All Forum Posts by: Kelvin Lee

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.

Physical condition, location, rental income and tenancy laws etc. I think the physical condition looks great. The location could be a draw back like the hi-way next to it without side walk, unpaved road etc. Can't comment on the rental income without any data like NOI, expenses etc. Small units could be hard to survive with rent control and the ever changing tenancy laws that 100% work against the property owner.

Let me ask you these fundamental questions before going further. Do you plan on self-managing the rental? If you want to buy within City of Portland area, do you familiar with the ever changing tenancy laws and the rent control in Oregon State? How many years of experience you have on real estate rental business? What is your exist strategy, for instance, 1031? 

Screening Highlights

• City criteria would broaden approvals for people with criminal backgrounds.
• City to reduce income requirements from 3 times the rent to 2 times the rent.
• City requirement to provide individual assessments will increase cost and likely require legal opinions for denials.
• City to require a 3 day waiting period before anyone can apply once ads are live.

Deposit Highlights

• City to limit maximum deposit to 1.5 month's rent. Currently no cap.
• City to require landlords to accept deposit payments over up to 6 months. Currently paid in full at move-in.
• City to limit the term "normal wear and tear" which will substantially reduce what you can charge for at move-out.
• City to prohibit charges for cleaning at move-out.
• Forced depreciation for property damage. The rate would be 3.6% per annum over 27 years.
• Charges must include original receipts, depreciation schedules and photos, or are prohibited.
• Additional requirements will increase cost.

If passed, will you relocate your equity out of City of Portland. Or will you see this as an opportunity to raise higher rent to overcome these new ordinances. In general, how do you cope with this ever changing ordinances?