By Ron Garcia
My name is Ron Garcia. I am an Oregon landlord and property manager. I am the Past President of The Rental Housing Alliance Oregon and currently serve as its Legislative Director. Several years ago I co-founded “The Good Landlord PAC” (www.goodlandlordpac.com) which has supported pro-landlord lobbying efforts locally and statewide. I have worked many hours both in the background and in the foreground for local and statewide property rights in a highly charged political climate.
As I read Carlos Garcia’s “A Good Landlord’s Open Letter on Why He Is Getting Out of Business” in the Rental Housing Journal I felt compelled to respond. Although he and I are unrelated and we have never met, we seem to share some common background and sentiments. But we have some differences.
I applaud his commitment to being a “good landlord”; I empathize with his frustration towards new tenant protection laws; and I congratulate him on his decision to sell.
I am equally certain that he, (like so many other property owners today who are making that same decision to liquidate), has been able to cash in on the substantial gains and profits accumulated due to the great residential investment market Oregon has experienced in recent years.
This is a far cry from what we landlords and property owners were experiencing 10 years ago while in the midst of the “great recession”. In 2009 anyone would have sold to any buyer for any price that would have pulled them out from being under water in their real estate investments. Today we can casually reflect on the notion (or cliché) that “real estate is cyclical” and chalk up our newfound wealth to some inherent truth that financial gains in real estate are a “divine right” and are ours to be expected.
From a tenant advocate’s viewpoint, landlords have been the entitled class for too long. Now they want to inject parity into the marketplace. Tenant advocates have the attention of the liberal party. The liberal party has a Super-Majority in our state government. They see a housing crisis in what owners view as a great housing market. They believe it needs to change. Government affects change through legislation. All legislation has “unintended consequences.” And as our society continually learns through the empirical science of economics, the market makes corrections.
I was told years ago that there is no such thing as a bad real estate investment…. But there is such a thing as bad real estate timing.
We are seeing many landlords today that are following Carlos Garcia’s reasoning and are “getting out of the business” – at least in Oregon. It is a rising tide and it will have an effect. The question is to what end?
For every unit we see go on the market, we see a new buyer ready, willing and able to perform. Our core issue of housing supply and demand is heavily weighted on demand with no relief in sight. Landlords have exasperatedly testified against rent control because it ultimately shuts down supply, while demand continues to grow and thus RAISES PRICES. We know this is true! So now we can all experience that truth together. Check every major city that has ever enacted rent control in the past and you will find the highest appreciation rates in the country.
Rent control creates a new reality: cap rates plummet yet values soar.
In Oregon, tenant regulations have created new business management realities. Have they gone too far? Most landlords don’t need much time to answer that. The real question is how will they affect our investments? What time does our real estate clock say it is?
My watch says this: It’s time to work in our new reality. It is a hard time to be a rental housing provider and a great time to be a residential housing owner.
Ron Garcia is Principal Broker for The Garcia Group www.garciagrp.com
Ron Garcia, Principal Broker
The GARCIA Group
OR & WA Real Estate Service
Rental Property Management