Understanding Oregon State's Senate Bill 608
KAREN: Hi, welcometo House Talk. As you know, this is Karen Malanga, Principal Broker at RE/MAXKey Properties and NestBend.com. I’m so excited to have Lindsay here fromVelocity Property Management because – she’s not an attorney, and she’ll tellyou that right up front, but she is going to help us go through more details onSenate Bill 608, how it affects you as a tenant, how it affects you as a propertyowner.
She’s coming from amore knowledgeable side than I am being a realtor because she’s a propertymanager, so she has to deal with this day in and day out. Lindsay, welcome tothe program. So glad you could come, and take it away.
LINDSAY: Thanks,Karen. Yeah, the hot topic is Senate Bill 608 and all the challenges that arecoming with it.
KAREN: There’salways challenges with change.
LINDSAY: Yes.
KAREN: I think thequestions I get are on the landlord side, how does this affect me if I do have atenant that I feel I do need to evict? How does it affect me if my propertycosts have gone up? How does it affect me being able to raise the rent to helpcover some of those costs? And as a tenant, how does it affect me? Is itprotecting me a little bit more, or are there some windows in there where I’mprotected less? I don’t know where you should begin.
LINDSAY: That’sreally good.
KAREN: Take oneside. I don’t know which one you want. [laughs]
LINDSAY: Again, I’mnot an attorney, so this is just giving my professional opinion. One of thethings that I think – one to start off with that I found interesting when I wasseeking legal advice around all of these new laws is that if your lease tookeffect before February 28th –
KAREN: Of whatyear?
LINDSAY: Of thisyear, when the bill took effect, you are not constrained by the new law. Solet’s say I have a lease that started last summer and it’s coming to an end.It’s been a year lease. You can still terminate as you would prior to this law.You’re looking at these laws affecting any new contracts.
KAREN: So once yourenew, then the new law comes into play.
LINDSAY: Exactly.That helps, I think, lay out how you’re going to look at this. As a landlord,it’s really interesting. The rent increase has been the big one that everyone’stalking about now. We have rent control. We’re the first state to have that.
One of the things –well, there’s lots of things, but one of them is if you’re 14 years or newer,you can rent increase as much as you’d like. This is based on when you got yourcounty – what is that called, Karen? Occupancy. When you get the occupancy fromthe county.
KAREN: Yeah, thecertificate of occupancy.
LINDSAY: That’s thedate that you need to look at. If it’s 14 years or newer, you’re notconstrained by the rent increase, so you can go ahead and raise rent howevermuch you’d like.
KAREN: So why didthey do that? Why would they base that on older homes? It’s interesting to me,coming from the real estate side. To me, some of the homes built prior to 14years ago need the property owner to put a lot of money into them at thispoint. Obviously you’ve painted it a couple of times, and after 14 yearsthere’s a lot of things that become obsolete. Your furnace, all that stuff.
So it seems likeowners of those properties are putting more money into those and would probablyneed a rent raise more, almost. Am I making sense?
LINDSAY: Yeah,you’d think, right? I know, this bill is very confusing. But yes, you’re makingsense. None of this makes total sense, or makes common sense, I should say. Idon’t know why they did that. It’s silly. But anyway, that does help peoplewith newer homes.
Anything beforethat, you can only increase it 7% plus the consumer price index that’s stated.There’s a couple percent in there that you can go. Right now I’m encouragingowners to not go more than about 9% on an increase.
KAREN: Okay. If Iread the fine print on it – and again, I’m certainly not an attorney – thestate is going to say what that consumer price raise can be.
LINDSAY: Yeah.
KAREN: The otherthing I don’t get, Lindsay – and tell me if I’m crazy – they did a blanketpercentage for the whole state.
LINDSAY: Yes, theydid.
KAREN: That kind ofmakes no sense.
LINDSAY: I think itcomes out once a year.
KAREN: A lot ofpeople that are in some of those older homes are also ones that are probablyless inclined to be able to afford to have a raise in their rent, too.
LINDSAY: I know, Iknow.
KAREN: So it’saffecting – I don’t know if this is the right thing. But we can’t do anythingabout it. We just have to understand it.
LINDSAY: We can’t.But what’s happening is we’re seeing rent increases happening now all the timerather than when you needed to raise them, because you’re now forced to keepyour market rate up by this. Sometimes you’d keep good tenants on the same ratefor several years and you wouldn’t raise it. Now you need to raise it becauseyou’re capped.
KAREN: Especiallyif you’re 13 years old, because you’ll be 14 years old next year.
LINDSAY: Exactly.That’s a good point.
KAREN: Those poortenants are going to realize probably a higher raise in rent than what isappropriate.
LINDSAY: That’sexactly what we’re seeing. I know.
KAREN: So thebill’s kind of having a reverse effect.
LINDSAY: I think itis. I have a lot of owners that are selling because they’re just not interestedin this right now.
KAREN: I have a lotof clients that are selling as well. In fact, two of the homes that we solddidn’t go to investors; they went to first-time homebuyers. So that took tworental homes off the market.
LINDSAY: Yes. Ithink the market is getting tighter now that we’re seeing this. Now, the otherthing is you have to give a 90-day notice for a rent increase or change ofterms.
KAREN: That’s onthose properties that are 14 years –
LINDSAY: That’s onanything.
KAREN: Okay, wait.
[laughs]
Let’s take a break, because this is probably going to – we’ll be rightback with House Talk.
Hi, welcome back toHouse Talk. Again, this is Karen Malanga, Principal Broker at RE/MAX KeyProperties and NestBend.com. Happy to be visiting with Lindsay from VelocityProperty Management.
Before the break wewere discussing Senate Bill 608. I got a little confused, so I thought I’dstart us off on this second segment with – okay, if your home is older than 14years, you aren’t affected by this 7% cap on rent raise?
LINDSAY: Correct.
KAREN: No, wait. Ifyour home is newer than 14 years.
LINDSAY: Newer,yes.
KAREN: But you areaffected by other parts of the bill.
LINDSAY: Everythingelse applies. It’s just the amount you can raise rent.
KAREN: Okay, can wego over everything else that you can pull out of the top of your head?
LINDSAY: [laughs]Oh boy.
KAREN: You’re goodat this, come on.
LINDSAY: I know, Iknow, right? So one of them is you do need to give a 90-day notice for anychange of terms to the contract.
KAREN: Is thatdifferent than before?
LINDSAY: That wascurrently how it was in the City of Bend, but outside of that – Redmond, Prineville– wasn’t that way. Now it all is that way. Everywhere you are, no matter whereyou have a home in Oregon.
KAREN: In the wholestate.
LINDSAY: The wholestate, it’s 90-day notice.
The second thingthat’s playing into it is how you can terminate. You used to be able toterminate a lease with no cause. Let’s say a tenant had been living there for ayear and you just weren’t jiving. Things weren’t working out. They weren’thorrible, they were paying their rent, but it just wasn’t the right fit. Youused to be able to say, “Here’s your notice, and we’re not going to renew yourcontract.”
Now you don’t havethat ability after the first year. The first year starts when a tenant receiveskeys, not when a new contract is signed.
KAREN: Okay, explainthis to me. Just pretend that I don’t know what anything – and I actuallydon’t. [laughs] It’s a learning experience for me. Just so I look at thetimetable and it makes clear sense to me, does that mean that you would want to– one the year is up, you don’t have that right. So do you find people, then,giving notice at 11 months or 10 months?
LINDSAY: Exactly.It’s when you give keys. Let’s say June of last year we gave keys to a tenantand they moved in. Then you can give them a 90-day notice of nonrenewal duringthe first year of when they receive keys.
KAREN: So it’d haveto be at 9 months.
LINDSAY: Exactly.You’re going to want to just get real familiar and see how happy you are withyour residents at that time. Once the year is up and you’ve moved into either amonth-to-month agreement or signed a new contract, you’re really locked in tothat tenant. You’ve really committed, because now we can’t just give them a nocause.
Now, if a tenant violatesrules, you can still ask them to leave based on violations. But you can’t justsay “we’re choosing not to renew” after that 1 year.
KAREN: So thatfirst year is really critical both for the tenant and for the landlord.
LINDSAY: It’sreally critical, yeah.
KAREN: To figureout if they do get along. Because I know sometimes things just don’t mesh.
LINDSAY: They justdon’t mesh. The house isn’t the right fit, or there’s other things. As anowner, you want to keep in mind that timeframe, because you’re going to want todeal with it that first year.
KAREN: Have therebeen changes in the circumstances that fall under just cause determinate? Arethose the same?
LINDSAY: Yes, thoseare still the same.
KAREN: What wouldbe some samples of those?
LINDSAY:Non-payment of rent, obviously. Unauthorized pets. For cause, so something atenant has done that’s violating the contract, you can still terminate.
KAREN: Is thetimeframe the same?
LINDSAY: It’s allthe same. Well, they’re all different – sorry, yeah. In terms of for causenotices, they’re all different. So consult an attorney for that.
KAREN: Oh mygoodness. This is one reason to really get a property manager. [laughs]
LINDSAY: Yeah, Ihighly recommend getting an attorney and a property manager, because it’s justgetting a lot more constrictive. You really need to know what you’re doing now.
KAREN: Also thetenants have a lot more knowledge, too, and they’re watching their dates too. Ican see both sides of each equation. We want more people to own rentals so thatthere’s more property available to rent.
LINDSAY: Yes.
KAREN: As we makeit more restrictive on investors, we end up with less inventory to rent.
LINDSAY: Exactly.
KAREN: That’sexactly what’s happening in what I see in Bend. I don’t know about statewide.
LINDSAY: I thinkit’s causing more of a housing crisis, because I think people are selling.There’s still that option just to sell your property, and then we have less andless inventory. I think you get less and less owners that are willing to justbe nice owners, because you have so many rules you have to play by that youjust don’t have that ability like you did.
KAREN: Owningproperty becomes more of a job.
LINDSAY: Exactly,and a profession rather than just this –
KAREN: Having arental house.
LINDSAY: Having arental house, yeah. For renters, I think there’s some benefits for sure on therent increases, but limiting that so you’re not just going to get into a homeand get settled with your family and then have these rents just skyrocket onyou in the next year. There’s some security there for renters, but I think thatwhat they’re going to see is more frequent rent increases than before.
KAREN: Sure. I dothink as a renter it might behoove them to really look at the age of the homethey’re renting too, because if it’s newer than 14 years old, then they’regoing to have a little bit more flexibility or a little bit more security.
LINDSAY: That’s agreat point. Yes, that’s a really good point.
KAREN: Yeah, so ifthey want one of those older homes on an acre where they can have the boat andthe car, they might want to look at the age of that. If it’s a 1970s, that rentcan be raised substantially.
LINDSAY: Yes.There’s also some fees that have gone in now. You’re supposed to pay a tenant arelocation fee, which has been happening in Portland for a while, but nowthat’s the new thing. There’s a few things that you can do to ask a tenant toleave after that first year.
You can still moveinto your property. You can still have an immediate family member move into it.Give your tenant the 90-day notice and move in or have a family member move in.
You can still listit for sale. There’s some extra things around how that would look, but there’sa 1 month relocation fee that an owner that has four or less units gets waived,but if you have more than four units, you have to pay 1 month relocation fee tothat tenant if it falls under a few of the criteria.
KAREN: I think Iwant to correct something I just said previously because I think I got itgoofed up again. [laughs] Oh, Karen. I haven’t had my coffee. But it wouldbehoove a tenant to look at a property that’s older than 14 years.
LINDSAY: Yes,sorry. Did we say newer earlier?
KAREN: Yeah, weagreed that it would be newer. But older.
LINDSAY: Older,because older is limited on the rent to 7%.
KAREN: Yeah, olderis limited. If they look at a newer one – okay, we’ll be back. We’re going totake a break. I’m going to get a cup of coffee. We’ll be right back with HouseTalk.
Hi, welcome back toHouse Talk. Again, it’s Karen Malanga, Principal Broker at RE/MAX KeyProperties, and I’m sitting here with Lindsay from Velocity PropertyManagement. We’ve had our coffee. We’re a little bit more clear on Senate Bill608.
I just want to say,I think if you’re an investor – now that I have this perfectly clear – it wouldbehoove you to be looking at newer properties. I don’t want to get politicalhere, but the reason that could be part of this bill is to incentivize biggerbuilders to come in and build new units, because they’re going to be able tohave more substantial rent increases.
I don’t know howthat’s going to affect our tenant population. I’m not real comfortable with allthat. But again, there’s so many deep dives on this bill, and we need time, andwe need time to be behind us to see how it’s really going to affect our housingsituation here in central Oregon. Obviously we can’t speak for the whole state,but what we experience every day is really important, whether we’re helping arenter find a home or whether we’re helping an investor buy a property.
Lindsay, a little moredetail? [laughs]
LINDSAY: Yeah, it’sso important. I do think get a real estate attorney or call a property managerif you’re a single family owner and you just have a couple rentals. Just getsome advice. It’s wise.
KAREN: When youstart working with someone, how do you start the whole dialogue? When I have aninvestor and I send them your way, how does it begin? Because a lot of myinvestors are from out-of-state, so they’ve got different rules on propertiesthey own elsewhere.
LINDSAY: It’s wiseto educate them on what you’re getting into when you buy an investment incentral Oregon. But I think if you want to get started, I’d contact us atVelocityPropertyManagement.com. You can give us a call or email us. We’ll behappy to get you on the right track and give you some guidance on yourlong-term plans.
I think you doreally want to look now at what your long-term plan is. Are you going to be along-term investor or a short-term? Because you’ll really want to play thisdepending on what your plan is.
If you are lookingto sell right now – because we have people that are looking to sell theirrental investments – really get a good realtor, like Karen Malanga, who’sexcellent, and really have your realtor guide you. This is getting a littlemore tricky.
KAREN: It isgetting tricky.
LINDSAY: For youtoo, not just for me.
KAREN: Yeah. I doknow that when we have an investor, we want to make sure that we’re reallyhelping them find the best property for the long-term.
LINDSAY: Yeah, andmaybe you want to sell your older rental right now and buy something newer.
KAREN: That wouldmake a whole bunch of sense.
LINDSAY: So callKaren and get her to help you out.
KAREN: [laughs] Oh,Lindsay.
LINDSAY: No, it’strue. It’s true.
KAREN: Do we haveany more words of advice to our listeners, like a website to go to? Do you haveinformation on this Senate bill on your website?
LINDSAY: I don’t,but if you just google “Senate Bill 608 in Oregon,” it should pull it up foryou. There’s going to be a lot of information. If you’re looking for anattorney, too, I have some great contacts. If you call us and you’re justwanting some guidance on who to call for more detail, I’m happy to direct youthat way.
KAREN: Okay. Also,we have the summary for Senate Bill 608 on our website at NestBend.com, so ifyou wanted to read just a summary, it does provide a lot of information.Obviously it’s not legal information. We always want to say that. But I thinkthat in the end, like I said, time will tell and we’ll see just how this playsout. Right?
LINDSAY: Yes. Maybein a year we’ll revisit this and talk about how it’s looking now. [laughs]
KAREN: Anyway,Lindsay, a little bit about you. How many homes and properties do you guysmanage at Velocity?
LINDSAY: We haveabout 250.
KAREN: Oh mygoodness.
LINDSAY: Yeah, incentral Oregon. We do all over, but particularly Bend.
KAREN: How do youdo that?
LINDSAY: It’s alot, but it’s good. We have a lot of help. We have a great team. We’re limited– we really want to take on properties and really manage them well, so we don’tjust take everything. We don’t just take on an unlimited amount, so we reallycan customize to our owners and be a good source for them.
KAREN: Do you offerdifferent levels of service?
LINDSAY: We do,yes. That’s all on our website.
KAREN: Okay, tellus what your basic service would be.
LINDSAY: Our basicservice, we do just tenant placement. We can do all the screening, themarketing, the showings, the full lease agreement, and then you can take itover and manage it from there. It’s a really nice service if you’re justwanting to make sure you get good tenants in.
Then from there wecan do monthly management, you can hire us a la carte to do inspections. We doall kinds of fun things. Just call us. We’ll get you plugged in. [laughs]
KAREN: Just callyou. And you do winter servicing as well, or winter maintenance?
LINDSAY: We do.
KAREN: I thinkthat’s important, especially for out-of-state investors.
LINDSAY: We do.
KAREN: Any timethat you can’t drive by or check on your property, it becomes much moredifficult and things can happen.
LINDSAY: Yeah, andtenants know when their owners aren’t around. So make sure you have somebodythat’s keeping a good eye on it for you.
KAREN: As we’rewinding down our program, Lindsay, why don’t you give our audience your phonenumber?
LINDSAY: It’s (541)388-1382.
KAREN: Perfect. Ifyou do, after listening to this, have an older property that you would like tosell, I’d love to help you. You can reach me at (541) 390-3326. Thanks so much,Lindsay, for being on the program.
LINDSAY: Thanks,Karen.
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