kay Properties as a way to do that exclusively and has seen the company grow to 19 team members to date. “Business is booming,” Kay says. “Last year, we helped our clients purchase around $300 million-plus of investments in these 1031 DST vehicles.” So, what is a DST? It’s a Delaware Statutory Trust—a legal 1031 exchange structure through a trust that provides investors with a passive, diversified ownership opportunity. The IRS rules allow the DST structure as “like kind” for the purposes of a 1031 exchange under IRC Revenue Ruling 2004-86. “Our clients come to us because they are tired of being landlords. They are tired of managing their properties yet they have a very real tax problem if they sell and don’t do an exchange,” says Kay. Over its history, Kay Properties has participated in more than $12 billion of DST real estate, providing the company with plenty of experience and know-how on the process that finally seems to be catching on in the real estate industry. “Even though it’s a part of the tax code, a lot of real estate professionals–CPAs, attorneys– they’ve never heard of it. They are not familiar with what is available with the DST structure,” Kay says. “Over the past ten years, more people are learning about it, so DSTs are growing in popularity.” He explains that in the past, his experience with many investors tended to go the triple net route, leasing their properties to tenants who are responsible for property taxes, insurance and maintenance. That’s not a suitable choice for many investors who may have a net worth of, say, $5 million. Should they really be putting a major part of their net worth into one building in the middle of nowhere just because it has a long-term lease? “No,” Kay answers simply. “With DSTs, we’re able to provide a passive investment without the potentially disastrous concentration risk that buying one NNN property can potentially pose – think the hundreds of dark dollar stores, video stores, book stores, electronic stores, grocery stores, etc.” He adds that DSTs are fully passive because the sponsor is the asset manager of the building, handling reimbursements from tenants and daily needs, repairing issues, processing rent and invoices, etc. “These are all tasks that a tenant might be responsible for in a traditional triple net, but, what many investors 6
RENTAL ALLIANCE UPDATE January 2020
are unwaware of, are often a landlord’s responsibility to coordinate, then bill back to the tenant,” Kay says. “A DST really takes all that landlord activity out of the hand of the investor and puts it into the sponsors’ hand, so the investors now are in a much more passive situation and don’t have to deal with the tenants.” Another benefit of a DST is the opportunity to create a diverse portfolio of multiple properties. “Investors can take their $2 million and place, for example, $500,000 into a long-term net lease with FedEx at one facility, $500,000 into a 300-unit multi-family property in Austin, $500,000 into a multi-family property in Dallas, $500,000 into a portfolio of 3 multi-family apartment communities with a total of 1,000 units,” explains Kay. It’s possible to do that because each DST has already closed on those properties, which also expedites an investors 1031 exchange whereby they can close even prior to their 45 day identification window closing. The DST can also potentially provide a backup plan for investors as well. “A lot of investors are so focused on the property they are selling, they are not as focused on what are they going to exchange into,” says Kay. “Once they close, they talk to their CPA and find out a substantial portion of their sale is going back to Uncle Sam unless they go into a 1031 exchange.” But to capitalize on a 1031 exchange, investors must adhere to those strict timelines: a new like-kind property must be identified within 45 days and the investor must close on it within 180 days. That’s where the flexibility and ease of a DST becomes appealing. “An investor can typically 1031 exchange into one of our DSTs within two or three business days. We’ve done them as fast as 24 hours,” Kay says. His company’s website, kpi1031.com, is loaded with resources for potential investors to learn more about DSTs, as well as other investment tools, including qualified opportunity zone funds. “We are actually starting to work with qualified opportunity zone funds quite a bit. They are another tax-deferral strategy for investors to consider,” says Kay. “Investors who are selling properties, stocks, mutual funds, businesses and more with gains can use opportunity zone funds to defer and eliminate some of the capital gains taxes.” Once you register on the website, you can sign up for access to Kay Properties listings and schedule a call with a team member, who can help guide you through the potential pros and cons of various types of investments. “We’re very upfront with clients that real estate investing does have risk which is why we stress thorough due diligence and diversification as well as rejection of certain asset classes altogether,” Kay stresses. Every investor’s situation is different, which is why Kay Properties’ personalized approach is so important. It’s also the reason so many clients stick with the company, which has offices in Los Angeles, San Diego, San Francisco, Seattle, New York City and Washington, D.C. “We love how pro-business Texas is, especially since there is no state income tax,” says Kay, adding that Kay Properties
(continued on page 7)
www.rhaoregon.org
1031 DST & Me CONTINUED FROM PAGE 7 has many clients from the Lone Star State as well as many DST investment options in Texas. “We think it’s a great state; we think there is a lot of growth.” As a result, Kay anticipates opening a Texas office and relocating staff members here very soon. Until then, you can reach out to him and Kay Properties staff via the company’s website: kpi1031.com.
About Kay Properties and Investments, LLC: Kay Properties and Investments, LLC is a national Delaware Statutory Trust (DST) investment firm with offices in Los Angeles, San Diego, San Francisco, Seattle, New York City and Washington DC. Kay Properties team members collectively have over 114 years of real estate experience, are licensed in all 50 states, and have participated in over $9 Billion of DST real estate. Our clients have the ability to participate in private, exclusively available, DST properties as well as those presented to the wider DST marketplace; with the exception of those that fail our due-diligence process. To learn more about Kay Properties please visit: www.kpi1031.com. This material does not constitute an offer to sell nor a solicitation of an offer to buy any security. Such offers can be made only by the confidential Private Placement Memorandum (the “Memorandum”). Please read the entire Memorandum paying special attention to the risk section prior investing. This email contains information that has been obtained from sources believed to be reliable. However, Kay Properties and Investments, LLC, WealthForge Securities, LLC and their representatives do not guarantee the accuracy and validity of the information herein. Investors should perform their own investigations before considering any investment. IRC Section 1031, IRC Section 1033 and IRC Section 721 are complex tax codes therefore you should consult your tax or legal professional for details regarding your situation. This material is not intended as tax or legal advice. There are material risks associated with investing in real estate, Delaware Statutory Trust (DST) properties and real estate securities including illiquidity, tenant vacancies, general market conditions and competition, lack of operating history, interest rate risks, the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multifamily properties, financing risks, potential adverse tax consequences, general economic risks, development risks and long hold periods. There is a risk of loss of the entire investment principal. Past performance is not a guarantee of future results. Potential cash flow, potential returns and potential appreciation are not guaranteed. For an investor to qualify for any type of investment, there are both financial requirements and suitability requirements that must match specific objectives, goals and risk tolerances. Securities offered through WealthForge Securities, LLC, Member FINRA/SIPC. Kay Properties and Investments, LLC and WealthForge Securities, LLC are separate entities. There are material risks associated with investing in DST properties and real estate securities including illiquidity, tenant vacancies, general market conditions and competition, lack of operating history, interest rate risks, the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multi-family properties, financing risks, potential adverse tax consequences, general economic risks, development risks, long hold periods, and potential loss of the entire investment principal. Past performance is not a guarantee of future results. Potential cash flow, returns and appreciation are not guaranteed. IRC Section 1031 is a complex tax concept; consult your legal or tax professional regarding the specifics of your particular situation. This is not a solicitation or an offer to see any securities. Please read the Private Placement Memorandum (PPM) in its entirety, paying careful attention to the risk section prior to investing.
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Office of Economic Analysis presented its second economic and revenue forecasts of the 2019-2021 biennium Communicated by Cindy Robert, RHA Oregon Lobbyist
The general outlook is that there has not been any significant changes since the previous forecast for the State of Oregon but at the US level there is still a fear of recession. A recent poll of economists across the nation indicated that the fear of recession has declined from 35% to 30% in the last few months but most agree that the US will enter a recession next year. The upside is that consumers appear to be still willing to spend - which is currently propping up the US economy. In Oregon there has been a sharp slowdown in employment growth. This slowdown has reached every corner of the state. The causes are largely due to slower sales growth, rising business costs, uncertainty at the federal and state level, a tight labor market and one notable mass layoff at a food processing plant in the MidWillamette Valley.
•Third Quarter corporate income tax collections were up $9.2 million (4.2 %) from the September forecast and is up $135 million (11.3%) from the 2017 Close of Session (COS) estimate. •General Fund (GF) gross revenue is up $148.6 million (0.7%) from the 2019 COS estimate and Net GF and Lottery resources are up $490.8 million (2.0%) from the 2019 COS estimate. •Projected 2019-2021 combined net General Fund and Lottery resources are up $166.8 million (0.7%) from the September Forecast. Currently the state has healthy levels of money in the Educational Stability Fund and Rainy Day Funds that will temper any substantial reductions in revenues to the state in the event of a recession.
The one big upside to the tight labor market has been an appreciable increase in Oregon’s medium income. The tight market has resulted in upward pressure on incomes and as a result Oregon’s medium income is above the national average for the first time since 1980. Bottom line, Oregon’s revenue outlook remains stable but also remains susceptible to an expected recession. The key will be how deep and how long that recession lasts. The Numbers: •Third Quarter personal income tax collections were up $13.1 million (0.5%) from the September forecast and personal income is up $3.7 billion (1.7%) from the September forecast. www.rhaoregon.org
RENTAL ALLIANCE UPDATE January 2020
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I Can See 2020 By Jeffrey S. Bennett
If you’ve seen me before, you already know that I wear glasses. Still, as we’re rolling from 2019 into 2020, I can see 2020 from here. So, let’s see what’s on the horizon for 2020. With the onslaught of laws emerging from both Salem and Portland, there are more laws regulating Oregon landlords than any prior time in our history. The Oregon legislature was busy in 2019. Aside from establishing rent control and limiting no cause termination rights (via Senate Bill 608), the legislature enacted laws pertaining to screening, marijuana, and more. Courts have also been busy, with a variety of innovative lawsuits starting to hit courtrooms across the state. Hot Points There have been a variety of hot points, with regard to tenants’ claims and lawsuits. Disputes relating to utility billing practices and tenant-on-tenant discrimination quickly come to mind. However, failure to comply with Portland’s Ordinance is equally endemic. New Laws House Bill 2530 A variety of House Bills hit the books. Focusing solely upon one most likely to affect the average landlord, House Bill 2530 now requires a new notice to FED defendants of available assistance for veterans. Senate Bill 295 (Amends the Screening Statute, ORS 90.295): The amendments to the screening laws are pretty concise: “A landlord may only require an applicant to pay a single applicant screening charge within any 60-day period, regardless of the number of rental units owned or managed by the landlord for which the applicant has applied to rent.” “(7) A landlord that requires an applicant screening charge must refund the applicant screening charge to the applicant within a reasonable time if the landlord: (a) Fills the vacant dwelling unit before screening the applicant; or (b) Does not screen the applicant for any reason. (8)(a) An applicant may not recover an applicant screening charge from the landlord if the tenant refuses an offer from the landlord to rent the dwelling unit.” The remaining amendments are nominal. Senate Bill 420 (Setting Aside Marijuana Convictions): Senate Bill 420 now establishes a methodology for setting aside marijuana convictions. The statute covers motions, objections, timelines, and so on.
(b) Does not screen the applicant for any reason.” Finally, “An applicant may not recover an applicant screening charge from the landlord if the tenant refuses an offer from the landlord to rent the dwelling unit.” Be careful. SB 484 allows tenants to pursue a damage claim (equal to twice the amount of the screening charge paid, plus $150.00), if the landlord doesn’t comply with the foregoing law(s). Senate Bill 873 (Sealing FED Records): A person who was a defendant in an FED will be able to apply to a court to set aside the FED judgment and seal the official records. This would apply to judgments of restitution entered against the applicant over five years prior to the application and would require a showing that the applicant has satisfied any money award included in the judgment. Senate Bill 970 (Evaluation of Applicant re: Marijuana): This amends landlords’ screening rights so as to include prohibitions against some denials based upon marijuana. Portland’s “FAIR” Ordinance (PCC 30.01.086): This ordinance deals with the “Evaluation of Applicants for Dwelling Units.” The FAIR acronym derives from “Fair Access in Renting.” As of November 7, 2019, the City of Portland was still receiving public input as to the content of he new law. Pay close attention to announcements, as the new law (once it’s finally written) is supposed to take effect on March 1, 2020. Security Deposits and Pre-paid Rent Ordinance (PCC 30.01.087): As with the FAIR ordinance, this new law – which may evolve – is supposed to take effect on March 1, 2020. Note that date, and pay attention to announcements regarding the final version of the new law. Wrapping It Up It requires clear vision to navigate the maze of new laws and succeed in your endeavors. Keeping on eye on emerging laws, listening to current developments in the legal system, and adjusting your strategies to match the current challenges will remain critical to your success. You may wear glasses like me, but you can still see 2020 from here, so be prepared. About the Author Jeffrey S. Bennett is a partner in the Portland law firm of Warren Allen LLP. A member of the Oregon and Washington state bars, Mr. Bennett is the head of his firm’s landlord law department and has specialized in both residential and commercial landlord/tenant law for the past three decades. His articles have appeared in The Business Journal, Apartments Northwest, and in other media, and Mr. Bennett is a frequent lecturer at regional landlord/tenant seminars.
Senate Bill 484 (Applicant Screening Charges): Pursuant to new rules applicable to applicant screening charges paid on or after January 1, 2020… “A landlord may only require an applicant to pay a single applicant screening charge within any 60-day period, regardless of the number of rental units owned or managed by the landlord for which the applicant has applied to rent.” Further, “A landlord that requires an applicant screening charge must refund the applicant screening charge to the applicant within a reasonable time if the landlord: (a) Fills the vacant dwelling unit before screening the applicant; or 8
RENTAL ALLIANCE UPDATE January 2020
www.rhaoregon.org
IMMEDIATE
RESPONSE Sean & Shelby Goforth 503-517-9027
junkawayhauling@gmail.com Your items picked up are recycled and/or donated Shelby Cell: 971.998.4654 Sean Cell: 971.808.6387 PORTLAND
VANCOUVER
FIND EVICTIONS STRESSFUL? Amendment to RHA By-Laws
503-‐242-‐2312
Full FED Service First Appearances evict@landlord-‐solutions.com Small Claims
Maintenance Men Cont. CONTINUED FROM PAGE 5 We are available throughout Southern California. For an appointment please call Buffalo Maintenance, Inc. at 714 956-8371 Frank Alvarez is licensed contractor and the Operations Director and co-owner of Buffalo Maintenance, Inc. He has been involved with apartment maintenance & construction for over 20 years. He is also a lecturer & educational instructor and Co-Chair of the Education Committee of the Apartment Association of Orange County as well as being Chairman of the
Product Service Counsel. Frank can be reached at (714) 956-8371 Frankie@BuffaloMaintenance.com For more info please go to: www. BuffaloMaintenance.com Jerry L'Ecuyer is a real estate broker. He is currently a Director Emeritus and Past President of the Apartment Association of Orange County .and past Chairman of the association’s Education Committee. Jerry has been involved with apartments as a professional since 1988. www.rhaoregon.org
As currently stated; ARTICLE V – OFFICERS AND BOARD OF DIRECTORS Section 12. There shall be at least 15 and not
more than 20 members of the Board of Directors which shall include all of the elected officers, the Immediate Past President, and at least one Affiliate and no more then four Affiliates.
Proposed change; ARTICLE V – OFFICERS AND BOARD OF DIRECTORS Section 12. There shall be at least 15 and not
more than 20 members of the Board of Directors which shall include all of the elected officers, the Immediate Past President, and at least one Affiliate and no more than six Affiliates.
RENTAL ALLIANCE UPDATE January 2020
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Winter Maintenance Checklist In winter, your tenants can enjoy energy-efficient warmth and the fruits of your maintenance labors while you take a few precautionary measures on the outside. Outdoor Tasks: Walk around the property’s exterior and make sure the foundation vents are closed or covered. Protect the central air conditioning unit with a cover. Remove and store window air conditioners. Winterize sprinkler systems. Rake last of leaves and remove storm debris as needed. Check gutters and downspouts and clean them out if needed. Send freezing weather reminders to tenants. Insulate or wrap all exposed plumbing pipes. Katie O’Neal is a Licensed Property Manager, Continuing Education Provider, Chair of the Education Committee for the RHA Oregon, and a Property Manager at Acorn Property Management in Portland, OR. She can be reached with questions or comments at Katie@AcornPM.net
T T T T T T T T T T T T T T T T T HOW TO DEAL WITH FROZEN PIPES Mr. Landlord
If you are in one of the many states that has to deal with frozen pipes, check out the following tips by Brad 20,000(IN), one of the top contributors on MrLandlord:
Frozen Pipes 101 -> Frozen pipes do not leak. They are a solid tube of ice. The flood comes when the pipes thaw and the hairline crack blows out giving you full flow, usually in a hard to reach location and results in a swampy, muddy mess. The lines often free up at night when no one hears them, or while folks are away for the holiday. -> A 1/4" pinhole in a foundation can blow cold air onto the backside of a pipe, the part you cannot see--and freeze that section of pipe. -> Insulation around the pipe does not create heat. It only slows the transfer of temperature. Over a few minutes or hours the inside of the insulation will be the same temp as the outside. One must ADD heat. -> Those foam caps over outside spigots are useless. No heat is being added to the spigot. You must shut it off INSIDE the home and drain the spigot. The best kind are the long, anti-freeze spigots. -> Foundation blocks will eventually allow the cold to "soak through" and not provide any barrier to the cold. -> Heat tape on pipes has been known to burst into flames. (Watch it on YouTube). It should only be used in a nonflammable area, and they are not dependable. They give with age. Your first symptom of this will be frozen pipes. -> Warm air fanned into the crawl space will eventually thaw out the pipes. A $10 fan can work miracles by moving the warm air around to the cold spots. Add a small heater IF AND ONLY IF the location is safe. -> SOME utilities will discount the sewer portion of your water bill if you can prove you had a leak and the water went in to the ground, not the sewer. 10
RENTAL ALLIANCE UPDATE January 2020
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What is Tax Basis & How to Calculate It.
Austin Bowlin, CPA – Partner at Real Estate Transition Solutions Investment real estate is far from static, there are many factors that change during the owner ship period. Tenants, lease rates, and property values are a few of the most dynamic elements all change regularly and are crucial to monitor if the property is going to be effectively man aged. As of late, laws and regulations have also changed at a rapid pace. Next comes the physical property condition. Barring a major catastrophic event, property condition tends to change at a slower pace, but still requires active maintenance so that a small problem does not become significant and costly – such as a clogged drain that backs up and causes significant water damage if not discovered soon enough. When we meet with owners regarding transition options available to them, they generally have a good pulse on their tenants and physical property condition. However, one factor that is often overlooked is what their tax liability would be were they to sell their property. When considering a transition strategy, understanding the potential tax consequences is a major piece of the puzzle. Taxes may seem overly complicated (they are) and inaccessible (they can be) but calculating an approximate tax basis of your property can be done with a few key pieces of information. The term tax basis refers to the amount that will be subtracted from an eventual sales price to determine the taxable gain. Once the taxable gain is determined, it is generally divided into two categories. The first is the gain attributed to “Depreciation Recapture” – taxed at a current rate of 25%. The second is the gain attributed to appreciation beyond the original purchase price – taxed first at the owner’s “Long Term Capital Gains” bracket (currently either 15% or 20%) and possibly taxed at an additional 3.8% for the Net Investment Income Tax (also referred to as “Obamacare Tax”) depending on the owner’s investment income for the year. Owners may have “Loss Carryforwards” that help mitigate these tax consequences. It is important to note that a sale of property can also impact other taxes such as the tax on the sale of stocks or bonds and the tax on ordinary income in the year of property sale. Knowing the tax basis of a property is an important step in assessing the options an owner has available to them. Owners with large tax liabilities should not feel limited if they want to transition their assets to take advantage of high valuations or lifestyle changes. We regularly develop strategies for owners looking to unlock liquidity in their property and defer all their taxes. To assist owners in understanding the tax piece, we have worked with one of our preferred CPA firms, Hutchinson & Walter, to create a simple and effective template for owners to arrive at their approximate tax liability. If you are interested in accessing this tool, please email info@re-transition.com. Austin Bowlin, CPA – Partner at Real Estate Transition Solutions, provides exit strategy analysis, execution, income and equity replacement options for investment property owners. If you have questions relating to your investment property ownership, you can email him at aabowlin@re-transition.com or call (206) 686-2201. www.rhaoregon.org
RENTAL ALLIANCE UPDATE January 2020
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This material does not constitute an offer to sell nor a solicitation of an offer to buy any security. Such offers can be made only by the confidential Private Placement Memorandum (the “Memorandum”). Please read the entire Memorandum paying special attention to the risk section prior investing. IRC Section 1031, IRC Section 1033 and IRC Section 721 are complex tax codes therefore you should consult your tax and legal professional for details regarding your situation. This material is not intended as tax or legal advice. There are material risks associated with investing in real estate, Delaware Statutory Trust (DST) properties and real estate securities including illiquidity, tenant vacancies, general market conditions and competition, lack of operating history, interest rate risks, the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multi-family properties, financing risks, potential adverse tax consequences, general economic risks, development risks and long hold periods. There is a risk of loss of the entire investment principal. Past performance is not a guarantee of future results. Potential cash flow, potential returns and potential appreciation are not guaranteed. Securities offered through WealthForge Securities, LLC. Member FINRA/SIPC. Kay Properties and Investments, LLC and WealthForge Securities, LLC are separate entities. Preferred return is not guaranteed, and subject to available cash flow.