In California, rent increases are capped state-wide at 5% plus inflation for any multi-family more than 15 years old.

As time goes along and your investment goes well due to your tenants paying their rent as they should and the home going up in value due to inflation and market appreciation, COC becomes less relevant.For example, if you purchased a property with $22,500 down payment, $5,000 in closing expenses, and $2,500 for some touch-up paint and new carpet, you are all-in for an original investment of $30,000.

The cash flow in these markets, that do not appreciate faster than inflation, will never go up in inflation adjusted dollars. 

An inflation calculator tells me that in 2020 appraisers should be getting no less than $750 a pop for that same appraisal, if all they were doing was getting pay raises that track with inflation.But they aren't getting $750 for that ho-hum SFR appraisal.

However - Oregon is going to cap your annual rent bumps to 7.00% + CPI inflation. 

For all we know, inflation could be 3% next year with the growth in the stock market, and you need to manage the risk of the $17.20/ft2 being worth less than $17.20 in 2020. 

If you convince him about the long term health of your shop he could cut you a break on rent for the next few years and have it grow a few basis points above inflation once you have your feet under you. 

They want to outpace expected inflation by double while building equity up.

Then you may raise said rent up to 5% PLUS inflation which gives you another 2-3%.

It’s About the rate of inflation.