June 2021
A monthly newsletter published by the Rental Housing Alliance Oregon
rha est. 1927
www.rhaoregon.org
In this issue:
RHA Calendar of Events............................................page 2 Executive Director Message.......................................page 3 Dear Maintenance Men....................... ...........................................................page 4 Mom & Pop Landlords:Challenges and Solutions.............................page 5 Ask Attorney Brad...................page 6 Will you be ready for the Moratorium to end?...............page 7 Five Professionals Behind A Successful 1031 Exchang....................................page 10
Join us for RHA Oregon’s Membership Meeting! Where: Zoom Meeting When: Wednesday June 16, 2021 at 6:00pm
Who: 1031 Exchanges, featuring Toija Beutler with Beutler Exchange Group
FREE for RHA Members
Rental Housing Alliance Events & Classes DATE
EVENT
LOCATION
TIME
06/09
Board Meeting
Zoom
4:00pm
06/16
Dinner meeting
Zoom
6:00pm
06/24
Mentor Round Table
Zoom
6:00pm
07/05
Closed
-
-
07/14
Board meeting
Zoom
4:00pm
07/17
Mentor Round Table
Zoom
11:00am
07/21
Dinner Meeting
Zoom
6:00pm
DATE
CLASSES
LOCATION
06/03
Improve Your Chances of Collecting Covid-Era Rent Join.me
INFORMATION
RHA Office will be closed in Observance of Independence Day.
TIME
INSTRUCTORS
7:00pm
Robert Collier w/Landlord-Reference.com
06/08 Online Tenant Screening Class
WebEX
11:00am
Marcia Gohman w/National Tenant Network
06/08 Your Chances of Collecting Covid-Era Rent
Join.me
7:00pm
Robert Collier w/Landlord-Reference.com
06/10
Online Tenant Screening Class
WebEX
7:00pm
Marcia Gohman w/National Tenant Network
06/10
Advertising, Screening, Deposits, OH MY!
Zoom
6:30pm
Anna McCormack w/Warren Allen
06/16
Improve Your Chances of Collecting Covid-Era Rent Join.me
7:00pm
Robert Collier w/Landlord-Reference.com
06/22
Online Tentant Screening Class
WebEX
7:00pm
Marcia Gohman w/National Tenant Network
06/22
Landlording 102
Zoom
6:30pm
Christopher L. Tackett-Nelson w/Warren Allen
06/24
Online Tenant Screening Class
WebEX
11:00am
Marcia Gohman w/National Tenant Network
06/24
Improve Your Chances of Collecting Covid-Era Rent Join.me
7:00pm
Robert Collier w/Landlord-Reference.com
06/29
Improve Your Chances of Collecting Covid-Era Rent Join.me
7:00pm
Robert Collier w/ Landlord-Reference.com
07/06
Online Tenant Screening Class
WebEX
11:00am
Marcia Gohman w/National Tenant Network
07/08 Online Tenant Screening Class
WebEX
7:00pm
Marcia Gohman w/National Tenant Network
07/15
Is It Time to Hire a Property Manager
Zoom
6:30pm
Kurt Lane w/Chroma Property Management
07/22
Online Tenant Screening Class
WebEX
11:00am
Marcia Gohman w/National Tenant Network
07/22
Is It Time to Hire a Property Manager
Zoom
11:30am
Kurt Lane w/Chroma Property Management
07/27
Online Tenant Screening Class
WebEX
7:00pm
Marcia Gohman w/National Tenant Network
For additional class/event information visit: https://rhaoregon.org/education All educational classes/seminars are open to members in good standing and the general public. A member in good standing may register and pay for an invited guest at the member rate for the educational class. General public must pay at the time of registration and at the non-member rate. 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. Currently all classes are in Zoom meeting format. RHA Oregon is not responsible for attendee’s inability to log into Zoom meeting. The Zoom invite will go out as an email to all those registered. Please check your spam folder email settings to make sure you receive the email invite. RHA is not responsible for lost or spammed emails.
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RENTAL ALLIANCE UPDATE June 2021
www.rhaoregon.org
Executive Director Message Ron Garcia, RHA Oregon Executive Director
As the saying goes, the third time is the charm! June 30th will be the third ending date that has been announced for Oregon’s Eviction Moratorium. So what does this mean? Will we begin to finally get back to normal rent collections? Landlords and Tenants are wondering, “Is it really over or will it be extended again?” Tenants fear evictions for non-payment of rent will now resume. Landlords can no longer afford to stay in business. This massive gap of unpaid rent has devolved into a toxic unfilled crater. We are all asking, “What solutions are we being offered by our State?” Let’s take a look at Oregon’s newest legislation, Senate Bill 282. It has just been passed after many rounds of work groups and lobbying efforts by both Tenant activists and Landlord groups.
The highlights of this law are:
A.The moratorium is NOT being extended beyond June 30, 2021. B.The required forgiveness for payment of back-rent WAS extended to February 28, 2022. C.Landlords CANNOT report any violations of rent non-payments accrued from April 1, 2020 to July 1, 2021 nor deny applications to rent based on nonpayment of rent for this same period. D.Landlords CANNOT deny applications to rent for FED filings from April 1, 2020 to March 1, 2022 nor consider a judgement for applicant’s unpaid rent from April 1, 2020 to March 1, 2022. E.Extends the 72 / 144 Hour Notice to Pay Rent or Quit to 10 / 13 Days until March 1, 2022. F.Landlords CANNOT enforce restrictions against “Non-Tenant Guests” who stay through March 1, 2022, unless the denial is based on federal, state, or local occupancy guidelines. Any guests staying longer than 14 days MAY be required to be screened by Landlord (NOT for credit or income) and MAY be required to sign a Temporary Occupancy Agreement from Landlord. G.This bill is written as an Emergency Declaration and becomes law with the Governor’s signature. SB 282 is yet another game-changing bill to Tenant-Landlord law in Oregon. However, it is written with a sunset clause that will end its specific regulations on March 1, 2022. One may wonder if these policies are intended to provide Rent Relief or are they primarily concerned with Eviction Protection? During the workgroups, it was emphasized repeatedly that the primary justification for the extension of forgiveness and added Tenant protections is because Oregon stands to receive +/- $,2,000,000,000 in housing relief funds this year. Lawmakers understand that it will take time to push those funds through the system and get them paid to Landlords. They also wanted to allow time for the next Special Session in 2022 to modify provisions if necessary. Most important however, County Commissioners throughout the state likewise know what a monumental task this will be for their local jurisdictions, as they gear up for that challenge with its unprecedented demands on their servicing structures. As an example of this, on May 19th a $200,000,000 program for rent relief was introduced on the website www.oregonrentalassistance.org. It is designed for Tenants to submit the application and will pay up to 100% of all pastdue rent from April 1,2020 through June 30, 2021, PLUS up to 3 months of forward rent to help them stay current after the Mortarium expires! Perhaps most importantly is that it will pay the funds directly to the Landlord if they provide a W-9 tax statement. Yet, as earnest as this program appears, at least 1 county (Clackamas) did not sign up to provide it upon its rollout, illustrating the complexities of local aid distribution. I think we can all agree that the huge hole that has been dug needs to get filled in as soon as possible. And many hands make light of work! The truth is your Tenant did not create the problem, but they can help get the needed funds that are coming. I would like to take this opportunity to implore us all to wipe the sweat from our brow, stay focused and pick up a shovel and work together to help fill it in. www.rhaoregon.org
RENTAL ALLIANCE UPDATE June 2021
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Dear Maintenance Men by Jerry L’Ecuyer & Frank Alvarez
Dear Maintenance Men: One of my maintenance chores I do is caulking and sealing shower/tub fixture flanges and shower walls. My problem is getting the caulking to dry before a resident uses the shower. Any Suggestions? David Dear David: A lot of people will say: “Just tell the resident not to use the shower till the caulking is dry”. Well it doesn’t work and by the time you are driving away from the building, your resident is already taking a shower and your fresh caulking is washing down the drain. Your caulk should cure at least 24 hours before use. Water based latex caulking is easy to use, but very susceptible to water until it is cured. Try using a silicone or polyurethane based caulking for doing tubs, showers, toilets, sinks or other wet locations.It tends to set quickly and will repel water during its cure time.
batt insulation or loose fill insulation. The batt method is a bit more labor intensive and is less effective than loose fill. If you decide to use loose fill, be careful not to block ventilation holes or cover any through the ceiling light fixtures. Insulating existing walls typically involves drilling holes just below any fire blocks and blowing loose fill insulation into the wall cavity. Repairs to walls will be needed after the work is completed. The best of all worlds would be to do both wall and attic insulation. But if you must choose one over the other, we recommend doing the attic first as we have found this to be the most effective at cutting heating and cooling costs. You may want to check with your city or utility supplier; they often have low cost energy saving programs, or rebates. Dear Maintenance Men: How can I add more storage to my utilitarian type bathrooms? The residents complain that they need to store their toilet paper in the hallway! Please list a few suggestions on what to do? Robert
Another solution we have found works well with very busy showers is to remove all the fixtures, including the showerhead & arm, valve handles and tub spout, before caulking. (A bit extreme, but effective) We then plug the showerhead and tub spout with a capped pipe. Then caulk the tub/shower. We come back 24 hours later and reinstall all the fixtures.
Dear Robert: It does seem bathrooms are sometimes designed as an afterthought. Sink, toilet, bath and that is it. A modern bathroom will take into consideration the need for storage, electrical devises, personal hygiene etc. The first item that comes to mind is installing a bath sink cabinet. An old style cabinet might only have a set of doors under the sink. We find this is not adequate and a cabinet One more thought; if you have sliding shower doors should have drawers along with access to under the for your tub, check the bottom track. If it is loose, do sink. The drawers can store hair dryers, and all manner not caulk until the track is removed, cleaned and dried. of personal bath items. A unique system we like utilizes Reinstall the track with new adhesive caulk to hold it the space between the studs in the wall. Cabinet doors down and caulk the edges to keep the water out. or mirrors can be used to cover storage in the walls. The wall storage is perfect for toilet paper, rolled up towels, tooth brushes, and most other small items. Install Dear Maintenance Men: multiple towel racks on the back of the bathroom door My apartment building was built in the 1950 and has for additional towel storage. The space above the toilet no insulation in the walls or ceiling. What do you can easily accommodate an overhead cabinet for larger recommend as the most cost effective method of insulating items. Reversing the swing of the bathroom door from the building? inward to outward will greatly increase the usable room Sam and make the bathroom appear larger. Dear Sam: It is very common for older buildings to have no insulation whatsoever. As for where the best bang for your buck is concerned; ceiling insulation is the winner. For single story or top story units, ceiling insulation is very easy and inexpensive to install. Wall insulation is much harder and involves a more invasive approach. To illustrate the differences; ceiling insulation can be either 4
RENTAL ALLIANCE UPDATE June 2021
Bio: If you need maintenance work or consultation for your building or project, please feel free to contact us. 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 30 years. Frankie is President of the Apartment Association of Orange County and a lecturer, educational instructor and Chair of the Education Committee of the AAOC. He is also 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
Mom & Pop Landlords: Challenges and Solutions - Going on a Vacation? by Shiral Torres
Challenge: Going on a Vacation
You’ve been working day-in and day-out and then you realize life is more than just work. So, you decide to go on a vacation. Then the daydreaming begins; relaxing on the beach, taking a hike in the mountains, or maybe taking a road trip across the country. The choices are endless. Sounds wonderful right? So, with all this excitement, you start planning your dream vacation. Then all of a sudden it hits you. What if something goes wrong with the rentals? Plumbing issues, electrical outages, roof leaks, and the list goes on. Now your dreams become nightmares and you tell yourself, maybe it’s not a good idea to go on a vacation and your dreams are shattered. This is a very common experience for Mom & Pop Landlords. But it doesn’t have to be your reality.
Solution: Create a Plan
Creating a vacation plan is the solution to taking that dream vacation you’ve been planning and deserve. Let’s look at rentals as you would your children. If you’re going on a vacation without the kids, you’ll need to find a sitter, right? So, like children, you’ll need to find a sitter for your rentals. What do you mean, you may ask? Let’s break it down. Below is what you’ll need: 1. Find a Responsible Adult/AKA, the sitter Find a person you trust, who is capable of taking on the responsibilities of a property manager. This is your temporary representative. Before giving them the following items, review it together and allow them to ask any questions. • List with your tenants’ address and contact information. • Vendor list • Emergency phone number list • Funds to pay the vendor • To-do list • Blank 24-hour Notice-to-Enter form This is an important part of your planning because the more situations they can handle, the fewer calls you’ll get while you’re on vacation. Remember, the goal is to go on vacation and not have any calls related to your rental.
Vendor List
Create a vendor list by writing down all the good vendors you’ve hired in the past. Note that common issues are plumbing stoppages, plumbing leaks, and electrical outages. Make sure your list includes the contact person and their phone number. If you don’t have any responsible vendors, ask your family, friends, and neighbors if they have any. Ask for recommendations on social media like www.rhaoregon.org
Nextdoor.com. If you don’t know where to start, consider taking my class, It’s Time to Get Organized. 3. Emergency Phone Numbers Create a list of emergency phone numbers: local fire department, police, and family members who live nearby just in case you have an emergency that requires these, folks. 4. Funds Make sure to leave your representative funds to pay for the service if any is required; cash, credit card, blank check, etc. You can always ask the vendor to send a bill. 5. What-To-Do List List some of the most common details just in case something goes wrong. For example: below is a scenario for a plumbing stoppage (the most common tenant issue). You’ll write down the following. (Be sure to replicate this example for any issues you think your units will have.)
Plumbing Stoppage
• Call a plumber listed on the Vendor list and set up an appointment. • Call the tenant and ask if he/she will be there to greet the plumber. If the tenant is not able to greet the plumber, have your representative give the tenant a 24-hour notice-toenter so they can go into the unit with the plumber. • When the plumber completes the job, your representative can pay him/ her with the designated funds. • Notify the tenant that the stoppage issue has been completed. Be sure to replicate this example for any issues you think your unit will have.
Share the Contact Information of Your Representative with Your Tenant
Send your tenant a letter or call and let them know you’ll be out-of-town. Give them the name and phone number of your representative to call in case they have any issues. Now you’re ready to go on that well-deserved vacation. Make sure to update this plan whenever needed so you can use it every time you go on vacation. GO on that vacation with peace of mind, knowing everything is covered. You deserve it! Shiral Torres teaches rental property management classes at local colleges and through her business, Simply Shiral. She believes keeping life simple is the key to success. She and her husband own and manage multiple properties in California and throughout the country. The author of Rental Property Made Simple (available at amazon. com), Shiral is also a volunteer support group facilitator and Walk to End Alzheimer’s committee member for the Alzheimer’s Association. Want to learn more? Visit her website at www. simplyshiral.com to view the affordable classes offered that may help you gain confidence and profits. Reprinted with permission of the Apartment Owners Association of California, Inc. http://www.aoausa.com RENTAL ALLIANCE UPDATE June 2021
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Ask Attorney Brad: How Do I Prove a Tenant Smoking Inside My Rental? By Brad Kraus w/Warren Allen LLP Ask attorney Brad is a feature with attorney Bradley S. Kraus and this week the question is about tenant smoking and how to prove it if you go to court. If you have a question for Brad, please feel out the form below. Ask Attorney Brad: I trust this message finds you well. I’m wondering this: How can I prove in court that my tenants are smoking inside the home rented to them? Can you please advise? -Arun Hello Arun, Thank you for your question. Proof of smoking can be a challenge. Obviously, the best proof is when you catch a tenant in the act. However, that’s not always easy, and short of putting cameras in your tenants’ unit—please don’t do that—you may need to do your homework. It’s important to verify the smoking with neighboring tenants (i.e., those above, below, and on the sides of the smoker) if possible. That way, you may be able to “box-in” the smoking, and rely on that circumstantial evidence to buttress your case. If you have properly inspected the unit, and found ashtrays in the unit, disposed/used cigarettes therein, and/ or lingering odors in the unit, those are all items you may be able to rely on as well. Finally, if smoking has been pervasive inside the unit, the walls can collect smells and stains which, if combined with the proper testing and testimony, could rebut any tenant contention that they weren’t smoking inside the unit. Ultimately, your tenant will deny they are smoking in the unit. Some judges may require you to have more than just circumstantial evidence, so there’s risk of attempting a termination strategy without stronger proof. However, enforcing other tenants’ rights to live in a smoke-free area can be a worthy fight at times, even without rock-solid proof. Showing them you’re fighting for them may keep their focus and frustration on the smoking tenant . . . as opposed to you. -Brad Bradley S. Kraus is an attorney at Warren Allen LLP. His primary practice area is landlord/tenant law, but he also assists clients with various litigation matters, probate matters, real estate disputes, and family law matters. You can reach him at kraus@warrenallen.com or at 503-255-8795. Permission to reprint by Rental Housing Journal. 6
RENTAL ALLIANCE UPDATE June 2021
www.rhaoregon.org
WILL YOU BE READY FOR MORATORIUM END?
weathered the storm and made you a priority. I would caution you to not take them for granted.
Recently I was at a birthday party where young children were participating in some old-fashioned games. One that struck me particularly was musical chairs.
A lot of things can change over the course of a year (new
By David Pickron
As an adult, I now realize the anxiety that was generated by that game; will I get a seat or will I be the last one standing? As each round progressed and more players and chairs were removed, I could see that unique mixture of fear and fun fill the faces of these children as they competed to be the last person with a chair to call home. Over the past year in meeting with landlords across the country, I have come to know that look all too well as we have tried to navigate the eviction moratoriums that have affected our industry. You may have even seen that face in your mirror this morning. As March 2021 ended, once again the eviction moratorium was continued to June 30. For most of us, I don’t think this came as any great surprise. Even though the legislature approved rental relief for affected landlords, there just wasn’t enough time to get that money out to landlords (these are the same people who were able to get PPP business loans out and funded within weeks). I predict that this will be the last extension and I’m already prepared for many of you to let me have it if I am wrong. I hope and pray I am right. Let’s assume that I am right, and that the eviction moratorium completes its run at the end of June. The rental-housing market will immediately be thrust into an unforgiving version of adult musical chairs. Whether you have been paid every month, getting partial payments here and there, or have had absolutely have no communication with your tenant, there are things you should plan for now to protect your investments. I believe it is easiest to break down the grouping of landlords into three buckets as follows.
BUCKET 1: RETAIN Your are in bucket 1 if you have received all your rent and the pandemic did not hurt you personally. Congratulations, many of us are jealous. Your tenant www.rhaoregon.org
job, new child, new pet) and those changes may prompt a move by this valuable tenant. These tenants know their value and will have the power to move wherever they want because their credit and residential history is perfect. Whether looking for a bigger home or a shorter commute, when this game of musical chairs starts, they may be tempted to vacate your property. These are “dream” renters, and you cannot afford to let them go. I suggest a couple of ideas to help them recommit and sign a new lease with you: 1.Give them a discount in rent this year. $100 a month is cheaper than a turn. Do you really want to play “renter roulette” with an up-and-coming rental pool filled with bucket-3 type applicants? 2.Offer to upgrade your home. I am putting new flooring in one of my homes. It’s a win-win, as my property value will increase and the tenants will love it. Consider new countertops, appliances, or landscaping as an incentive for them to stay. 3.Giving them a monthly gift card or buying them an annual pass to the local zoo or theme park might be a better option depending on the renter. By helping this group, you only help yourself. They helped keep you afloat for a year… it’s time to say thank you! BUCKET 2: MANAGE If you have been working with your tenants and have gotten partial payments here and there, then you are in bucket 2, the “manage” bucket. I don’t need to tell you, but you have been working hard, performing a high level of management just trying to get paid. The only reason you are managing like this is because the government forced you into it. If this moratorium ends in June, I suggest these as your next steps: 1.Sit down (face-to-face if possible) with your tenants and lay out your future expectations. 2.Let them know that the behaviors they have shown in the last year will not be acceptable in the future. 3.Contact your local government to see if there is any stimulus money to offset past –due rent. 4.Negotiate any past-due rent and then renew the lease with a new mindset. Get creative and (continued on page 9) RENTAL ALLIANCE UPDATE June 2021
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RENTAL ALLIANCE UPDATE June 2021
www.rhaoregon.org
WILL YOU BE READY FOR MORATORIUM END? CONTINUED FROM PAGE 7
say you will waive the past due if they sign a new lease with a small increase in rent. This will allow you to recoup your past-due rent over time and take the burden off your tenant. BUCKET 3: REPLACE If your tenant ignores you, won’t take your calls and refuses to pay rent because of a COVID-related reason, you, my friend, are drowning in bucket 3. We feel for you, as covering someone’s rent when they are not cooperating or communicating is not fun or easy. Cutting the cord and cutting it quickly may be your best decision. If you are in bucket 3, please consider these suggestions: 1.If you fail to receive any rental-assistance money, you should contact an attorney immediately. Some states have lengthy eviction processes and by starting the process today, you might be in a better situation come the end of June. Establishing and maintaining that relationship with legal counsel is well worth the money. 2.You could offer the tenant money to move if your property is given back to you in great shape. Once they are out and the property is inspected and meets your standards, you can send them their money. As the world prepares to get back to normal, let’s make a commitment and not just return to our normal way of managing. This pandemic has afforded us the perfect opportunity to review and update our processes, policies, criteria, applications, and on boarding process. The key to your success in this world is finding and retaining the right tenants. In a time where it will only be harder and harder to find the right tenants, is is paramount to be ready to hold on to or grab the best of the best when the music finally stops. David Pickron is president of Rent Perfect, a private investigator, and fellow landlord who manages several short-and long-term rentals. Subscribe to his weekly Rent Perfect podcast (available on YouTube, Spotify, and Apple Podcasts) to stay up to date on the latest industry news and for expert tips on how to manage your properties.
www.rhaoregon.org
In summer, complete the following projects to keep the rental property landscape lush and the home cool for your tenants.
Outdoor Tasks: • Walk around the property’s exterior and open or uncover foundation vents. • Uncover central air conditioner and install window air conditioners. • Pressure wash siding and fences. • Pressure wash sidewalks and patios. Repair and seal cracks in walkways, driveways, patios, etc. • Touch up peeling or damaged paint. • Check exterior caulking and apply caulk as needed. • Wash exterior windows. • Remove lint from dryer exhaust vent with a long, flexible brush. • Clean the swimming pool or spa. Fix cracked tiles and any safety or structural concerns. Ensure any fence around the pool is secure and the gate has a working latch or lock. • Turn on the sprinkler system and check for leaks. • Open or remove storm windows.
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
RENTAL ALLIANCE UPDATE June 2021
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your r
Five Professionals Behind A Successful 1031 Exchange Austin Bowlin, CPA – Partner at Real Estate Transition Solutions After many years of owning and managing a multi-family rental property, you are ready for a lifestyle change and decide to sell your highly appreciated investment property. You know the tax liability from selling your rental property will be substantial. However, you also know that you can avoid paying that high tax bill by completing 1031 Exchange and investing the proceeds into a qualified replacement property. What you are not sure about is where to find a qualified replacement property and what professionals you will need to work with in order to complete your 1031 Exchange.
elinquished rental property. However, if you are in the market for a new broker, it is a good idea to work with one who has 1031 Exchange experience.
Although Exchanges offer many benefits, they can be complicated and must be executed under the strict guidelines of Section 1031 of the Internal Revenue Code. Any missteps can be costly, and there is no room for error regarding rules and deadlines. Having the right team in place will help ensure your 1031 Exchange is successful and meets your goals. Here are five professionals that can play a key role in helping you make the most of a 1031 Exchange.
Differing taxes is at the center of every 1031 Exchange. For this reason, work with a CPA or tax advisor who understands your financial goals, is familiar with 1031 Exchanges, and can make themselves available to the other professionals involved in your Exchange. Once your 1031 Exchange is complete, your tax advisor will gather the necessary supporting documents in order to report the 1031 Exchange to the IRS during your upcoming year’s taxes.
A real estate broker with 1031 Exchange experience understands the rigid time constraints of an exchange and will take additional measures, such as including a 1031 Exchange Cooperation Clause in your purchase and sale agreement, to help protect your exchange.
CPA / Tax Advisor
Licensed 1031 Exchange Advisor
Attorney
As the team leader, your 1031 Advisor will provide consultation, develop your Exchange strategy, help you select and acquire replacement property, and guide you through 8 key steps of the 1031 Exchange process to ensure IRS rules are met at every point.
Exchanges and can make themselves available to the other professionals involved in your Exchange.
Think of a 1031 Exchange Advisor as the team captain—and every team needs a good captain. A quality 1031 Exchange Advisor is licensed through FINRA and is highly experienced with an in-depth knowledge of the Exchange process, tax code, Exchange strategies, and replacement property option.
Quality 1031 Exchange Advisors, like Real Estate Transition Solutions, even have CPAs on staff that can calculate tax liabilities and estimate financial projections on replacement properties. In fact, 1031 Exchange Advisors are continuously analyzing and vetting replacement properties to find quality properties that best align with client objectives. Lastly, a good 1031 Exchange Advisor will also work closely with the other professionals on your Exchange team to collaborate on your behalf to help ensure a seam less transition from start to finish.
Qualified Intermediary
Often referred to as an Exchange Accommodator or Exchange Facilitator, a Qualified Intermediary (QI) is an independent entity that holds the proceeds from the sale of your relinquished property while your replacement property is being identified and releases the funds to acquire your 1031 replacement property. As required by the IRS, prior to closing on the sale of the relinquished property, all exchangers must identify a qualified intermediary and open an “Exchange” with that qualified intermediary who will prepare all the required documents for the Exchange. Before selecting a qualified intermediary firm for your 1031 Exchange, be sure to consider the QI’s reputation, transaction history, and experience. It is also important to ensure that the qualified intermediary has both errors and omissions insurance as well as fidelity insurance.
Real Estate Broker
You may already have a trusted real estate broker to help you sell 10
RENTAL ALLIANCE UPDATE June 2021
Although most 1031 Exchange transactions do not require a real estate attorney, there are situations when hiring an attorney is beneficial, such as when a property is co-owned and there is legal entity restructuring that must occur in advance of the Exchange or following the Exchange. Work with a real estate attorney that has experience with 1031
The Bottom Line
IRS Section 1031 is undeniably one of the most generous sections of the tax code however IRS rules are absolute and must be followed. Having the right team in place and working with a highly experienced 1031 Exchange Advisory firm will help you make the most of this advantageous transaction structure. If you are considering a 1031 Exchange and would like to learn more about working with a 1031 Exchange Advisor, contact Real Estate Transition Solutions at 503-946-5656, email info@re-transition.com, or visit www.re-transition.com/rhaor. Austin Bowlin, CPA is a Partner at Real Estate Transition Solutions and leads the firm’s team of 1031 Exchange Advisors & Analysts. Austin advises on tax liability, deferral strategies, legal entity structuring, co-ownership arrangements, 1031 Exchange options, and Delaware Statutory Trusts. About Real Estate Transition Solutions Real Estate Transition Solutions is an advisory firm specializing in tax-deferred 1031 Exchange strategies, Delaware Statutory Trust investments, and fractional replacement property options. For over 20 years, we’ve helped investment property owners perform successful 1031 Exchanges by developing and implementing well-planned, tax-efficient transition strategies carefully designed to meet their financial & lifestyle objectives. Our team of licensed 1031 Exchange Advisors will guide you through the entire Exchange process and help you select and acquire 1031 replacement properties best suited to meet your goals. To learn more about Real Estate Transition Solutions, visit our website at www. re-transition.com. This is for informational purposes only, does not constitute as individual investment advice, and should not be relied upon as tax or legal advice. Please consult the appropriate professional regarding your individual circumstance. Because investor situations and objectives vary this information is not intended to indicate suitability for any individual investor. There are material risks associated with investing in real estate securities including liquidity, 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. This article was collectively authored by Austin Bowlin and a paid third-party firm. Real Estate Transition Solutions offers securities through Concorde Investment Services, LLC (CIS), member FINRA/SIPC. Advisory services through Concorde Asset Management, LLC (CAM), an SEC-registered investment adviser. Real Estate Transition Solutions is independent of CIS and CAM. www.rhaoregon.org
Why is DST Real Estate a Popular 1031 Exchange Option? Just Ask a Few Oregon Landlords. A 1031 Exchange into DST real estate helped these landlords meet their objectives. By selling their rental property and investing in three DSTs, they avoided paying 37.7% in gains tax while increasing income potential, diversifying risk, and eliminating active property management.
Before 1031: Landlords
After 1031: DST Property Investors
Sold Rental Property. Performed a 1031 Exchange. Deferred $423K in gains tax.
Invested in 3 passive management 1031 DST properties with monthly income potential.
Whole Ownership Rental Property
Fractional Ownership in Institutional DST Properties 1031 EXCHANGE
Example and pictures are for illustrative purposes only and are intended to show types of institutional properties that DST Sponsors seek to own. It does not constitute open or closed offerings. Individual results may vary.
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Learn more about 1031 Exchange DST property investments and fractional real estate ownership. Speak to a licensed 1031 Advisor at Real Estate Transition Solutions by calling 503-946-5656. This is for informational purposes only, does not constitute as investment advice, and is not legal or tax advice. Please consult the appropriate professional regarding your individual circumstance. There are material risks associated with investing in DST properties and real estate securities including liquidity, 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. Potential cash flows/returns/appreciation are not guaranteed and could be lower than anticipated. Diversification does not guarantee a profit or protect against a loss in a declining market. It is a method used to help manage investment risk. DST 1031 properties are only available to accredited investors (typically have a $1 million net worth excluding primary residence or $200,000 income individually/$300,000 jointly of the last three years) and accredited entities only. If you are unsure if you are an accredited investor and/or an accredited entity, please verify with your CPA and Attorney. Real Estate Transition Solutions offers securities through Concorde Investment Services, LLC (CIS), member FINRA/SIPC. Advisory services through Concorde Asset Management, LLC (CAM), an SEC-registered investment adviser. Real Estate Transition Solutions is independent of CIS and CAM. The company depicted in the photographs herein may have proprietary interests in their name and trademark. Nothing herein shall be considered an endorsement, authorization or approval of RETS, CIS, and CAM or the investment vehicles they may offer, of the aforementioned company. Further, none of the aforementioned company is affiliated with RETS, CIS, and CAM in any manner.
www.rhaoregon.org Real Estate Transition Solutions | www.re-transition.com | info@re-transition.com 503-946-5656 RENTAL ALLIANCE |UPDATE June 2021 11
