Dramatic Changes

When we lived in Tennessee, the arrival of fall was accompanied by a much more dramatic change in thelandscape than we experience here in Oregon. The transition of the deciduous forests from a carpet ofgreen to the warm orange, deep reds, and brilliant yellows is a sight that everyone should see. Ofcourse, there’s no place like Oregon with its verdant evergreen forests. And we do have our share ofchanging colors among the street trees and landscapes in Portland’s diverse neighborhoods. But ifyou’ve never visited the Smoky Mountains in the fall, I encourage you to put it on your bucket list.

This fall, I am reminded that the business of being a landlord in Oregon, and especially a landlord inPortland, is changing as dramatically as the colors of the fall foliage. Based on feedback from the staff atRHA Oregon’s offices, there are hundreds, and likely thousands, of landlords that are still unaware of allthe new laws and ordinances that are affecting our business. More and more often, we advise theselandlords that they should probably consult their attorney. Why? Because no, you cannot raise yourrents this year more than 10.3%. You do have to pay relocation costs to your tenants if the property is inthe city of Portland and you did not file for one of the very limited exemptions before you signed thelease. And no, you may not turn down an applicant because they intend to pay using a “Section 8”voucher.

With even more rules and ordinances set to go into effect next March, the time has arrived to askyourself whether you want to continue to be a landlord. If you are willing to run your rental propertyoperation as a small business, you are in a great position to watch your investment grow as demand forrental housing increases. If you are going to stay in the business, you should either delegatemanagement of your properties to a competent, licensed, professional property manager or beprepared to spend the extra 5 – 10 hours per month per property learning and implementing thechanges these new laws and ordinances have or will impose on your business.

For example, you might increase your reserves to prepare for the day that you may need to payrelocation assistance. You need to build the new $60 per year per unit registration fee into your coststructure. As the US-China trade war continues, you probably should be increasing your reserves tocover the increased costs of appliances, floor covering, and other items. By the time the new securitydeposit ordinance is put into effect next March, you will need to have a depreciation schedule for everycomponent of every property. As to the new screening ordinance, interim rules are supposed to bepublished this month; look to the RHA calendar for courses that will cover this material. However, Iexpect that many landlords will choose not to do their own screening any longer – the liability is simply too great.

Of course, all of these will significantly increase the costs landlords incur. Again, if you are running youroperation as a business, you will pass most of these costs on to your tenants. Like many landlords, I havenot always been rigorous in implementing annual rent increases. But I am now. You should be, too.

As surely as the trees change colors in the fall, our business is changing. Those who weather thesechanges will be in a good position in the long run. Others will decide it isn’t worth the hassle. We arealready seeing an increase in sales of rental properties, and conversion of older homes that had beenused as plexes back into single-family owner-occupied homes. This is an unfortunate consequence of theheavy-handed regulatory environment in which we now operate, and it will almost certainly increasehousing costs and reduce the diversity of our neighborhoods. Next month I’ll share my thoughts abouthow to change this trend.

Ken Schriver, RHA Oregon President