Ah spring! The tulips are done blooming, the Rose Festival is under way, the irises are in full glory, and the peonies are…laying on the ground. Peonies are one of my favorite plants, but it can be more than a little discouraging to come outside in the morning after a rain only to see all those flowers collapsed under the weight of a rainwater-filled double bloom. I sometimes feel similarly when I see a poorlymaintained housing property.
Rental properties are a bit like plants. Each individual needs attention, but the specific needs can vary considerably. I suspect few of us operate our rental properties as “annuals;” we leave that market to the AirBnB, VRBO, and hotel industries. Most of us who are small landlords have singlefamily homes or plexes that are like perennials. We take care of them: we regularly change the furnace filters, check the smoke detectors, vacuum out the dryer vents, and clean the gutters. From time-to-time we all need to make a capital investment to replace a water heater, or floor covering, or perhaps a roof. It’s kind of like the need to prune, or re-pot, or divide bulbs. We invest time and money in our properties to ensure that the property will continue to provide a safe and affordable home for our tenant and a reliable income stream for us. Some properties have unique needs: just as peonies need a scaffold to prevent the blooms from falling over, some older homes in the Portland Metro area will need capital investment above and beyond the ordinary. Some projects are relatively inexpensive with quick returns, like LED lighting upgrades facilitated with financial assistance such as grants or incentives from Energy Trust of Oregon. Other projects, such as whole house re-piping, sewer line replacement, or seismic retrofits, can seem daunting and expensive, but these are the kinds of investments that increase property value, lower maintenance costs, provide a safer, cleaner living environment for tenants, and ensure long-term rental income.
This spring is a particularly good time to take advantage of these opportunities for renewal and growth. First, given the appreciation of property values in our state over the past decade, most small landlords have significant equity in their properties. With interest rates still near historic lows, borrowing money to re-invest in your rental properties makes sense. Second, the challenge of finding qualified contractors to undertake these kinds of projects has eased considerably. The construction boom of high-rise apartments around Portland is coming to an end, and the current regulatory environment, from inclusionary zoning to statewide rent control to Portland’s relocation ordinance has led many larger real estate investors to look elsewhere. The Portland Bureau of Development Services eliminated four positions at the end of 2018 following a decline in permit applications. Contractors that used to be booked two to three months out are now available to work on relatively short notice. Now is a great time to engage these contractors before they move on to projects elsewhere in the state.
I continue to be optimistic about the future for small landlords. We are the small business branch of a significant component of Oregon’s economic engine: housing. As successful small business owners, we recognize when to invest in our capital assets: our properties. So spring forth and attend to your perennials!
Ken Schriver, RHA Oregon President