Oregon Governor Kate Brown has signaled her support for a rent stabilization bill that would limit Oregon landlords to rent increases of 7 percent per year and eliminate no-cause evictions of long-term tenants, according to reports.
Brown believes those ideas “are innovative and will give renters some peace of mind,” spokeswoman Kate Kondayen told Oregon Public Broadcasting.
“We need to help Oregonians who have homes but are struggling with the high cost of rent,” Governor Kate Brown said in her inaugural address. “When problems arise, they need technical assistance to stay in their homes and not end up on the streets. We can help landlords and tenants navigate this tight housing market.
“Speaker Tina Kotek (D-Portland) and Senator Ginny Burdick (D-Portland) have innovative proposals that will give renters some peace of mind. Oregon families are counting on us. They are counting on us so they don’t have to make a choice between paying the rent and staying home with their newborn,” the governor said.
A state-wide rent stabilization policy another word for rent control
Under the proposed legislation landlords of properties across the state could only raise rent by up to 7 percent per year, plus the annual change in the consumer price index.
That would amount to a statewide rent stabilization policy that officials say would be unique in the United States, according to Oregon Public Broadcasting reports.
Legislative action expected on rent stabilization or rent control in this term
Overall, the legislation this session in Oregon is expected to build on concepts from two years ago, including limits on no-cause evictions.
Rent control is a term of art. Oregon Democrats are quick to distance themselves from old-school policies that place a hard cap on rents,” Willamette Week reports. They prefer instead the term “rent stabilization,” which technically would limit the amount by which landlords could increase rent.
Tenant protections, particularly limits on rent increases, have proved politically impossible elsewhere.
The real estate industry soundly defeated a rent-control ballot initiative in California in November.
The U.S. multifamily market sector enjoyed a solid year in 2018 in which multifamily rent grew by 3.2% according to a survey of 127 markets by Yardi® Matrix, and wrapped up the eighth straight year of growth.
Since January 2011, rents nationally have increased by 31%, while annual rent growth has been at least 2.9% in every year save 2017. Rent growth has topped 3% in six of the last eight years.
Multifamily national report shows calm amid the storm
- U.S. multifamily rent remained at $1,419 in December, and year-over-year growth was 3.2%, also unchanged from November. Rent growth has been flat since the summer.
- 2018 proved to be a solid year for the multifamily sector, and 3.2% rent growth slightly exceeded going-in expectations. Despite the recent volatility in the financial markets, we foresee more of the same in 2019, with strong demand producing rent growth just shy of 3% nationally.
- Las Vegas (7.3%), Phoenix (6.5%) and the Inland Empire (5.5%) are the Top 3 metros, highlighting a trend of outperformance among secondary markets.
- Rent growth in 2019 will again be led by metros in the Southwest, West and South regions.
- Late-stage markets Las Vegas and Phoenix remain atop our rankings, as job and population growth drive demand in the desert.
- Both markets are benefiting from migration out of high-cost and tax-prohibitive areas in California and the Midwest. Job growth in tech and finance have attracted educated millennials, and warm weather and a lower cost of living continue to bring retiring Baby Boomers.
- Considering the late stage of the current cycle and significant new supply that has been added in the past three years, multifamily rent growth performed quite well and exceeded expectations in 2018
While acknowledging concerns that the unusually long cycle has played out, a report on the survey cites “reasons to believe multifamily fundamentals will remain vigorous in 2019 and beyond,” YardiMatrix says in the report.
Chief among those reasons is ongoing strong demand is that job growth remains robust, and social factors—such as student loan debt that limits first-time homebuyers, families remaining renters longer, and retirees downsizing and moving into rentals—are also likely to maintain demand for multifamily.
Multifamily trend similar to hotels
Multifamily could be taking a trajectory much like hotels, which have had nine consecutive years of above-trend revenue growth.
Hotels benefit from business profitability and travel, but also from lifestyle changes that lead individuals to spend more on experiences.
A landlord’s ability to adapt has a substantial impact on their success such as adapting to the needs of millennial renters.
Potential tenants will always choose properties that align with their interests and values, and as these interests and values change, year after year, landlords need to remain aware of shifting trends to capitalize on them.
This fact is especially true of the millennial demographic. Projections show that millennials will soon surpass baby boomers as the nation’s largest living adult population, making them an even higher priority for landlords. So what can these landlords expect from millennial renters in 2019?
Let’s consider three trends that will shape the way landlords appeal to millennial renters
No. 1 – Desire for Smart-Home Technology
Millennial renters are familiar with the range of smart-home technology available on the market today. Many of them are interested in the benefits of smart thermostats, smart lighting, smart security systems and other products that provide convenience and energy efficiency. Landlords see the appeal as well.
For example, residents can save as much as 10 percent per year on heating and cooling by turning the thermostat back seven to 10 degrees from its average setting for eight hours a day. A smart thermostat allows for this kind of regulation without input, earning considerable energy savings for a rental.
While it’s often unrealistic for landlords to purchase smart lighting systems for every unit in an apartment complex, they can invest in smaller — though no less substantial — changes, like smart security. A wireless camera system allows landlords a more extensive view of their property, and they impress upon tenants a sense of safety and security.
Tech-savvy landlords who integrate smart-home devices into their properties also enjoy a higher profit. A survey from Wakefield Research found that 86 percent of millennials are willing to pay more for a rental property if it features smart-home technology. Both landlords and tenants see the value in these products.
No. 2 – Shifting To New Life Stages
Millennials are growing older, and as they settle down and have children, finding properties with family-friendly features becomes a higher priority for them. While more urban rental markets will largely miss this trend, smaller communities may see more tenants who are starting to raise families while paying rent.
Millennials are growing older, and as they settle down and have children, finding properties with family-friendly features becomes a higher priority.
Sure, home ownership becomes much more popular at this stage in life. But research shows that millennials are entering this stage later than generations in the past, and their first children are those most likely to live in rented housing. Buying a house takes a lot of capital, and renting still makes a lot of sense for some young families.
Landlords who are located in more suburban areas can benefit from understanding a young renting family’s needs. These landlords can market elements of the surrounding area – schools and parks, for example. A space for children to play and explore catches the attention of new families, and they’ll gravitate toward properties where these features are within walking distance. Accessibility is crucial.
More widely, millennials are also searching for rentals where their pets are welcome. Many of them have a furry family member, and they don’t want to have to pass over the perfect property just because the landlord doesn’t allow cats and dogs. Landlords who prohibit pets should consider an adjustment in their policies.
In short, landlords need to adjust their perception of the average millennial. Depending on your location, you can adjust your listings and marketing to attract the interest of households with small children and pets. This can set you apart in a market that largely caters to tenants with fewer obligations.
No. 3 – Commitment to an Eco-Conscious Lifestyle
Now more than ever, millennials are aware of their impact on the planet. In the face of fluctuating temperatures, unseasonable weather and more frequent natural disasters, many have taken it upon themselves to adopt an eco-conscious lifestyle. Sustainability and environmental conservation are significant considerations.
Millennials want to rent from a landlord who shares their values. Between a progressive, eco-friendly landlord and one who hasn’t made an effort to improve their buildings, most young tenants will choose the former. This decision not only lessens their carbon footprint, but it can save money on monthly utilities.
Sustainability and environmental conservation are significant considerations.
Landlords can appeal to these young tenants in a number of different ways, such as by installing smart-home technology like the energy-efficient devices mentioned above. They can make smaller changes too, like fixing low-flow attachments to faucets and shower heads, as a comparatively inexpensive alternative.
However landlords choose to address this trend, it’s essential that they make a point to advertise their property’s eco-friendly features. Whether it’s something as simple as a set of new light bulbs or as complex and costly as solar panels, potential tenants are interested to know how their living space aligns with their belief system.
Learning to Adapt
Landlords need to at least be aware of trends to sustain interest in their properties. To attract millennial renters in 2019, they have to appeal to their desires for smart-home technology, their interest in family-friendly features and their commitment to an eco-conscious lifestyle.
As the priorities of these millennials renters continue to shift, landlords and property managers can benefit from adapting to meet their needs.
Every once and a while you come across one of those stories that just epitomizes a notion or concept that hits home. A recent story on Business Insider chronicles a young Atlanta couple in their 20’s who are successfully using real estate investing to not only pay down their 6-figure student loans, but live the lifestyle of their choosing. The article says that instead of working to pay down the debt as soon as possible, they decided to buy assets that would generate cash flow and pay for the debt with the passive income. They started with house-hacking a duplex. Yes, indeed….
“Our first decision was to buy a duplex. Our housing expenses prior to owning the duplex were $1,350,” Shawn said. “After buying the duplex and living on one side while we rented out the other side, we used the tenant’s rent from their side, $1,225, to pay for the entire mortgage, $990 (and some utilities with the money that was left over). This enabled us to live in the duplex without having to pay for the mortgage out-of-pocket and saved us the $1,350 in housing expenses that we had prior to buying the duplex.”
Dear Landlord Hank: If A Rental Has Been Burglarized Do We Have To Put Up Security Cameras?
A landlord asks veteran property manager and real estate investor Hank Rossi if a rental has been burglarized are security cameras are required.
Dear Landlord Hank:
If a rental property has been burglarized, is it the landlords place to put up security cameras?
Dear Landlady Joyce,
It is the landlord’s responsibility to have reasonable security at your property.
Usually that means locking doors and windows. You do not have to put up security cameras or use a home security system, as that would be something the tenant could pay for if they want it.
I would have the damaged door or window, where burglars gained entry, repaired today, so your tenant feels safe.
Does your tenant have renters insurance to pay for stolen items? It should be mentioned in your lease that you strongly urge tenants to have renters insurance.
Well-lighted areas at my apartment buildings
At my apartment buildings I have the exterior well lighted at night so tenants feel safe walking from their vehicles to their doors. Walkways and hallways are well-lighted as well.
If your place is a single-family home or duplex, you may want to make sure you have exterior lighting.
You could have a couple of flood lights on the corners of the property and on a motion detector. But, if tenants don’t keep the switch to that light on it won’t work, and that would be tenant responsibility.
Don’t be surprised if your tenant wants to move. Let them bring it up though.
They don’t have the right to break the lease, unless you were somehow negligent, but you may want to consider letting them out of the lease.
Do you have a neighborhood watch? It is a great idea. And, the Neighborhood Watch sign alone is a deterrent.
Leading Asset Protection attorney Clint Coons reveals the risks associated with owning rental properties and the best way to mitigate those risks. If you’re just getting started with buy-and-hold real estate investing or are a current rental property owner, read Clint’s FREE guide on how to protect yourself and your assets.