All Forum Posts by: Kelvin Lee

I believe buildings with five or more units are classified as multi-family properties. For these, costs tend to double across the board, especially for older buildings. For example, State Farm typically requires the latest inspection report for underwriting on multi-family properties that are over 30 years old. If you've done a complete renovation—say, updating a 60-year-old building to 2025 standards—their quote could be outstanding. However, without significant updates, they’re likely to reject your application outright without leniency. The recent surge in natural disasters has created an "Armageddon effect" on the real estate industry. Coupled with persistently high interest rates that may last for years, rising insurance premiums are inevitable, regardless of your property’s condition. It’s no longer a question of if your coverage will be non-renewed or your costs will spike, but when. If you haven’t already, start saving for major capital expenditures. Living in the Pacific Northwest, where the “Big One” could strike at any moment, I’ve been gradually selling off my portfolio to exit the market and safeguard my capital.

After American Family dropped my multi-family coverage, I’m still struggling to find a carrier for my 1969-built apartment, with only three weeks left before the current policies expires. I spoke with State Farm, but they require plumbing and electrical panel upgrades just to consider reviewing my application. After speaking with several commercial realtors, I realized my frustration is shared by many. Others are also struggling to secure a carrier or are being forced to pay exorbitant premiums just to have their applications reviewed. Sadly, this price-gouging behavior has become the unfortunate new norm in the insurance industry.

Consider yourself fortunate that your property is still covered by your insurance carrier. American Family recently discontinued their multi-family coverage, leaving many property owners scrambling to find new providers. As a result, price gouging has become a common issue.

I've been regularly consulting with realtors and mortgage brokers to assess our situation. It's clear that certain properties in our portfolio are outperforming others. As I mentioned in a previous post, the outlook in Portland is not particularly positive, especially for upper-middle-class renters, as many are leaving the city. There's been resistance to increasing rents this year, but there's a strong demand for fully equipped properties. Consequently, I've had to invest thousands in installing washers and dryers, along with new water and 220V lines to accommodate this demand.

Ultimately, the confluence of high-interest rates and the exodus of high-end renters who can support higher rental prices is putting significant pressure on our profit margins, property appreciation, and overall property values.

Believe me, I've been pushing the rates as much as I can. The main drains on the cash flow are the turnover and the costs associated with renovating the property.

Portland has recently gained national attention due to issues such as homelessness, drug problems, gun violence, and rising crime rates. In addition to these concerns, the implementation of new taxes for initiatives like 'Preschool for All' and 'Metro Supportive Homeless Services' has pushed Portland into one of the top three highest tax rates in the United States. As a result, many people, particularly those in the upper middle class, are choosing to leave the city. Similar to what has been observed in Seattle and San Francisco, property values in the core areas of Portland have plummeted.

The question now is, how long will it take for the city to recover? One potential starting point for this recovery is to address the influence of entrenched liberal ideologies and bureaucracy in city management and policy decisions. Once we tackle these issues, we can move forward with the revitalization process.

 It will still generation cash flow but will never as stellar as it used to. With these near doubled interest rate, the cash flow will be reduced closer to halve.  

After enjoying 3.4% interest rate over the last five years, I'm now confronted with the challenge of managing a 6% interest rate in the coming year. This is a source of significant concern for me. Moreover, the rate of rent increases hasn't kept pace with these economic shifts. As a result, I'm left pondering how to adjust to this changing financial landscape. I'm considering whether it's wise to sell some of my assets or navigate a substantial reduction in cash flow. It might even be essential for me to explore full-time employment opportunities to ensure my financial stability.

I plan on doing 1031 exchange of my single family rental in PDX. I know I m not supposed to talk deals here so PM me if you are interested.

I have contacted both Farmer and American Family but the quote were too high for a 20 units. Any suggestion is appreciated.