Eugene, Oregon - The Worst Landlord City in America! (BREAKING NEWS!)

[Dan Gandee]

Hope I got your attention because the City of Eugene got mine! Phase II Rental Protections just went into place and we are seeing some big buzz in Facebook investing forums and on the local news. 

According to KVAL News, "What are the Phase II renter protections?

Phase II renter protections center on three main policies:

• -Limiting the amount of money a landlord can charge for a security deposit, equal to two times the cost of monthly rent.
• -Processing applications on a first come first serve basis.
• -Relocation assistance."

The impact to this is huge because now there is going to be a centralized database for all evictions filed, for cause or no cause. This data will be available to help them justify their need to overstep their legal authority and regulate rental property further. Also, with the passing of SB-611 at the state level, this creates a toxic mix of rental protections that should push a Mom&Pop landlord out of the business. 

The long term impact includes the following:

-Less compassionate landlords who are willing to be flexible with late payments, evictions, or delayed move outs

-Less supply of rental property due to single family rentals being liquidated and sold to buyer/owner occupiers 

-More competition from bigger REIT's (real estate investment trusts) and real estate holding corporations who can weather limited returns

-Less incentive for real estate developers to rehab and hold properties long term in the local area

-Less flexibility to keep rents affordable without falling behind and keeping up with market rents to appraise at exit 

-Less business in the investment property sector due to lack of supply, including realtor commissions, title and escrow fees, handymen and contractors, property inspection fees, appraiser fees, mortgage lender commissions, and bank refinancing profits 

-More headaches for property management companies having to navigate complex and controversial client demands on their property 

-Less qualified tenants using the first-come, first-serve basis for applications 

Now BEFORE EVERYONE thinks these laws are just horrible to invest here, I want to conclude with some of the major PROs of these laws:

-Less competition from entry-level investors, meaning more deals will be had by liquid and well financed investors looking to scale with the roadblocks in mind

-Higher valuation of rental property over the long term due to supply and demand constraints 

-More stability in the quality of management and landlord professionalism 

-More 1031 exchanges from older investors looking to move assets around more frequently to dump low performing properties 

-More incentive for real estate developers to only build large unit multifamily that will not have regulations for 15 years (from certificate of occupancy)

-More expectation from tenant that they will receive an increase each and every year (more implementation, means more frequency to experience)

As always there are two sides of the argument, but I firmly say that I can still be profitable and make millions of dollars here in Oregon, but with a little more caution and strategy. Pivoting is going to be key and value add projects with no-cause evictions is going to cost more, but will be worth it over the long term. 

Thoughts?

Dan Gandee

[Theresa Harris]

Honestly this "Limiting the amount of money a landlord can charge for a security deposit, equal to two times the cost of monthly rent" is reasonable.