May 2020
A monthly newsletter published by the Rental Housing Alliance Oregon
rha est. 1927
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In this issue: President’s Message ......page 2 Know Before You Vote....page 3 Snow Cap Community Charities ................................page 4 Dear Maintenance Men................. ....................................................page 5 Impact of Covind-19.........page 8 10-31 Exchange...................page 11
Stay Informed Stay Connected Stay Safe
President’s Message Ken Schriver, RHA Oregon President
These days I feel a bit like the man in the story who falls out of an airplane. Fortunately, he had a parachute. Unfortunately, it failed to open. Fortunately, there was a pile of hay to land on. Unfortunately, there was a huge rock in the pile of hay. Fortunately, he missed the rock. Unfortunately, he missed the pile of hay. Life for landlords during this COVID-19 pandemic has been similarly filled with ups and downs. The initial announcements of moratoriums on evictions for non-payment of rent was a bit like being kicked out of the airplane. Of course, we were told that we had a parachute: rents were only being deferred, not waived. We know, however, that this is a false promise unless the State of Oregon provides emergency rental assistance to tenants. Towards that end, RHA Oregon has been working to make sure that all housing providers, and especially small landlords, will make it through this difficult time. To wit, •We are maintaining support for our members with limited staff resources to provide phone and e-mail assistance. Although in-person classes and meetings are cancelled, we are expanding our educational offerings and Member Mentor sessions using an online (Zoom) Webinar platform. •We are regularly updating our COVID-19 resource page on the RHA Oregon website so that landlords can keep up to date on regulations regarding tenants that are unable to pay rent, and find the resources they need to deal with their unique situation. •RHA conducted a survey of our members from 6 – 10 April. THANK YOU to the more than 200 landlords who responded, providing us with valuable, statistically valid information. I hope you have read the report that we made available to members the following week. •We are coordinating efforts with our counterparts at Multifamily Northwest, including sharing data from our respective member surveys and harmonizing our communications with State and Local leaders. As noted in our survey, most of our members felt they would be OK in April, but they were worried about May. Now that the CARES Act relief checks are being disbursed and unemployment benefits have been increased, I am hopeful that most May rents will also be paid on time. Nevertheless, for Oregon housing providers, it will get worse before it gets better: •There have been over 334,000 initial unemployment claims in Oregon since March 15. This is 16% of the state wide labor force. •Unemployed workers in the restaurant and hospitality industries (~20% of the above total) are likely to be some of the last to return to work after “stay at home” restrictions are relaxed. •The Small Business Administration’s Interim Final Rule relating to CARES Act loans (e.g., the PPP and Economic Injury Disaster Loans) designated that “…landlords that do not actively use or occupy the assets acquired or improved with the loan proceeds” are ineligible to receive these funds. As gloomy as things sound, we should be glad to live in a state where most citizens have responded in a way that has successfully “flattened the curve.” This effort will allow Oregon to re-start our economy without endangering those who are most vulnerable. According to the nonpartisan Center on Budget and Policy Priorities, Oregon is well positioned to recover more rapidly from the current recession than many other states. I encourage all of us to continue to support our tenants and each other during these extraordinary times. I am confident we will land in the pile of hay. Now if we can just manage to miss the rock. 2
RENTAL ALLIANCE UPDATE May 2020
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Know Before you Vote Where the Major Candidates Stand on Housing By Jennifer Shuch, HFO Research Analyst
As Oregon’s May 2020 primary approaches, a large number of local, regional, and national candidates have entered the race with housing as a top priority. Housing affordability, both for renters and homeowners, has become a flashpoint in political debate throughout the country. Rent growth in Portland has begun to slow due to new units coming online. An increasing number of households are rent-burdened--defined by the U.S. Department of Housing and Urban Development (HUD) as spending more than 30% of household income on rent. At the national level, public housing investment is well below historical levels. But the candidates vying for the Democratic nomination have all unveiled plans aimed at tackling affordability issues. Former VP and presumptive nominee Joe Biden has a policy calling for $640 billion in investments aimed at helping renters and homeowners. In the Portland mayoral race, Mayor Wheeler’s reelection may hinge on whether city residents are as enthusiastic about his housing record as he is. An additional three city council seats are also up for election. Most hotly contested is the position held since 2017 by Chloe Eudaly, who campaigned on a platform focusing primarily on issues such as tenant rights and rent control. Metro—a government entity charged with overseeing regional planning, parks, and some major entertainment venues in Portland’s three-county metro area—passed a $652.8 million housing bond in 2018. Metro will ask voters again in May for up to $250 million for homeless services funding. There are currently three races for open Metro Councilor seats. In light of all this, we have compiled an overview of candidates’ positions on housing issues in races for the City of Portland, Multnomah County, Metro, and the Democratic nominee for U.S. President. City of Portland Mayoral Race Ted Wheeler is up for reelection as Portland’s Mayor. Among his 18 competitors are leading contenders Sarah Iannarone, Teressa Raiford, and Ozzie Gonzalez. Both Iannarone and Gonzalez have released housing plans, while Wheeler’s website mainly touts what he sees as his most significant accomplishments so far. On his website, Mayor Wheeler claims that he has more www.rhaoregon.org
than doubled shelter capacity in the city, prevented 7,000 households from falling into homelessness, helped 6,000 people connect with transitional housing services, and built over 800 units of affordable housing. His office has also touted the city’s progress in exceeding its housing bond goals of creating or preserving 1,300 housing units. So far, however, of the 1,424 bond-funded units, only two complexes with 314 total units are open and occupied as of March 2020. While Wheeler’s campaign website emphasizes what the Mayor has accomplished over the last four years, it does not indicate what his plans are for the future if he’s re-elected. And there are differing opinions as to the validity of the Mayor’s claims. Of Wheeler’s plethora of challengers, both Sarah Iannarone and Ozzie Gonzalez have released housing proposals, and Teressa Raiford limits herself to commenting on demolition and displacement in her platform statement. Iannarone’s housing plan calls for a five-year plan to end the housing state of emergency, which has been in place since 2015. She argues that the city needs a task force to assess housing inventory and resident needs. That city leaders must use this information to solve the problems that are persisting in the city’s housing market. Iannarone also calls for increased communication between city bureaus, nonprofit organizations, and private sector stakeholders. Her plan addresses the city’s taxation system – she advocates for recalibration to eliminate inequities between East Portland and other parts of town, as well as land value and real estate transfer taxes. Iannarone’s housing proposal also focuses on eviction prevention and tenants’ rights. She argues in favor of a tenants’ bill of rights, including the right to organize, and she believes that the city should fund the rental registration system and track eviction rates. Iannarone is in favor of using tourism tax revenue to create a rental subsidy reserve, and advocates for relegalizing SRO’s throughout the city. She is the only candidate calling for a moratorium on the development of self-storage facilities in mixed-use zones, centers, and corridors. She also seeks the reduction of costs and red tape for small-scale building projects. Like Iannarone, Ozzie Gonzalez advocates for collaborating with stakeholders to tackle housing issues. His housing plan calls on the city to partner with managers, developers, and real estate firms to establish a housing inventory system. Gonzalez’s strategy focuses on development-side issues – he would like to see more incentives for producing a variety of housing types and an emphasis on transit-oriented development. He also believes the city should find new uses for vacant units. (continued on page 6)
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SnowCap Community Charities is located at 178th & Stark, they service over 9000 people each month in East Portland. The majority of the people they assist are the working poor who receive help with groceries from their food pantry, HOP bus cards, and clothing. SnowCap also directs people to other community resources that SnowCap cannot provide. Additionally, they deliver food boxes to seniors and the disabled.
Most of SnowCaps food donations come from the Oregon Food Bank, while a lot of the food is donated to them, they also purchase meat and fish items with cash donations. Did you know that just a $5.00 donation to SnowCap buys 100 lbs. of food from the Oregon Food Bank? SnowCap is always looking for food donations; however, they need other specific items as well: Dog & cat food Books-especially kids Travel size personal care products Paper & plastic bags Shoes School supplies Blankets Back packs Sleeping bags Empty pop & water bottles Landlords, when you do a clean-out, keep in mind there may be a lot of items you could donate directly to Snowcap! RHA Oregon donates money each year to Snowcap from Starry Night proceeds and collects toys at our holiday party that Snowcap distributes to the children as part of a larger toy drive. Please help us support their generous community activities by donating directly and by attending our Starry Night fundraiser event in July. Lynne Whitney-Community Chair-Charitable Contributions lynne@realestateroofing.com Jerad Goughnour Tamara Collins Cari Pierce Melinda McClelland 4
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Dear Maintenance Men by Jerry L’Ecuyer & Frank Alvarez
Dear Maintenance Men: I have a multi-unit apartment building with a 100-gallon water heater that serves all the residents. The problem is that only the nearest units to the water heater gets any hot water. The units at the other end of the building only get cold water or it takes a long time to get hot water. . The heater seems to be working and producing hot water. How do I solve this dilemma? David Dear David: Sounds like your circulation pump is not working properly. Calcium or hard water deposits in the water heater and lines may also aggravate this problem. The circulation pump’s job is to bring hot water to all the units at the same time. When the pump is not working or is clogged, the hot water will take much longer to get to the units furthest away from the heater. The first step is to determine if the pump is working. Locate the pump near the water heater, check that the motor is plugged into an electrical outlet. Next, touch the water lines on either side of the pump and determine the temperature. If it is working properly, the lines should be warm or cool to the touch, not hot. If the pipes are hot or very hot to the touch, the pump is not working properly. If the pump does not spin when plugged in, it may need to be replaced. If the pump motor is working, the pump may be clogged with debris. Remove the pump and clear out the lines. Take care to clean the line from the pump to the water heater. This is generally the problem. While you have things apart, this is a good time to clean out the calcium deposits in the water heater. These deposits may have caused the clog in the first place. Water heater clean outs should be done at least once a year depending on how hard you’re your incoming water is. Check with your water departments, to determine the hardness of the water in your area. If the calcium buildup continues to be a problem; consider adding a water softener to your system. Dear Maintenance Men: One of my residents is requesting a grab bar for the shower/ tub. What do I need to get and how do I install it safely? Bob Dear Bob: This is a subject that is surfacing more and more as
our residents are getting older. The use of handrails and safety bars help provide stability and extra support required by the elderly and people with limited mobility. Shower and bathroom safety grab bars are available in a wide variety of configurations, colors and finishes. The most common is the stainless steel or chrome finish. Installation of grab bars must be done securely. The bars must be able to support a dead weight pull of 250 pounds. The preferred method is to bolt directly into the wall studs. This is not always practical, as the stud might not line up were they are needed. Grab bars can be mounted vertically or at an angle to match wall stud spacing. Horizontal installation can be difficult because stud spacing and bar size do not always match. If finding studs becomes a problem, alternate installation methods are available. If your walls are in good condition and have not been compromised by water intrusion, you may use large toggle bolts or if you have access to the back side of the shower or bath walls, insert a backer plate or add a new stud for an anchor point. Safety grab bars can be found at any local hardware store. Dear Maintenance Men: I need to replace a dishwasher and I am little intimidated by the process. Can you walk me through the installation procedure? Mac Dear Mac: The installation of a dishwasher is not as complicated as it looks. Turn off the electricity leading to the machine. Turn off the water at the main shut-off. If your dishwasher site is not pre-plumbed with a separate water valve, remove the existing hot water angle stop valve under the sink and install a double threaded angle stop/ shutoff valve under the kitchen sink. Use a stainless steel braided flex water line to hook up to the dishwasher. You may need to buy a fitting to screw into your dishwasher to accept the hose. Most new machines don’t come with the fitting, or remove the existing fitting from the old dishwasher. Next, connect the drain line from the dishwasher pump motor outlet to the garbage disposer inlet. (Don’t forget remove the “knock-out” in the garbage disposal inlet.) It is important to install an “Air Gap” between the dishwasher and the garbage disposal. The air gap is installed next the faucet and stops the water from draining back into the dishwasher by siphon action. If you are unable to install a true air gap device, loop your drain line over the dishwasher before hooking up to the garbage disposal. Both methods will prevent debris from (continued on page 9)
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RENTAL ALLIANCE UPDATE May 2020
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residents housed.
While Teressa Raiford does not have a comprehensive housing proposal, her policy statement, which she calls The People’s Platform, calls for a moratorium on urban redevelopment. She believes demolitions should await the coming together of communities to decide what should be saved or replaced. She pushes back on “demolition, rezoning, and redevelopment,” which she believes serves only “big investors, large corporations, and the highincome earners.” Mayor Wheeler was endorsed by The Oregonian for re-election in its op-ed dated Sunday, April 26, 2020.
Tim DuBois believes the city should do more to increase housing diversity and build more housing near transit and job opportunities. He also argues for a streamlined and expedited permitting process.
Portland City Council Portland City Council Position No. 1, is currently held by Commissioner Amanda Fritz, who is vacating her seat. Of the nine candidates, Carmen Rubio, Candace Avalos, and Timothy DuBois are the only candidates that have put forth housing plans. Carmen Rubio is assumed to be the front runner due to the large number of endorsements she has received from local elected officials. Rubio advocates for coordinating with state, regional, and federal partners to address housing affordability, and investing in homeless prevention and anti-displacement measures. She argues that the city needs to increase density if residents want better transit and more affordable housing options, and she stresses the need for data-driven solutions to the city’s problems. In a survey conducted by Portland Tenants United (PTU), Rubio did not commit to advocating for an end to the statewide ban on local rent control policies. While she did not explicitly back the state law, she argued that she would need to be sure that increased rent restrictions would not reduce the availability of affordable housing. Candace Avalos believes the city should fully fund rental assistance programs and collaborate with service providers to support people who may be on the verge of homelessness. She advocates for an innovation hub dedicated to finding new ways to build affordable housing without subsidies. Avalos also believes that the city should incentivize building affordable housing ‘at scale’ and advocates for streamlining the permitting process. Like Sarah Iannarone, she calls on the council to fully fund the Office of Rental Services, which oversees the rental registration program. Unlike Rubio, Avalos has committed to overturning the state preemption of local rent control policies. Avalos argues that local jurisdictions must be allowed to use whatever tools may help keep 6
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Carmen Rubio was endorsed by The Oregonian in its oped on Sunday, April 26, 2020. Portland City Council Position No. 4 is also up for grabs this year, with incumbent Chloe Eudaly facing challenges from former Mayor Sam Adams as well as professor and prior public servant Mingus Mapps, Keith Wilson and four other candidates. Eudaly defeated incumbent Steve Novick in 2016, mainly by gaining the support of housing and tenants’ rights advocates. During her time as a commissioner, she has advocated for rent control and increased tenant protections. Eudaly’s staff devised the recent FAIR ordinances governing rental applications and safety deposits. As of March, Eudaly has not released a housing policy platform to indicate her priorities should she be re-elected. Former Mayor Sam Adams has received an endorsement from Smart Growth Oregon, and his housing plan reflects the idea that more housing is needed at all affordability levels to make up for years of underbuilding between 2010 and 2018. While Adams supports the Residential Infill Plan, he believes that the city should also increase density along arterials and near transit stops. He also argues for expediting the permitting process for both affordable and market-rate projects. Adams’s goal, should he be elected, is to bring all stakeholders together to build a long-term plan to determine which type of housing is needed, and who should build it. He also wants to re-evaluate current design rules to make sure they meet city goals. Adams also intends to conduct regular surveys of renters and property owners to track affordability, rent increases, and demographic information, as well as property ROI and the amount an owner invests in updates and maintenance. Adams is also in favor of ending the state preemption on local rent control laws and allowing local jurisdictions to establish individual policies. Mingus Mapps has released plans on housing and homelessness, both of which emphasize the need for new housing units at a variety of income levels. His Ending Homelessness and Housing First proposal calls for a ban on price gouging in the rental market, as well as an additional 1,500 units of permanent supportive housing. He also believes the (continued on page 7) www.rhaoregon.org
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city should increase funding levels for short-term rental assistance to keep people in their homes when they may be experiencing temporary setbacks. In his Affordable Housing for All plan, Mapps advocates for fee reductions, streamlining, and faster inspections to increase development activity in the city. He also argues that the city should protect renters’ rights and increase housing density. In his public appearances, Mapps has argued that the City Council has neglected to bring all interested parties to the table to find the best solutions for housing and homelessness issues. In an interview with HFO, Mapps agreed that the city has weaponized housing policy, and made it harder for smaller landlords to operate. He believes the city should do more to understand the consequences of policy decisions. Also running for Position 4 is Keith Wilson, a University of Portland Business School graduate, world traveler, and President of Portland-based trucking company TITAN Freight. His housing plan focuses on the need for more housing units in the city. He advocates increased flexibility to allow for more SRO, micro, and cohousing units. He also argues for the conversion of single-family homes to multi-generational and multi-family residences and the reduction of development fees. While an additional four candidates are running for Commissioner Eudaly’s seat on the City Council, none of these contenders have released a housing proposal. Mingus Mapps won the endorsement of The Oregonian in its op-ed published Sunday, April 26, 2020. Portland City Council Position No.2. Commissioner Nick Fish passed away suddenly in December. Since then, 13 candidates have filed. Of those candidates, four have housing policy details outlined on their campaign websites, while an additional two mention housing but do not discuss the details of their housing plans. Loretta Smith, who ran against Commissioner JoAnn Hardesty in 2018, is the highest-profile contender in this race. In her brief list of city priorities, Smith states that she will address homelessness through increased supportive services and affordable housing. Sam Chase, who has been the Metro Councilor for District 5 since 2013, touts his involvement in the creation and passage of the Metro housing bond as a major highlight of his career. Chase’s housing plan includes implementing a plan originally championed by Nick Fish to create 2,000 permanent supportive housing units for www.rhaoregon.org
homeless residents. He also believes the city should invest in creating new affordable housing, particularly in transit corridors, with infrastructure already in place to support these new units. He also believes that jurisdictions within the Portland Metro Area should be required to build adequate shelter beds and affordable housing. Chase is in favor of lowering the rent increase threshold that triggers the relocation assistance requirement in Portland and overturning the statewide prevention on local rent control policies. Another frontrunner in the race is Julia DeGraw, progressive organizer, and director of nonprofit lobbying organization PDX Forward. DeGraw’s housing plan, which she calls Housing for All, argues that developers have too much influence on city policy. She believes housing is a human right, and the city should fully fund rental assistance programs as well as the Rental Services Office and build profoundly affordable housing throughout the city. She also argues that the city should go further in outlawing no-cause evictions and do more to enforce recently passed tenant protections—DeGraw advocates for redirecting subsidies to affordable housing projects and community land trusts. Like Candace Avalos, she believes the city should set up an innovation hub to come up with new ideas for producing affordable housing. She also urges the city to explore a vacancy tax. Also running is a longtime tenant advocate and former head of Portland Tenants United (PTU), Margot Black. Black advocates for lifting the state ban on rent control so that the city of Portland can enact what she refers to as ‘real’ rent control policies. She also advocates for increased tenant protections, including universal eviction defense, and a collective bargaining process for rental agreements. In addition to increased tenant protections, Black is in favor of a ‘housing wage for all’ and argues that the city should improve accountability for public and affordable housing providers. Both Jeff Lang and James Davis’s proposals focus primarily on homelessness and include big ideas for turning under-utilized city sites as campuses for homeless residents. Jeff Lang argues that the city should turn the Veterans Memorial Coliseum into such a school, including dorms with locking doors, a medical clinic, teaching facilities, and offices for local nonprofits. Meanwhile, James Davis argues that Concordia University, which will shut down at the end of the Spring semester in 2020, should be purchased by the city and operated as a housingfirst project. Both Lang and Davis also argue that the city should allow for a wider variety (continued on page 10) RENTAL ALLIANCE UPDATE May 2020
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The Impact of COVID-19 on the Portland Real Estate Market
Austin Bowlin, CPA – Partner at Real Estate Transition Solutions It is no secret that in Portland and western Oregon, real estate has been a major success story over the past 10 years. With near continuous appreciation throughout the last decade, it has felt as though the region’s real estate could do no wrong.
In fact, it seemed like the only thing that would destabilize the western Oregon real estate market would be something that catastrophic, like an earthquake. No one predicted that the event would be a pandemic. It is very clear that the pandemic will have both global and regional impacts. We are all asking ourselves, “What will be the impact be to our local real estate market?” We, like everyone else, are not entirely sure yet, but here are a few observations thus far. Hospitality and tourism are being hit the hardest. Target occupancy for Portland hotels is typically 80% for this time of year. Currently, all restaurants have been closed in Oregon, sans take-out and curb-side delivery. Multifamily renters who are unable to work remotely, or those who work in the service sector or “gig” economy, are feeling the financial strain due to declining income. Portland and Multnomah officials banned evictions for non-payment of rent, although the missed rent will be due at the end of the ban. This shifts financial exposure from the tenants to the property owners. Buyers of commercial real estate from outside the area are wary of travel to tour and inspect properties. This reduces a buyer pool that contributed, in large part, to the appreciation the market has experienced as new capital flowed into the region. It is likely that assisted living and senior care properties will be met with more regulatory scrutiny due to their susceptibility to viruses like COVID-19. This could dramatically increase operating costs moving forward. Other asset classes, such as equities (stocks) have been very reactive to the pandemic and that tends to cause alarm. When suitable, we firmly believe that real estate is an asset class that warrants an allocation in most investor’s portfolio. So, what takeaways are there for investors looking to protect their investments during this period of uncertainty? Diversify to protect your real estate investment. Diversification is key when focusing on preservation of capital. Within real estate, different geographic locations and different property types, serving different business sectors, behave differently in major events and market cycles. Following are examples of these premises as it relates to Coronavirus: •Warm states in the South are experiencing lower instances of Coronavirus due to their climate (as of writing this article, Arizona has 1,289 known cases as compared to Washington’s 4,824 known cases). •Not all retail will be affected in the same way. Grocery stores, pharmacies, and drug stores may have record-setting sales during this time period. Retail that has a developed online presence will capitalize on that as people are practicing social distancing and adhering to shelter-in-place orders. Bricks and mortar stores that sell non-essential products will struggle the most. As of right now, we are still very bullish on the region’s long-term real estate prospects, however, we strongly believe that too much concentration in any one 8
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market/market sector puts preservation of capital at significant risk. Investment property owners who are entirely concentrated in one property type, in one geographic area, such as multi-family rental property in NW Oregon, should strongly consider diversifying a portion of their portfolio, if they prioritize preservation of capital. Younger investors may have the investment time horizon and risk appetite to be concentrated, but unless you are comfortable weathering a full market cycle (historically, real estate cycles occur every 7+ years), then diversification is essential. Our clients regularly ask our opinion regarding how much room there is left for the region’s real estate to appreciate. Here are some points to consider: •Portland is still more affordable than Seattle and significantly more affordable than San Francisco •Multnomah County has a highly educated labor force earning high incomes, these high wage earners have a multiplier effect for “secondary job” creation within the services and support industries •Major employers are growing, leading to a major expansion of commercial office and a net migration of residents into the city •Record new multi-family and commercial office expansion continue to be met with record high absorption and leasing We all hope that the pressures of the Coronavirus are short-lived and that we can swiftly address COVID-19 on both a local and global level. In the meantime, investment property owners should consider their property and decide if they have the holding power, and will, to ride a real estate cycle, should our market turn. Remember, it is the punch you do not see coming that knocks you out. If you feel that now might be a good time to sell your investment property and have questions regarding your tax-deferral options and 1031 Exchanges, contact us to schedule a complimentary 1031 Consultation. Our consultations can be done over the phone, via web conference, or in person at our offices located in Mercer Island, WA and in Portland, OR. To schedule your free consultation, simply call 206-686-2211 or CLICK HERE.About Real Estate Transition Solutions Navigating the Exchange process successfully can be challenging and complex. For over 20 years, Real Estate Transition Solutions has helped investment property owners navigate and execute tax-deferred 1031 Exchanges, Delaware Statutory Trusts (DSTs), complex real estate investments, and tax planning strategies. Our team of dedicated 1031 Exchange consultants will help you select and acquire Exchange properties that seek to meet both your financial and lifestyle objectives. To learn more about Real Estate Transition Solutions, visit our website at www.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. The information herein has been prepared for educational purposes only and does not constitute an offer to purchase or sell securitized real estate investments. Statements concerning financial market trends are based on current market conditions, which will fluctuate. Past performance and forecasts are not indicative of future results and should not be relied upon. There are risks associated with investing in real estate) properties including, but not limited to, loss of entire investment principal, declining market values, tenant vacancies and illiquidity. Because investors situations and objectives vary this information is not intended to indicate suitability for any particular investor. This material is not to be interpreted as tax or legal advice. Please speak with your own tax and legal advisors for advice/ guidance regarding your particular situation. 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
Maintenance Men Cont. CONTINUED FROM PAGE 5
sucking back into the machine. Look for the small electrical box under the dishwasher, remove the cover and pull out the wires. Connect your wires or pig tail to the machine (A “Pig Tail” is a wire with a plug on one end and bare wires on the other end). Be sure to hook up the Green ground wire for safety. Carefully push your machine under the counter. Once in place, adjust the legs by turning them in or out to level the machine. There should be two tabs at the front top of the dishwasher, use these to secure the machine to the counter top with screws. Now turn on your water and electricity and test your dishwasher and check for leaks.
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. 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.
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. We are available throughout Southern California. For an appointment please call Buffalo
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During the Covid-19 emergency, RHA Oregon is working to provide member landlords with timely and accurate information regarding best practices and resources to keep you and your tenants safe, and safely housed. Our offices are closed to in-person visits, but our forms are still available online. Staff are available to answer your phone calls and e-mails. In-person classes and dinner meetings are cancelled until further notice. We are working on ways to expand our online offerings of classes and member mentor sessions using Zoom. Please visit our Covid-19 Resources webpage https://rhaoregon. org/membership/rha-covid-19-resources-webpage/ We appreciate your patience and your support during this difficult time. www.rhaoregon.org
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of housing types, including co-ops, SROs, tiny home villages, and intentional communities. Davis believes the city can facilitate this by creating a public bank for nontraditional lending. Sam Chase won the endorsement of The Oregonian in its op-ed published Sunday, April 26, 2020. Other Local Elections While candidates in the Portland City Council and Mayoral races are prioritizing housing, candidates in other local races have not yet released housing plans. The vast majority of candidates running for Multnomah County and Metro Council positions have not released many details on how they will address the region’s most pressing issues. But with Metro planning to release housing bonds and homeless measure funding to cities and counties throughout the region, how these candidates propose to address housing needs may become more critical than ever. Multnomah County Commissioner District 3 Jessica Vega Pederson, who is running for Multnomah County Commissioner in District 3, has released a housing statement (not a plan). Pederson plans to work with community organizations to build coalitions with local government agencies, including Multnomah County, to address homelessness and affordable housing. She also believes the county should operate as a “one-stop-shop” for connecting residents with housing and social services. Metro Councilor District 3 Gerritt Rosenthal has released a statement arguing that Metro should do a better job of evaluating data and listening to residents and developers when determining whether to expand the urban growth boundary. He also supports Metro’s housing bond. Metro Councilor District 5 Two candidates for Metro Councilor in District 5 answered PTU’s survey about rent control and tenant protections, though they have not put out comprehensive housing plans. Candidate Cameron Whitten is in favor of lowing the statewide rent cap but doesn’t believe local jurisdictions should be able to set individual rent control policies, arguing instead for a stronger relocation ordinance in the city of Portland. Candidate Chris Smith disagrees with Whitten, arguing that housing stability is a crucial part of planning for climate-related investments. Smith believes cities and other local jurisdictions should be able to establish regulations that help keep people in their homes. Note form RHA Editor* Rental Housing Alliance Oregon is providing this information to our members to help them make informed decisions in the upcoming election. RHA as an organization has not endorsed any specific candidates at this time.
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FIVE THINGS TO REMEMBER WHEN DECIDING TO DO A 1031 EXCHANGE BY DWIGHT KAY AND THE KAY PROPERTIES TEAM
A 1031 exchange is a legal way for investors to defer their capital gains taxes on the sale of real estate held for investment or business purposes. It allows one to defer taxes on a property sale as long as they follow specific 1031 rules and guidelines. In other words, you have the potential to keep all your profits working for you with the purchase of your next investment property, without the IRS coming after you looking for their share of the pie. Here are five things to remember before a 1031 exchange. 1. Taxes are Applicable in a Non-1031 Exchange When an investor sells a property that has gone up in value this results in several types of taxes. These include capital gains taxes, which the investor must pay if they sell the asset at a price higher than they initially paid for it. Federal capital gains are taxed at 15-20% of the increase in value, while state capital gains are taxed between 0-13.3% of the increase in value. Depreciation recapture taxes are taxes due when the seller had claimed depreciation expenses on the sold property. Depreciation recapture is currently taxed at 25% of the amount you have depreciated over the years. Other taxes incurred on property sales include the 3.8% Medicare surtax. All these taxes are able to be deferred if you do a 1031 exchange. But if you choose to sell your property without a 1031 exchange, ensure you consult a reputable attorney and CPA so you can know what your full tax bill will be when adding up federal capital gains, state capital gains, depreciation recapture and the medicare surtax. 2. You Need a Qualified Intermediary A 1031 exchange isn't as simple as selling and reinvesting in another property. You must first transfer the relinquished property to an intermediary or an accommodator so they can execute the sale on your behalf. This is a process whereby your sale contract is assigned to the qualified intermediary and when the property closes your funds are then wired to your account at the qualified intermediary. From there you will instruct which properties you would like the qualified intermediary to purchase on your behalf. Kay Properties is not a qualified intermediary however we work with many throughout the country so if you would like a referral please let us know. 3. You Can Only Purchase a Like-Kind Asset For you to defer taxes via a 1031 exchange, you must reinvest the profits from the sale in like-kind property. In other words, if you sell a property held for investment or business purposes in a 1031 exchange, the replacement property must be of the same character. For example, you could sell an apartment building and purchase a commercial building or you could sell a rental home and purchase a DST 1031 investment. 4. Remember Deadlines 1031 exchanges are subject to deadlines. If you sell a property today, you're expected to have identified the replacement property within the next 45 days and reinvested the proceeds in it within 180 days. But if you'd already identified the replacement property, you can reinvest immediately. 5. Understand Your Options Once investors have decided to do a 1031 exchange they should consider their options. First, they could purchase another type of investment property that they would manage on their own. Second, they could purchase a triple net lease property whereby a national tenant such as Walgreens or FedEx has leased the property for typically 10-15 years. The problem with the triple net leased properties is that it causes investors to place a large portion of their net worth into a single property which could be disastrous (think Blockbuster Video). Third, if the investor is wanting to get out of active management and the day to day issues of dealing with tenants, toilets and trash as well as they are wanting to diversify their investments into multiple properties then a DST 1031 exchange may be a solution. The DST (or Delaware Statutory Trust) is a type of property whereby the management is handled by a third party trustee and since the typical minimum investment of a 1031 DST offering is $100,000 investors are able to purchase a diversified portfolio of Delaware statutory trust properties that may include a piece of Walgreens for 100k, piece of a FedEx distribution warehouse for 100k and a piece of a 800 unit portfolio of multifamily properties located throughout the south east and Texas*. If you are interested in learning more about your 1031 exchange options please get in touch with us today to learn more. 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. * These are illustrative examples of 1031 DST offerings. Future available 1031 DST offerings and tenants may be different. Diversification does not guarantee profits or protect against losses. 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. www.rhaoregon.org
RENTAL ALLIANCE UPDATE May 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.