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Can Oregon Landlord Increase Rent Mid-Month?

By
Brad Kraus
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Given all the rules for rent increases and rent control can an Oregon landlord increase rent mid-month asks an Oregon landlord

Given all the rules for rent increases and rent control, can an Oregon landlord increase rent mid-month?

Hi,

I own a rental property in Lake Oswego and my tenants have been in the home for 13 months. Their fixed term lease expired on Oct. 31 (spooky) and we are currently in a month-to-month set-up.
I’d like to increase the rent, and plan to do so by 9.5%. I’ll follow all the rules, including the 94-day notice if mailed.
My question for you is: Can I make the rent increase effective date on the 15th of the month? This would require a prorated rent in February of next year. I want to make sure there aren’t any rules about making the effective date on the first of the month.
I really appreciate any help you can provide.
Best regards,
-Mike

Hello Mike,

Thank you for the question. Truth be told, there’s nothing illegal with making a rent increase effective in the middle of the month, assuming you provide the requisite 90-day notice.

The problem that you can run into is miscalculation. What is the prorated amount? How are you calculating February, since it will be 29 days (as opposed to 30). Are you using a per-diem based upon a 365-day (or 366-day) calendar?

Making a rent increase effective on the first of the month is the one way to avoid this, and have everything “clean.” In short, while you are within your legal right to make a rent increase effective in the middle of the month, it can cause more headaches than it’s worth down the road.

-Brad

Given all the rules for rent increases and rent control can an Oregon landlord increase rent mid-month asks an Oregon landlord

Bradley S. Kraus is an attorney at Warren Allen LLP. His primary practice area is landlord/tenant law, but he also assists clients with various litigation matters, probate matters, real estate disputes, and family law matters. You can reach him at [email protected] or at 503-255-8795.

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Secure Your Monthly Cash Flow With One Easy-to-Miss Coverage: Business Income Insurance for Utah Landlords

By
By The Editors
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Secure your monthly cash flow with one easy-to-miss coverage: Business income insurance for Utah landlords to protect cash flow

By Andres Dominguez III

Owning and managing rental properties in Utah can be a lucrative business, providing a steady source of monthly income. Like any investment, you have risk exposure. One crucial aspect of risk management for landlords is protecting their cash flow, and that’s where business income insurance comes into play. In this article, we’ll explore the importance of business income insurance for Utah landlords and how it can safeguard your monthly cash flow.

The Utah Landlord Landscape

Utah’s real estate market has been booming, making it an attractive market for property investors. As a landlord, you enjoy the benefits of rental income, which helps cover property expenses, including mortgages, maintenance, and property taxes. A stable cash flow is essential for a landlord’s financial security, making it vital to protect against unexpected disruptions that can jeopardize your income stream.

Business Income Insurance: A Lifeline for Landlords

Business income insurance typically covers losses from fires, water damage, and other covered perils.  This coverage can be easy to miss. Many apartment and multi-family risks are quoted on an insurance platform that requires the agent to add coverage for business income. Make sure your agent has not omitted this coverage or not factored in enough coverage.

Protecting Your Cash Flow

As a landlord, your monthly cash flow is the lifeblood of your business. It covers not only your property-related expenses but also your livelihood. Without adequate protection, a temporary loss of rental income can have severe financial repercussions.

Here are some key benefits of business income insurance for Utah landlords:

  1. Continuity of Income: Business income coverage ensures that your rental income continues even when your property is not generating revenue due to a covered loss. It can also cover lost rents or additional expenses related to temporary relocations of your tenants.
  2. Property Restoration: When your rental property sustains damage, repairing it can be costly and time-consuming. Business income insurance helps cover the cost of lost rents during repairs, allowing you time to restore your property to its income-generating state.
  3. Peace of Mind: Knowing your cash flow is protected in the event of an unexpected loss can provide peace of mind and reduce the financial stress associated with property ownership.

How to Obtain Business Income Insurance

To secure your monthly cash flow as a Utah landlord, obtaining business income insurance is a smart move. Here’s what you can do:

  1. Consult an Insurance Professional: Call our office at 801-262-1551 or Click Here for a for a consultation with our experienced team. We can tailor your policy to suit your unique needs.
  2. Review Policy Terms: Carefully review the terms and conditions of the policy, including coverage limits, waiting periods, and any exclusions. Ensure that the policy aligns with your risk tolerance and financial goals.
  3. Budget for Premiums: Factor the cost of business income insurance into your overall financial plan. While it’s an additional expense, it is an investment in safeguarding your cash flow.

Conclusion

As a landlord in Utah, securing your monthly cash flow is essential for maintaining financial stability and growing your real estate investments. Business income insurance is an invaluable tool that can protect you against unforeseen disruptions and income loss. By taking the proactive step of obtaining this coverage, you’ll have peace of mind, knowing that your rental properties are protected from potential financial setbacks. Secure your cash flow and protect the future success of your property investments.

About the author:

Lance Anderson and Andres Dominguez III specialize in multifamily policies and are standing by to answer all your questions.

 

Seasonal Slowdown In Rents Continues

By
John Triplett
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The seasonal rent slowdown continued in October as nationwide median rent fell 0.7 percent to $1,354 the third month of negative rent growth

The seasonal slowdown in rents continued in October as the nationwide median rent fell 0.7 percent to $1,354 marking the third consecutive month of negative rent growth and “declines are likely to persist in the coming months as we head into the winter,” Apartment List says in their November report.

On average this means apartments across the country are cheaper now than they were a year ago.

But despite the cool down recently, “the national median rent is still nearly $250 per month more expensive than it was just three years ago,” the report says.

Regionally, rents fell in October in 81 of the nation’s 100 largest cities, and prices are down year-over-year in 66 of these 100 cities.

The seasonal rent slowdown continued in October as nationwide median rent fell 0.7 percent to $1,354 the third month of negative rent growth

Rents are down 0.7% month-over-month, down 1.2% year-over-year

Rent growth follows a seasonal pattern – rent increases generally take place during the spring and summer, whereas the fall and winter usually see a modest price dip.

This year, the slow season started a month earlier than usual, with a slight 0.1 percent decline in rents in August. Those monthly declines have gotten progressively steeper in the months since, with rents nationally falling by 0.5 percent in September and 0.7 percent in October, the report says.

Portland rent growth among slowest in the nation

The Portland and San Francisco metro areas are also experiencing some of the nation’s slowest year-over-year growth, showing that high-cost coastal metros are also seeing a slowdown in rental demand. These markets were among those that saw rapid declines in 2020, and are seeing it again now but more slowly. The Portland metro in particular ranks in the top 10 for slowest rent growth over the past 6, 12, and 36 months.

Apartment vacancies are back above pre-pandemic levels

The vacancy index stands at 6.4 percent, representing a return to pre-pandemic levels.

“This easing has plateaued in recent months, but we don’t expect it to tighten again anytime soon. Despite a recent slowdown in new building permits being issued, the number of multifamily units under construction remains near record levels,” Apartment List researchers write.

The seasonal rent slowdown continued in October as nationwide median rent fell 0.7 percent to $1,354 the third month of negative rent growth

As developers work through this robust construction pipeline, the supply of new apartment inventory should remain strong in the year ahead. This means that renters should have more available options than they have in some time, especially in the Sun Belt markets where construction activity has been strongest.

However, vacancy trends are highly localized, and they have been a key indicator of rapidly evolving conditions in local markets across the U.S.

Read the full report from Apartment List here.

 

 

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Jury Finds Conspiracy On Home Sales Commissions Awards $1.78 Billion

By
John Triplett
-
A federal jury found the National Association of Realtors and large residential brokerages conspired to keep home sales commissions high

A federal jury in Kansas City has found that the National Association of Realtors and large residential brokerages conspired to keep commissions for home sales artificially high and set damages at $1.78 billion, according to reports.

Bloomberg reported that Zillow Group Inc. and other real estate stocks plunged after the jury found the National Association of Realtors and other industry players guilty of colluding to maintain high brokerage commissions.

The lawsuit was filed in Kansas City, Missouri, against the Realtors association, Keller Williams and Berkshire Hathaway’s HomeServices of America. Two other brokerages, Re/Max and Anywhere Real Estate Inc., settled with plaintiffs earlier this year, agreeing to pay $55 million and $83.5 million, respectively, and to no longer require agents to belong to NAR.

In separate statements, NAR and HomeServices said they intend to appeal. Keller Williams said it “will consider all options as we assess the verdict and trial record, including avenues of appeal.”

“Today’s decision means that buyers will face even more obstacles in an already challenging real estate market and sellers will have a harder time realizing the value of their homes,” HomeServices said. “It could also force homebuyers to forgo professional help during what is likely the most complex and consequential financial transaction they’ll make in their lifetime.”

The jury awarded $1.785 billion in damages in the case, which was the smaller of two lawsuits concerning brokerage commission practices. In a third matter, the Justice Department is focused on a commission-sharing system that typically puts home sellers on the hook for a 5% to 6% cut of the sale, split between their agent and the buyer’s agent.

An NAR spokesman said that while the group plans to appeal, the matter will take years to resolve. “In the interim,” Mantill Williams said in a statement, “we will ask the court to reduce the damages awarded by the jury.”

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Rent Control Contributes To Affordable Housing Shortage

By
John Triplett
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Rent control laws are contributing to a shortage of affordable housing, according to economists as the supply of housing declines

Rent control laws are contributing to a shortage of affordable housing, according to economists.

When rent caps are imposed, developers build fewer new rental units, the supply of available housing declines and housing costs increase. Instead of rent control, policymakers should focus on supply-side solutions: reforming their local zoning code and providing tax incentives for developers to bring new units online, economists say.

Ryan Bourne, chair for the public understanding of economics at the Cato Institute’s Center for Economic Studies, said economists overwhelmingly agree that imposing rent control tends to reduce the amount and quality of affordable housing and explained why in an interview with FOX Business.

“Capping rents at a time when you know demand for property is growing strongly creates a situation where you have a shortage of rental accommodation relative to demand, so it creates shortages,” Bourne said. “And to the extent they create shortages, that can actually kind of raise the underlying market rents because if you kept rents below market rates, a lot of landlords will decide to convert their properties to condos or sell them for owner occupation.”

“So quite often,” he added, “it makes the kind of underlying market rate of property actually more expensive, rather than less expensive.”

Despite warnings from economists, rent control is becoming more and more popular.

Oregon led the charge in 2019 when the state imposed a cap on older units, and California followed suit in 2020. Since then, municipalities in Illinois, Colorado, Massachusetts and elsewhere are considering similar moves.

The Housing Solutions Coalition provided this update on the status of rent control around the country.

RENT CONTROL UPDATES

MINNESOTA: Rent Control Continues to Chill Development in St. Paul: The ramifications of rent control are continuing to be felt in St. Paul as the planned construction of 2,000 market-rate units remains on hold. The developer stated that the pause results from an inability to find financing after St. Paul voters passed a rent control ballot measure in 2021. The project, which was planned years before the ballot measure, was slated to include a variety of housing options, including row homes, apartments, senior living and custom home lots. – MinnPost

ILLINOIS: State Lawmakers Push to Allow Rent Control in Illinois: State lawmakers kicked off a six-day legislative session over the next three weeks to consider bills recently vetoed by Governor J.B. Pritzker. Among the legislative proposals under consideration this session is HB 4104, a bill to allow local governments to enact rent control. If the bill passes, any Illinois municipality could hold a local referendum to exempt itself from the state’s existing preemption against rent control. – The State Journal Register

MAINE: Portland Voters Could Loosen the City’s Rent Control Ordinance: In Portland, Maine, voters will decide whether landlords will be allowed to set rents of their choosing between tenancies. As it stands, the city’s rent control ordinance does not allow for so-called “vacancy decontrol.” Thus, even between tenancies, landlords may not raise rents by more than a prescribed amount. But if the ballot initiative, Question A, is approved by Portland voters this November, then landlords would be allowed charge market rates to new tenants. – FOX 23

MARYLAND: Prince George’s County May Make Temporary Rent Control Permanent: This past February, Prince George’s County, Maryland, capped rent increases for one year at three percent. This policy was billed as a temporary, emergency measure. But now county officials are considering capping rent increases permanently. The uncertainty surrounding this policy has chilled housing investment in the county. Greg Reaves of Mosaic Development Partners warns that until these questions are resolved, many builders will look elsewhere to bring new units online. – Bisnow

MARYLAND: Rent Control Could be Coming Soon to Howard County: Howard County, Maryland, is struggling to keep housing costs low. To address the issue, the Howard County Executive, Calvin Ball, outlined a plan called the Housing Opportunity Meant for Everyone (HOME) plan. Regrettably, in addition to policy changes that would allow more housing construction, Ball’s plan includes a proposal to enact rent control. – The Baltimore Sun

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Planning for Funding Opportunities Through the Inflation Reduction Act and Bipartisan Infrastructure Law

By
By The Editors
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Planning for Funding Opportunities Through the Inflation Reduction Act and Bipartisan Infrastructure Law for solar and energy projects

By Ravi Malhotra

Federal agencies have been busy rolling out the funds from the Inflation Reduction Act (IRA) and Bipartisan Infrastructure Law (BIL). With proper planning, multifamily affordable housing (MFAH) property owners can “braid” these dollars into capital stacks for projects that incorporate solar and storage, heat pump HVAC and hot water, health and safety measures, electric vehicle charging, and more – all at minimal cost to them.

Recent months have seen a flurry of updates. For example, the Dept. of Housing and Urban Development began making awards under the Green and Resilient Retrofit Program, with additional application rounds through mid-2024. The IRS opened applications for the bonus Investment Tax Credit for PV solar and storage, and MFAH should apply before November 18, 2023. The Dept. of Energy (DOE) opened state energy offices’ application window for the approx. $9 billion Home Energy Rebate programs. The Environmental Protection Agency closed application windows for the three Greenhouse Gas Reduction Fund program opportunities totaling $27 billion. The DOE’s Weatherization Assistance Program funds are already in play, but there is still an opportunity for the industry to influence states to allocate those funds towards multifamily.

The time to plan for accessing all this money and funding opportunities is now, and finite. This should take several forms, including:

  • Advocacy – Pushing state and federal agencies to design programs that, as a minimum, allow multifamily housing to access the incentives, but ideally set aside funds for multifamily housing.
  • Planning for Bridge Funding – grant funds and tax credits are paid after the project is completed and certified as such. However, contractors will need funds upfront to start work. Bridge financing can enable MFAH property owners to access loans for projects that can be repaid once the IRA incentives are in hand.

To learn more, download ICAST’s free Resource Guide on pulling IRA and BIL funds into the MFAH market.

About the author:

Ravi Malhotra is the Founder and President of ICAST, a national nonprofit that creates holistic retrofit solutions for MFAH. He has 30+ years of experience designing, launching, and managing programs to benefit this segment.

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Property Management Companies Plan To Expand Portfolios

By
John Triplett
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Buildium says 92% of property management survey respondents intend to expand their portfolios in the next two years.

In the annual State of the Property Management Industry Report, Buildium says 92% of property management companies’ survey respondents intend to expand their portfolios in the next two years.

“So many aspects of doing business look different than they did just a few years ago. But what hasn’t changed is companies’ determination to expand, though new tactics may be required in 2024,” the report says.

“Growth remains property management companies’ #1 priority for the sixth year in a row, followed by efficiency, as property managers search for effective ways to scale their operations as they expand.

“Also, 85% of third-party property management companies have expanded their portfolios in the last two years—the most growth they’ve reported in the eight years that we’ve run our survey.

“92% of those who manage other investors’ properties – called third-party property management companies – say they  plan to expand their portfolios over the next two years, a rate that’s on par with 2022. Recruiting new, growth-oriented clients is the primary portfolio growth strategy among third-party management companies today.

“Companies that exclusively manage their own investment properties plan to grow at a slower pace in comparison with third-party property managers,” the report says.

Buildium says 92% of property management survey respondents intend to expand their portfolios in the next two years.
Charts courtesy of Buildium

5 Key takeaways from the report

  • Property management companies are searching for new ways to grow as their plans for portfolio expansion outpace those of many rental owners, who are being held back from growing at their preferred pace by high property prices and interest rates.
  • Rising costs continue to strain property management companies and their clients, from increased insurance premiums and property taxes to higher prices on materials and labor.
  • Property management companies of all sizes are facing competition from real estate agencies dabbling in property management as the sales market has slowed.
  • Companies are devoting more resources to resident retention as the rental market cools and the supply of new apartments grows. Property managers are searching for ways to improve the resident experience to hold onto their best renters, including providing high-quality services, renovating units, and limiting rent increases.
  • Technology has never occupied a more pivotal role in property management companies’ operations—or in the employee and customer experience—than it does now.
Buildium says 92% of property management survey respondents intend to expand their portfolios in the next two years.
Chart courtesy of Buildium

Read the full report from Buildium here.

  

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Understanding the “Source of Income” in Fair Housing

By
By The Editors
-
Source of income is gaining traction in at state and local levels around the country so how does it apply to the Fair Housing Act

Source of income is gaining traction in at state and local levels around the country so how does it apply to the Fair Housing Act?

By The Fair Housing Institute

The landscape of fair housing is continuously evolving. One of the emerging focal points is the protection against discrimination based on “source of income.” While not federally recognized under the Fair Housing Act, this classification has steadily gained traction at state and local levels, expanding the purview of housing rights.

Defining “Source of Income”

In the realm of housing discrimination, “source of income” pertains to the origin of a resident’s lawful earnings or funds. This can include earnings from employment, pensions, or other regular payments, but notably, it frequently involves rental assistance programs or housing subsidies such as Section 8.

Although it’s not yet a federal mandate, many state and local housing laws and ordinances have recognized and added it as a protected category.

Implications for Property Managers and Landlords

For those managing federally assisted housing programs, such as 202, 811, or tax-credit properties, it’s often mandatory to consider housing subsidies as a valid source of income. This means that refusing a tenant on the grounds that they receive rental aid can have legal repercussions.

However, if a property doesn’t fall under these categories, it’s paramount to delve into local city or county regulations. A deep understanding of local ordinances is essential to ascertain whether “source of iIncome” is protected in your jurisdiction.

Resident Income Screening in the Context of “Source of Income”

When screening potential residents, many property managers and landlords have set income criteria that applicants must meet. When “source of income” is protected, this screening process requires nuanced handling. The focus should primarily be on the tenant-paid portion of the rent. Managers need to:

  • Ascertain the amount of rental assistance the applicant receives.
  • Determine the gap between the assistance and the market rent of the property. This is what the tenant will pay; are they able to do so?

Upon obtaining these numbers, they can be juxtaposed against the property’s income standards to ascertain eligibility.

The Rise of “Source of Income” as a Protected Class

Recent years have witnessed a surge in advocacy for “source of income” protection. Various legislative initiatives have been proposed to elevate its status at the federal level. This momentum is largely attributed to the pressing challenges of housing affordability and accessibility. Incorporating “source of income” as a protected category can alleviate these challenges, enabling a broader segment of the population to improve their housing conditions.

In Conclusion

The intricacies of housing laws go beyond federal mandates. For property management professionals, staying updated with state and local ordinances, along with training, is as crucial as understanding federal regulations. The categorization and acceptance of various income sources can profoundly impact resident selection and rental operations, underlining the importance of comprehensive knowledge in this domain.

About the author:

In 2005, The Fair Housing Institute was founded as a company with one goal: to provide educational and entertaining fair-housing compliance training at an affordable price at the click of a button.

  

Multifamily Rents Drop Amid Supply Surge

By
John Triplett
-
Multifamily rents turned negative in September, with the average U.S. rent declining $6 from August amid the multifamily supply surge

Multifamily rents turned negative in September, with the average U.S. rent declining $6 from August and $3 during the third quarter amid a supply surge, Yardi Matrix says in its September report.

“Still, the market remains robust overall, owing to strong job growth and household formation, despite challenges that include rising energy costs and higher interest rates,” the report says.

  • Weighed down by the slowing economy and a heavy delivery pipeline in some markets, U.S. multifamily rents dipped in September. The average U.S. asking rent fell $6 to $1,722 during the month, while year-over-year growth fell to 0.8%, down 60 basis points from August.
  • Market performance remains divided, as the Top 30 rankings are dominated by metros in the Northeast and Midwest. Most of the 14 metros with negative year-over-year growth are located in the Sun Belt or West.
  • Single-family rents fell for the second straight month, down $4 nationally to $2,104. Year-over-year growth dropped 10 basis points to 0.4%. Occupancy was unchanged at 95.9%, a sign that demand continues to be robust.

Supply Surge

“Much of the negative rent growth stems from the robust delivery pipeline that is putting pressure on rents in some metros.

“Demand and absorption remain positive in almost every metro—and occupancy rates have steadied—due to ongoing strong job growth and household formation. So while rent growth will slow for a while, the market remains healthy,” the report says.

Does The Monthly Drop Signal More Bad News for Multifamily?

Yardi Matrix said the industry “faces headwinds,” including a slowing economy and other factors such as:

  • Consumers are losing some strength as the post-pandemic boom as household savings dwindles.
  • Millions of households will have less to spend as they resume paying student loans.
  • Energy prices are rising.
  • Large-scale workers’ strikes could have an impact if they continue at length.
  • Higher interest rates are working their way through the economy.
  • Companies with greater debt-service costs have less to spend on productive uses.

The Sting of High Interest Rates

The report says multifamily property values have dropped at least 20% based on capitalization rates alone.

“Mortgage rates are over 6% for the government-sponsored agencies and even higher for other types of lenders. Even though delinquency rates remain subdued, many borrowers are being forced to either pay down the loan balance or renegotiate an extension with lenders,” Yardi Matrix says.

Renewal Rent Growth Continues to Fall

Multifamily rents turned negative in September, with the average U.S. rent declining $6 from August amid the multifamily supply surge
Chart courtesy of Yardi Matrix

Renewal rent growth again decelerated in August, to 6.4% year-over-year, down 60 basis points from July. Renewal rents, the change for residents that are rolling over existing leases, have gradually declined since peaking at 11.1% in August 2022.

The national lease renewal rate averaged 60.4% in August.

Summary

“The multifamily market heads into the fourth quarter with some headwinds. Not only is it the season when rent growth typically flattens but expectations are that the economy and job market will weaken after a period of strong gains. Every market, though, should be viewed through its own supply/demand drivers,” Yardi Matrix says in the report.

Read the full report here.

About Yardi Matrix

Yardi Matrix researches and reports on multifamily, office and self-storage properties across the United States, serving the needs of a variety of industry professionals. Yardi Matrix Multifamily provides accurate data on 18+ million units, covering more than 90 percent of the U.S. population. Contact the company at (480) 663-1149.

California Caps Security Deposits At One Month’s Rent

By
By The Editors
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A new California law scheduled to take effect next year caps security deposits at one month’s rent, according to reports.

A new California law scheduled to take effect next year caps security deposits at one month’s rent, according to reports.

Gov. Gavin Newsom has signed Assembly Bill 12 into law, which states that security deposits can’t be any larger than one month’s rent. The law is slated to take effect on July 1, 2024.

California became the 12th state to pass a bill that limits security deposit requirements.

Landlords could charge up to three months’ rent as a security deposit, plus the first month’s rent, due to an older California law.

In Los Angeles, where the average median rent is $2,895, a security deposit can cost nearly $9,000. In San Francisco, where the median rent is $3,495, deposits can cost more than $10,000.

Assembly Bill 12 was introduced by San Francisco Democratic Assemblymember Matt Haney and aimed to cap the cost of security deposits as part of a broader effort to make housing units more affordable statewide. “When renters can’t afford deposits, they often have to borrow from predatory lenders, go into debt, or just stay put,” Haney said in a statement.

“Landlords lose out on good tenants and tenants stay in apartments that are too crowded or have unsafe living conditions. Creating a rental deposit cap is a simple change that will have an enormous impact on housing affordability for families in California,” he said in the statement.

The California Apartment Association has opposed the bill and issued a statement following the bill signing.

Debra Carlton, executive vice president of state public affairs at CAA, wrote an opposition letter to Haney saying that the bill would limit “a property owner’s ability to financially cover property damage or unpaid rent is an unfair imposition for rental housing provider.”

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