OREGON SB611 Trying To Force Landlords To Pay 3X Rent For Relocation & Cap Rent!

[Dan Gandee]

PREFACE: First and foremost, I just wanted to say I totally understand the discussion point of investing in red states vs. blue states. As someone that grew up in Ohio helping my grandfather labor on his small rental portfolio and make nearly no money, I can see the pros and cons of all sides of the equation. Now that I live out here in Oregon with a substantial portfolio of properties (many different assets and many different price points) I'd like to gather some feedback from other investors and property managers on this topic. 

DISCUSSION POINT: Supply and demand will change with a mass exodus of investors, raising prices and raising rents (all good for someone that is patient and has market rents). 

If you are not familiar with SB611 then please take a quick Google Search of the law or click this link: SB611 Proposed Law

This law is a state-wide initiative that is very similar to the "PHASE II" rental protections the City of Eugene is trying to pass as we speak. 

THE PROPOSED LAW:

1. Penalty for landlord "no-cause" evictions to be 3X the monthly rental rate of the tenant as a relocation fee

2. Rental caps will be reduced from 7% + CPI to 3% + CPI 

3. The 15 year new construction exemption will be reduced to 3 years (cap on rents). 

4. A "state of emergency" will be put into effect regarding affordable housing (WTF does that mean?) 

I'm making this post because I've learned over the years that where "there are problems, there are opportunities." 

I'm looking to acquire more properties on creative financing and I believe this may just be the perfect storm for more discussions with tired landlords who've managed their properties poorly and have under market rents. 

Repositioning is my asset management skillset and I believe we can create massive success in a changing climate, while the near sighted investors push the ejector seat. 

What are your thoughts?

[Travis Rogers]

I moved all of my assets out of Oregon last year, liquidated literally everything. I started moving into Texas 3 years ago, and Florida last year after liquidating my Eugene assets and moving myself to Florida as well. Those are my two states of focus, I have done substantially better profit-wise, and if I need to evict I do so easily with no problems. Oregon tied my hands on too many things.

I personally wouldn't invest in Oregon, but agree with you there will be opportunity on the buy side as literally every week in Oregon landlords are moving out over the past couple of years. Oregon has one of the highest exit rates in the U.S. which I feel will eventually will slow pricing. Florida prices are appreciating still, rents are still staying up as well. I don't foresee that in Oregon due to the lack of demand and folks moving to other states, while 1,200 per day move into Florida increasing growth/demand. Buying right as you're looking to do is key, but I also want the growth that leads to appreciation and rent growth. 

Oregon caps rental increases. If taxes go up faster than rent increases you can get to a point where you're losing money monthly. This happened in NY and other places with rent control. I personally stay away from any rent control areas, one less thing I want to worry about if I can control that.

Those were my thoughts, they're free and you get what you pay for but that's my two cents haha. Regardless of what you end up with I wish you all the best. Time will tell and it's been very hard to gauge lately. Hoping for a good 2023 and beyond, I think it's going to be a wild ride. 

[Dan Gandee]

Totally appreciate your feedback. I feel Oregon has its constraints but I've also invested in certain markets in California with worse laws and came out the other side with 3X appreciation which smaller markets would have never returned. It's all about the risk vs. reward I guess. 

[Dan Z.]

Quote from @Travis Rogers:

I moved all of my assets out of Oregon last year, liquidated literally everything. I started moving into Texas 3 years ago, and Florida last year after liquidating my Eugene assets and moving myself to Florida as well. Those are my two states of focus, I have done substantially better profit-wise, and if I need to evict I do so easily with no problems. Oregon tied my hands on too many things.

I personally wouldn't invest in Oregon, but agree with you there will be opportunity on the buy side as literally every week in Oregon landlords are moving out over the past couple of years. Oregon has one of the highest exit rates in the U.S. which I feel will eventually will slow pricing. Florida prices are appreciating still, rents are still staying up as well. I don't foresee that in Oregon due to the lack of demand and folks moving to other states, while 1,200 per day move into Florida increasing growth/demand. Buying right as you're looking to do is key, but I also want the growth that leads to appreciation and rent growth. 

Oregon caps rental increases. If taxes go up faster than rent increases you can get to a point where you're losing money monthly. This happened in NY and other places with rent control. I personally stay away from any rent control areas, one less thing I want to worry about if I can control that.

Those were my thoughts, they're free and you get what you pay for but that's my two cents haha. Regardless of what you end up with I wish you all the best. Time will tell and it's been very hard to gauge lately. Hoping for a good 2023 and beyond, I think it's going to be a wild ride. 

Travis I hear you.. I own couple apartment buildings in OR and I hate the relocation assistance. I need to budget 30% more while doing value-add. However, I hear stories from my TX and FL investor friends that they're selling their portfolio there due to brutal operating expenses like property tax and insurance... They're moving their $$ to WA due to no income tax and no rent control (at least for now lol)

[Travis Rogers]

@Dan Z. property tax is the downside for sure, but still a win over what I had been doing in the past in Oregon with all the growth in TX and FL