Rental Housing Journal Metro January 2017

Rental Housing Journal Metro

January 2017

2. Home Sales Expected to Expand Modestly in 2017 as Affordability Pressures Tempter Buyer Enthusiasm 3. Housing Data Reveals Gaps in Economic Opportunity Along Generational, Racial, and Socio-Economic Lines 5. New Beginnings

10. Is My Uber Driver Holding Back the 6. Happy New Year Everyone!

Housing Market?

7. HomeUnion Names the Highest-Growth 11. Visionary Property Managers Rental Markets Anticipate Tomorrow's Rental Markets 8. Home Values Rise at Fastest Pace 14. The Housing Crisis is a Problem the Since 2006 City Helped Create 9. Dear Maintenance Men – Slab Leaks, Safety Bars and Shaky Ovens

www.rentalhousingjournal.com • Professional Publishing, Inc

Portland/Vancouver

Published in association with: Multifamily NW; Rental Housing Association of Oregon; IREM & Clark County Association

3Q16 Market Overview

Your Residents Can’t Recycle If They Don’t Know How

Multifamily Housing Update Portland, OR Payroll Job Summary Average Payrolls Annual Change RCR 2016 Forecast RCR 2017 Forecast RCR 2018 Forecast RCR 2019 Forecast

1,145.8m 32.1m (2.9%) 33.0m (3.0%) 34.4m (3.0%) 29.4m (2.5%) 20.0m (1.7%)

RCR 2020 Forecast Unemployment (NSA)

14.9m (1.2%) 4.7% (Oct.)

3Q16 Payroll Trends and Forecast Third quarter job growth was “steady as it goes” as Portland added workers to payrolls at a 32,100-job, 2.9% rate, representing the 13th consecutive quarterly advance over 30,000 jobs.

Skilled service industries continued to lead the way. Business, education and healthcare services expanded at a collective 13,200 -job, 4.0% rate, up from 2Q’s 3.5% performance. Gains also were recorded among finance and insurance firms and, notably, construction employers. Builders added workers at a 3,500-job, 5.9% pace, topping the prior quarter’s 2,800-job add. Elsewhere, growth in manufacturing and consumer driven sectors continued to deteriorate.

Job attrition in transportation equipment and weaker electronics growth dragged factory trends into the red (-900 jobs), while retail trade and personal service hiring fell to the slowest quarterly pace (1,600 jobs y-o-y) observed since 3Q10.

Seasonally-adjusted payroll data were more robust. This series shows a powerful 13,000-job net pick-up for the JulySeptember period, representing the largest three-month gain recorded since 2005, and the largest summer quarter job add since 1995. By way of comparison, only 900 jobs were created in the prior quarter.

RED Research’s PORT payroll model employs the rate of change of U.S. job growth (+); 5-year GDP growth (-); and metro personal income (+) and home price continued on page 12 Professional Publishing Inc., PO Box 6244 Beaverton, OR 97007

5 tips to improve your property’s recycling education in 2017

F

rom milk jugs to cardboard boxes, Portland residents want to recycle.

It’s not surprising our city has one of the highest recycling rates in the nation, with an impressive recovery rate of over 70 percent. Recycling doesn’t just happen. Multifamily property managers are critical to our success. Informed residents and an easy-to-use collection system are key to making your garbage and recycling program a success. Here are some tips from the City of Portland to help you plan your property’s recycling education for 2017. continued on page 18

More than One in 10 Homeowners Underwater as Housing Market Nears Full Recovery

E

ven as home values approach the highest levels reached during the housing bubble, 11 percent of homeowners with a mortgage are underwater, according to the third quarter Zillow® Negative Equity Reporti The share of homeowners who owe more on their mortgages than their homes are worth has dropped by nearly two-thirds since the housing bubble burst four years ago. Nationally 5.3 million homeowners were in negative equity in the third quarter, meaning they owe more than their homes are worth. At the peak in Q1 2012, 15.7 million homeowners were underwater on their mortgages. continued on page 13

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Rental Housing Journal Metro

Home Sales Expected to Expand Modestly in 2017 as Affordability Pressures Temper Buyer Enthusiasm

E

xisting-home sales are forecast to muster only a small gain in 2017 because of increasing mortgage rates and shrinking consumer confidence that now is a good time to buy a home, according to new consumer survey findings and a 2017 housing forecast update from the National Association of Realtors®.

In NAR's fourth quarter Housing Opportunities and Market Experience (HOME) survey1, respondents were asked about their confidence in the U.S. economy

and their housing expectations in 2017.

With the calendar turning to a new year in a couple weeks, the survey found that a majority of households believes now is a good time to buy a home. However, confidence has retreated by a considerable amount amongst renters. Fift y-seven percent of renters said now is a good time to buy, which is down from 60 percent in September and 68 percent a year ago.

Seventy-eight percent of homeowners (unchanged from September; 82 percent

in December 2015) think now is a good time to make a home purchase.

Lawrence Yun, NAR chief economist, says declining affordability in many parts of the country is behind the weakening morale. "Rents and home prices outpacing incomes and scant supply in the affordable price range has been a prominent headwind for many prospective buyers this year," he said. "Making matters worse, the unwelcoming reality of higher mortgage rates since the election is likely

further holding back confidence. Younger households, renters and those living in the costlier West region – where prices have soared in recent months – are the least optimistic about buying."

Even with this year's slow dip in buyer enthusiasm, existing-sales are still expected to close 2016 3.3 percent higher than 2015 and reach around 5.42 million – the best year since 2006 (6.47 million).

In 2017, sales are forecast to grow roughly 2 percent to around 5.52 million. The national median existing-home price is expected to rise to around 5 percent this year and 4 percent in 2017. By the end of next year, mortgage rates are expected to reach around 4.6 percent, and the Federal Reserve is expected to raise the Fed funds rate a few more times to 1.25 percent.

"Although the economy is expected to continue to expand with around 2 million net new job creations, existing home sales are expected to see little expansion next year because of affordability tensions from rising mortgage rates and prices continuing to outpace income growth," said Yun. Despite these headwinds, Yun is hopeful that the continued job growth, any economic stimulus from the new administration and more millennials continued on page 15

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Rental Housing Journal Metro · January 2017

Rental Housing Journal Metro

Housing Data Reveals Gaps in Economic Opportunity Along Generational, Racial, and Socio-Economic Lines Zillow Economic Forum will explore disparities revealed by housing data and how it affects people in different groups

A

s the U.S. housing market nears full recovery, widening gaps along racial, socio-economic, and generational lines are impacting the growth of the housing market and individual cities, according to a growing body of Zillow® research.

For example, though millennials want to own homes, the share of young people living at home with their parents has increased sharply. Black mortgage applicants are denied loans at a much higher rate than applicants of other races.

And housing affordability is twice as bad for those making a low income than those making a high income.

These gaps in economic opportunity are the focus of Zillow's upcoming economic forum Wednesday, January 11 in Washington, D.C. The half-day event, which is open to journalists, will feature a number of experts discussing data and proposed policy solutions around these three areas of disproportionate economic opportunity.

"Our research on housing has unlocked issues that are closely linked to broader social and economic problems in the U.S. – such as poor access to credit, weak

income growth, and social mobility," said Zillow Chief Economist Dr. Svenja Gudell. "This forum brings together some of the greatest minds in economic policy and research to explore the troubling disparities in economic opportunity. We will focus on how different generational, racial, and socio-economic groups are affected, specifically in their access to

FAIR HOUSING FAIR

FAIR HOUSING FAIR

housing and homeownership. I look forward to a discussion that gets to the heart of the issues that we at Zillow spend so much time thinking about."

Zillow's research shows: • Millennials want to own homes and have views about homeownership that are as conservative as their grandparents'.[i] But the share of millennials (18-34) living at home with their parents has increased sharply over the past decade.[ii] • Since 2012, the share of younger millennials (18-25) living at home has decreased from 55.5 percent to 54.2 percent, while the share of older millennials – those 26-34 who were scarred by the recession in their first years out of college – has increased from 12.9 percent to 14.5 percent.[iii] • Young people are renting for longer before buying their first home, compared

to a generation ago. And although first-time buyers' incomes have not changed significantly, the median price of their first home has increased by about a quarter.[iv] • The homeownership rate for black Americans has remained persistently lower than the national homeownership rate for 100 years. In 2016, 71.9 percent of white Americans owned their home, and 41.3 percent of black Americans did.[v] • Black applicants are denied home loans at a much higher rate than applicants of other races. Although the denial rate for black applicants has fallen in recent years, conventional loan applications from blacks are still denied at more than twice the rate of those submitted by whites.[vi] • Over the last 20 years, home values in the metro areas with the most social mobility have soared, making it difficult for low-income people to afford living in the very places where they could most easily achieve socio-economic growth.[vii] • Housing affordability is worst for those making a low income, even if they are living in the cheapest homes available.

Nationwide, the bottom third income earners spend twice as much of their income on mortgage payments than the top third. In some expensive markets, those making incomes in the bottom third would have to spend more than half of that income to afford the monthly payment on the cheapest homes on the market.[viii] • The cheapest homes were most likely to face foreclosure during the housing crisis, forcing those families to rent while continued on page 15

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Rental Housing Journal Metro

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Rental Housing Journal Metro · January 2017

President: Ron Garcia Vice President: Phil Owen President Elect: Mark Passannante Secretary: Lynne Whitney Treasurer: Sandra Landis

Ron Garcia, RHA Oregon President

Past President: John Sage Office Manager: Cari Pierce

President’s Message New Beginnings

G

reetings! My name is Ron Garcia and I am excited to be the new President of the Rental Housing Alliance Oregon.

As a Board Member for the past 6 years, I’ve had a front row seat within the organization and I’ve been able to witness up close the incredible dedication that many volunteers make to RHA Oregon. I am humbled by their efforts, and I am greatly appreciative of my own opportunity to serve. We have done a lot in the last few years, and there is now a lot to do. So first, I want to say Thank You to everyone involved. Next, I guess I want to say, let’s get to work.

The headline news of the day is the earth shaking shift coming to our country with the inauguration of an unconventional conservative President along with the now-controlled Republican Congress.

Yet in our “parallel universe”, we have a newly ratified liberal Governor and a Democratic controlled Legislature.

Political persuasions aside, our state leaders have announced an agenda unfriendly to rental property owners. The seismic fallout is their pro-active attempt to pass rent control and remove no-cause terminations from rental agreements.

I want to make a point that The Rental Housing Alliance Oregon will do what we can to provide a balanced perspective to this discussion. We hope to impress upon our leaders that antirent control does not mean anti-tenants.

And while the homeless crisis is real, preventing landlords from exercising their right to terminate a contract will not cure this issue.

Rental Housing Journal Metro · January 2017

For the last 90 years RHA Oregon has set the standard for community participation by landlords providing affordable and quality housing through our association’s networking, education, tools and support services for our membership. And, no matter what the outcome of this 2017 legislative session may bring, we will continue that direction into the next century as well.

10520 NE Weidler, Portland, OR 97220 (503) 254-4723 • Fax (503) 254-4821 info@rhaoregon.com • www.rhaoregon.org

So to that point, our incoming Board of Directors has many new faces and a depth of experience and talent. I think you will see fresh approaches to our networking events, vendor involvement and educational opportunities. Along with our recently hired new front office staff, and under the management of Cari Pierce, members are raving about the outstanding customer service experience they have when engaging with us.

I am also extremely excited to announce that RHA Oregon will be rolling out of a new website very soon. This new site will provide a robust new platform for RHA Oregon members to access more tools in order to continue to be even better landlords. It will be mobile accessible and it will be designed for us to grow in the services we can offer to small and midsized rental property owners. And it will look great, too!

I am very fortunate to inherit the helm of this association in such great condition. Now with your help and support, I’ll get started.

5

Rental Housing Journal Metro 16083 SW Upper Boones Ferry Rd, Suite 105, Tigard, OR 97224 503-213-1281 | Fax 503-213-1288 | www.multifamilynw.org

Happy New Year Everyone!

Jeff Edinger 2017 Board President

I

am excited to announce that moving into 2017 our organization is 191,000 units strong. As we continue to grow our membership and surpass the 200,000 mark, our event and education

opportunities, as well as our legislative advocacy, will continue to strengthen.

As your new 2017 Board President, I am excited to contribute to the leadership of Multifamily NW. We have an exciting year ahead of us indeed.

For those of you that don’t know me, I’m Jeff Edinger, Vice President of Tokola Properties. Tokola Properties is a real estate development, construction and property management company focused on multifamily housing and mixed-use

Upcoming Educational Classes 1/11/2017 1/11/2017 1/17/2017 1/18/2017 1/24/2017 1/25/2017 1/25/2017 1/26/2017 2/6/2017 2/6/2017 2/8/2017 2/8/2017 2/10/2017 2/15/2017 2/15/2017 2/16/2017

CAM: Industry Essentials & Financial Management HR Issues: HR Handbooks Strengthening Front Line Skills for Maintenance Portland Luncheon - 2017 Forms Collection Update CAMT: Heating CAM: Marketing Washington Fair Housing (Vancouver) Mold Awareness EPA Lead-Based Paint Renovation Certification 8-Hour Oregon Landlord Tenant Law Part I HR Issues: Job Descriptions Fair Housing 101 It's the Law - 30, 60, 90: Making Sense of the New Notice Rules Curb Appeal New Hire Class Fair Housing Fair

development in Oregon, Washington, and Arizona. Vertically integrated, we act as developer, prime contractor and property manager in the creation and operation of a diversified portfolio of multifamily housing. Tokola is an owner/operator of approximately 1,600 apartment units.

In addition to working as a developer and property manager of rental housing, my background includes experience with for-sale housing and real estate consulting.

Some of my past roles include working as Land Acquisitions Manager for leading national builder Toll Brothers, Senior Consultant for Southern California based Meyers Group, and serving as Executive Director of the non-profit Gresham Downtown Development Association.

2017 is off to a quick start. Legislatively we are working hard as we continue to advocate for our industry in general and for legislation that makes sense for both landlords and the residents we serve.

At the forefront of the 2017 legislative session we face Rent Control, aka “Rent Stabilization” and the termination of End-of-Tenancy Notices that are served without a stated cause. Ironically, both of these measures would be detrimental to the very people we strive to protect – our residents. As the 2017 Session starts, look in your inboxes for updates on legislative

efforts, or visit the Government Affairs page on the Multifamily NW website.

Multifamily NW’s Education and Events program is chock-full this year.

To start off the year, the association hosts the third annual Fair Housing Fair held on February 16 at the Oregon Convention Center. The Fair Housing Fair is a great venue for both maintenance and office personnel. For more information on education and events provided by Multifamily NW please visit our website at multifamilynw.org.

I am excited to fill the roll of Board President for Multifamily NW and look forward to continued participation and insightful feedback from our membership.

If you have a topic that you would like to discuss regarding our association or issues facing our industry, please don’t hesitate to contact me.

Cheers to a successful new year.

Jeff Edinger

Form of the Month - Mold & Mildew Addendum OREGON

MOLD & MILDEW ADDENDUM DATE __________________________________________ PROPERTY NAME / NUMBER ___________________________________________________________________________________________________________________________________________________________________ ___ ___ ____ __ ___ ____ __ ___ ___ __ ___ ___ ___ ___ ___ ___ __ ____ __ ___ __ ___ ___ ___ ___ ___ ___ ___ __ RESIDENT NAME(S) ___________________________________________________________________________

___________________________________________________________________________ ____ __ ___ ____ __ ___ ____ __ ___ ____ __ ___ __ ___ ___ ___ ___ ___ ___ ___ ___ ___ ____ __ __

____________________________________________________________________________ __ ___ ___ ____ __ ___ __ __

___________________________________________________________________________

___________________________________________________________________________ ____ __ ___ __ ___ ___ ___ ___ ___ ___ ___ ___ ___ ____ __ __

___________________________________________________________________________ ___ __ ___ ___ ___ ___ ___ ____ ___ __ ____ ___ ____ __ ___ ____ __ _

and all others.

UNIT NUMBER ___________________________________ STREET ADDRESS ___________________________________________________________________________________________________________________________________________________________________________ ___ __ ___ ___ ___ ___ ___ ____ ___ __ ____ ___ __ ____ ____ __ ___ __ __ ___ __ ____ ___ __ ____ ___ __ ____ ___ __ ___ ___ ___ ___ ___ ____ ___ __ ____ _ CITY ___________________________________________________________________________________________________________________________________________________ STATE T TA ___________________________________ ZIP _____________________________________________________________ ____ __ ___ __ ____ ___ __ ____ ___ __ ____ _ STA ___ __ ____ ___ __ ____ ___ _ ___ __ __

Keep the indoor humidity low: = Use bathroom fans during and for at least lea 30 minutes (preferably (prefera y 1 hour) after af showering and bathing. If no fan is available, open windows slightly for ventilation for the same e amount of time. me. = Use the exhaust fan above the stove whenever cooking ooking or boiling liquids, of if no fan (or if a recirculating fan exists that does not exhaust to the outdoors), open a window slightly for ventilation during du ng cooking cookin or boiling. = Use the fan in the laundry area during ng and for 20 minutes a afterr using u the washer (not the dryer if it exhausts outdoors), or if no fan, open a window slightly for ventilation. tilatio = Cover fish tanks. = Do not use unvented d space heaters, such su as kerosene heaters, indoors. = Do not use your oven for space heating. = Do not keep excess number mber of house use plants.

Prevent cold old surfaces that promote omote mold growth: growth = Raise se blinds or shades s as often ften as possible po each day (extremely important)! = Allow ow at least le one ne inch between bet en furniture furnit and walls to warm wall surfaces.

Keep the warm during non-summer months: e indoor temperature at least ast moderately m = Keep heat above 60 degrees Fahrenheit h at all times, as low temperatures cause mold growth. th = Do not turn rn off the e heat eat in any rooms (especially bedrooms). = Open closet doors. oors.

Attend to spills or flooding: flooding = Immediately dry any water that spills or overflows from showers, tubs, toilets, sinks, inks, etc. = Immediately clean up and thoroughly dry any spills onto carpets, rugs or floors. ors.

Immediately notify Owner/Agent of any excess moisture problems: = Immediately notify Owner/Agent of any water leakage such as leaking g plumbing, mbing, tubs, showers, showers toilets orr windows. wi = Immediately notify Owner/Agent of any running water—plumbing, tubs, showers sh wers or toilets.

Clean regularly and thoroughly: = If mold appears on any indoor surfaces, immediately scrub it off with soap and water w er (bleach is not necessary), and then rinse and dry the surface. = Check, clean and dry window tracks and keep free from om condensation condensa n buildup. = Once you have attempted to clean mold, if it reappears ars or you are not able to remove it, immediately report the mold to Owner/Agent.

Read the EPA pamphlet: “A Brief Guide to Moisture, Mold and Your Y ur Home” available Yo avai ble at http://www.epa.gov/mold/moldresources.html

Form M038 OR Copyright © 2014 Multifamily NW®. NOT TO BE REPRODUCED WITHOUT WRITTEN PERMISSION. Revised 12/4/2014.

Mold growth indoors is an issue common in the Pacific Northwest. rthwest. Mold spores naturally turally exist indoors ind and cannot be eliminated. Normally, they do not grow or reproduce on indoor surfaces and become me visible and a pose ose a problem pr m unless a condition of excess moisture exists at surfaces.

The main causes of mold growth are too much moisture generation, removal, eneration, too t o little moisture mo mov or cold surfaces. For example, mold often grows around windows because blinds or shades are always ys kept kep closed, losed, thus cooling the window area and causing mold growth. Those causes of mold growth can be reduced or eliminated by simple procedures under der your control. contr To reduce mold and mildew, Resident agrees to the following:

a M Resident understands and agrees that failure to do any of the actions in this Mold & Mildew Addendum shall constitute a material non-compliance ancially responsible for allll damage resulting from his/her failure to comply with this Mold & Mildew with the Rental Agreement. Resident will be financially Addendum.

X

SAMPLE

_____________________________________________________________________________________ _ __ __ __ __ _ __ ___ __ ___ ___ ___ ___ ___ ___ __ __ __ __ __ __ __ __ _ __ ___ __ __

SAMPLE

_____________________________ ___ __ __ __ __ __ __ __ __ __ _ __ ___ __ ___ ___ ___ ___ ___ __ __ __ __

RESIDENT

X

SAMPLE

_____________________________________________________________________________________ __ __ __ __ __ __ _ __ ___ __ ___ ___ ___ ___ ___ ___ __ __ __ __ __ __ __ __ _ __ ___ __ ___ ___ ___ ___ ___ __ __ __ __ __ _ __ __ __ __ ___ __ __

SAMPLE

SAMPLE

X

RESIDENT

SAMPLE

_ __ _____________________________

RESIDENT

SAMPLE

_____________________________________________________________________________________

DATE D E

_____________________________________________________________________________________ _ __ ___ __ ___ ___ ___ ___ ___ __ __ __ __ __ _ __ __ __ __ ___ __ __

SAMPLE

RESIDENT

_ __ _____________________________ ___ __ ___ __ ___ __ ___ __

RESIDENT

X

X

_____________________________________________________________________________________

DATE DAT A ATE

X

SAMPLE

_____________________________________________________________________________________

DATE

RESIDENT

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SAMPLE

_____________________________________________________________________________________

OWNER/AGENT

ON SITE

RESIDENT

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_____________________________

DATE

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_____________________________

DATE

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DATE

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MAIN OFFICE (IF REQUIRED)

Form # M038 Mold growth indoors is an issue common in the Pacific Northwest.

Mold spores naturally exist indoors and cannot be eliminated. Normally, they do not grow or reproduce on indoor surfaces and become visible and pose a problem only if a condition of excess moisture exists at surfaces.

Multifamily NW’s Mold & Mildew Addendum is a form used at the beginning of tenancies to educate tenants about all of the many factors and behaviors that can lead to moisture issues in their home. The main causes of mold growth are too much moisture generation, too little moisture removal, or cold surfaces. The form outlines the preventative remedies as well as instructions to remove any mold and when to notify the landlord.

6

Rental Housing Journal Metro · January 2017

Rental Housing Journal Metro

HomeUnion Names the Highest-Growth Rental Markets Seattle rent growth led the nation, while El Paso, Texas rent growth was the lowest.

H

omeUnion, an online real estate investment management firm, has released a list of the singlefamily rental (SFR) rental markets in the U.S. featuring the highest growth. Seattle tops the list, with same-house rent growth of 6.7 percent, while El Paso rounded out

the bottom of the list with a 7.1 percent decline in year-over-year rents.

"Many of the metros at the top of our list have these two common characteristics: strong job growth, and residents who prefer renting over homeownership as median home prices remain relatively high

and the cost of mortgage debt continues to increase," explains Steve Hovland, director of research at HomeUnion.

"Meanwhile, a degree of softness has impacted the most heated rental markets, like San Francisco and San Jose, which has pushed those metros to the bottom of our

list," Hovland adds. "We're seeing declines in rents for the most expensive Bay Area neighborhoods, as well as slowing rent growth in San Jose submarkets. However, rents remain extremely high on a relative basis in both these markets – in the $4,000 range."

Here's a list of the most expensive rental markets in the U.S.: Metro

SFR Rent

Year-Over-Year Rent Change

Seattle Dallas Atlanta Phoenix Orlando Raleigh Los Angeles Tampa San Diego Oakland Portland Philadelphia Jacksonville Cleveland Orange County Austin Boston San Antonio Denver Memphis

$2,220 $1,600 $1,280 $1,340 $1,420 $1,460 $2,540 $1,380 $2,520 $2,880 $1,840 $1,640 $1,320 $1,200 $3,120 $1,700 $2,460 $1,400 $2,060 $1,040

6.7% 5.6% 4.9% 4.8% 4.6% 4.2% 4.2% 4.1% 4.0% 4.0% 3.9% 3.4% 3.2% 3.2% 2.8% 2.8% 2.8% 2.4% 2.3% 2.1%

Here's a list of the least expensive rental markets in the U.S.: Metro

SFR Rent

Year-Over-Year Rent Change

El Paso, Texas San Francisco Oklahoma City Wichita, Kan. Pittsburgh Houston Miami San Jose Birmingham, Ala. Little Rock Baltimore New York City Milwaukee Honolulu Washington, D.C. Chicago Indianapolis Albuquerque, N.M. New Orleans Las Vegas

$1,160 $4,320 $1,140 $1,000 $1,060 $1,600 $2,200 $3,660 $1,000 $920 $1,820 $2,200 $1,280 $2,960 $2,120 $1,580 $1,160 $1,040 $1,280 $1,360

-7.10% -5.00% -4.60% -4.30% -3.60% -2.80% -2.70% -2.60% -2.30% -1.90% -0.60% -0.40% 0.80% 0.90% 1.30% 1.30% 1.40% 1.50% 1.90% 1.90%

Source: HomeUnion Research Services *Rents are same-house, year-over-year rents.

About HomeUnion HomeUnion is an online real estate investment management firm. Based in Irvine, Calif., it provides all the services needed for individuals to invest remotely in single-family rental (SFR) properties. The company uses a combination of research and proprietary analytics to incorporate data on over 110 million homes and 200,000 neighborhoods into

their database, and then delivers its solutions to an on-the-ground infrastructure that currently serves 18 locations. HomeUnion's role spans the lifecycle of the investment transaction: identifying sound investments, handling all aspects of acquisition, maximizing income, protecting asset value, and selling the asset when the time comes. http://www.homeunion.com

Rental Housing Journal Metro ¡ January 2017

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Rental Housing Journal Metro

Home Values Rise at Fastest Pace Since 2006 The median home value in the U.S. is now $192,500, according to Zillow's November Real Estate Market Report, just 2 percent shy of 2007 peak.

I

n November, national home values rose at their fastest annual pace since 2006, near the peak of the housing bubble.

The Zillow® Home Value Indexi (ZHVI) is $192,500, 2 percent shy of the records set in 2007, according to the November Zillow Real Estate Market Reportsii.

Rents, which were the big story of 2016 as they rose at a record pace, have slowed considerably to a 1.5 percent annual appreciation rate; this rate is expected to continue into 2017. The median monthly rent payment in the U.S. is now $1,403.

Home values were 6.5 percent higher this November than last. Strong growth is especially evident in a handful of new powerhouse markets, including Seattle, Denver, Portland and Dallas, whose strong job markets attracted new home buyers over the last year.

At their fastest pace, home values across the country were appreciating about 11 percent year-over-year. When the bubble burst, home values plummeted, falling 7.4 percent year-over-year during the depths of the crisis, and then began a steady recovery in 2012.

"Home value growth continues to be strong, supported by solid buyer demand and still limited for-sale inventory in

many markets across the country," said Zillow Chief Economist Dr. Svenja Gudell.

"Conditions today are very different than the ones we saw back in 2006, which was the last time we saw home values rising this fast. Rampant real estate speculation and loose mortgage credit have been replaced by the sound economic fundamentals we are seeing now."

Portland, Seattle and Dallas reported the highest year-over-year home value

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appreciation among the 35 largest U.S. metros. Portland home values rose 14 percent to a median value of $351,800.

Both Seattle and Dallas home values rose 12 percent since last November.

Seattle reported the fastest rent appreciation of the 35 largest U.S. metros for the sixth month in a row, up almost 9 percent annually. Portland and Sacramento follow Seattle, with rents up about 7 percent.

Inventory still remains an issue for home buyers across the country. There are 6 percent fewer homes to choose from than a year ago, with Boston, Indianapolis and Kansas City reporting the greatest drop. In Boston, there are 26 percent fewer homes to choose from than a year ago, and 21 percent fewer in Indianapolis and Kansas City. continued on page 16

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Rental Housing Journal Metro · January 2017

Rental Housing Journal Metro

DEAR MAINTENANCE MEN: Slab Leaks, Safety Bars and Shaky Ovens

By Jerry L’Ecuyer & Frank Alvarez

Dear Maintenance Men: Slab leaks! They are the bane of my existence! Turns out the problem is the hot water recirculation line. I’m trying to decide if I should fix it again or just abandon the line and remove the circulation pump and be done with it. What harm can it do? Do I really need a hot water return line for my residential units?

John

Dear John: Unfortunately, dealing with slab leaks is almost a “rite of passage” for property owners or managers. First, let us demystify what a return line really is. Simply, it is a dedicated hot water line which loops from the water heater to the furthest unit, and back to the cold water heater inlet. Its purpose is to maintain hot water at each tap by assistance from the circulation pump. The circulation pump constantly delivers hot water through the return line or loop. A slab leak is a water line break under the concrete floor of a building. A water pipe under a concrete floor can leak for a long time before it is noticed or it can bubble up through cracks in the concrete depending on soil conditions. The most reported type of slab leak is on the hot water side of the plumbing and along the return line of the recirculating system.

The reason for the return line being the most popular leak point is because the water never stops moving and it wears away and corrodes the pipe.

We do not recommend canceling the return line and removing the pump. This will cause other unintended consequence such as a slow delivery of hot water to many of the units in the building. The lack of a pump will waste water while the residents wait for hot water to come out of the tap which in turn will make the water heater work harder. Not only will this annoy the residents, it will cause the water heating bill to go up.

As for repair of the return line, there are a number of solutions. If the return line has chronic leaks, it is best to run a new line outside the slab. The old return is canceled at the pump and the furthest plumbing fi xture in the building and the new line installed and routed back to the water heater. Another solution after the

pipe is repaired is to limit the incoming water pressure with a pressure regulator and put a timer on the recirculation pump to operate only at peak demand times such as morning and evening. Installing a water softener system will also help keep both the hot water heater and water lines from corroding as quickly.

Dear Maintenance Men: I am installing safety grab bars in all of my showers & bathtubs and I need some guidance on the installation procedure.

What do I need to know to install these bars correctly?

David

Dear David: The use of handrails and safety bars help provide stability and extra support required by the elderly and people with limited mobility. Approved ADA grab bars are available in a wide variety of

configurations, colors and finishes. The most common is the stainless steel or chrome finish. The grab-bars must be able to support a dead weight pull of 250 pounds. The preferred method is to bolt directly into the wall studs. This is not always practical, as the stud might not line up where they are needed. Grab-bars can be mounted vertically or at an angle to match wall stud spacing. If finding studs becomes a problem, alternate installation methods are available. If your walls are in good condition, you may use large toggle bolts or if you have access to the backside of the shower or bath walls, insert a backer plate or add a new stud for an anchor point. Safety grab bars can be located at any local hardware store. It is advisable that you check ADA requirements with local, state and federal agencies for regulations governing height, distance & angle of the bars.

Dear Maintenance Men: I was cleaning the kitchen stove in one of my vacant units and noticed the free standing stove tipped forward when I put a bit of weight on the open oven door. It looked a bit dangerous and was wondering how I can fix this issue.

Rick

continued on page 17

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10/25/16 7:50 PM

Rental Housing Journal Metro

Is My Uber Driver Holding Back the Housing Market?

By John Burns, CEO and Mikaela Sharp, Research Analyst

W

hy are so many young adults today willing to make perhaps the biggest commitment of all—having a child together—before getting married? Does this recent societal shift tell us anything about young adults’ willingness to commit to a 30year mortgage?

I recently had a conversation with an Uber driver who shed light on the younger generation’s choices.

Gaming the System to Save Money My Uber driver told me that he and his girlfriend were about to have their third child together. Uber drivers have become a great source for researching social shifts, as they are right in the middle of the new Sharing Economy.

He said it made no financial sense for them to marry. Her modest income qualified her for all sorts of benefits, including free medical care for the kids.

As long as she was not associated with his income, they could live a good life together while getting the government to cover many of their expenses. I didn’t ask if this was legal.

Keeping a relationship “off the books” We call the higher taxes or fewer benefits that a married couple encounters in comparison to two single people with an equal combined income a “marriage penalty.”

This new marriage penalty could easily be enough of an incentive for an unmarried parent to keep their relationship “off the books.” The following table shows the median benefit amount for a nonworking single parent with two young children.

Don’t add these up because it is highly unlikely that a recipient would receive all of these benefits simultaneously.

Playing the Game Prevents Homeownership This got me thinking.

Our research has shown that today’s young adults born in the 1980s and 1990s are quite thrift y, taking advantage of technology to save money and very willing to share expenses with each other.

The Uber driver and his girlfriend will clearly not become homeowners any time

soon because to do so they would have to declare that they live together. I assume doing so would cause them to lose free health insurance for their kids as well as other benefits. How many 1980s Sharers have figured out how to have a family and still receive maximum government assistance? We already know that the number of children born to unwed mothers has exploded to 41%.

Here is some more information we learned: • Food stamps: A single parent of two children earning $15,000 per year would typically be eligible to receive about $5,200 per year in food stamp benefits. If married to a partner with equal earnings, their food stamp benefit amount would be cut to zero.

• Section 8 housing: On average, an unemployed single parent would be eligible to receive $11,000 per year of public housing or Section 8 benefits. If continued on page 17

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Rental Housing Journal Metro · January 2017

Rental Housing Journal Metro

Visionary Property Managers Anticipate Tomorrow’s Rental Markets

by Marc Courtenay in Articles

“All the king’s horses and all the king’s men couldn’t put Humpty Dumpty together again.”

M

ost of us can remember this childhood poem which has important lessons and reminders. The winds of change are blowing powerfully since the results of the November 8, 2016 U.S. elections. As the financial markets adjust to the changes and uncertainties so will the housing and rental markets.

The rental markets have seen many consecutive years of growth and prosperity. I’m not suggesting that our industry is like “Humpty Dumpty,” but I want property managers to be prepared.

First question: who will be tomorrow’s renters? According to The Zillow Group’s recent “Report on Consumer Housing Trends,” the answers may surprise you.

A trend in motion is likely to stay in motion longer than expected. The Zillow study attempted “…to gain a comprehensive understanding of the United States residential real

estate market. They “… employed independent market research to conduct a nationally representative, online quantitative survey.”

Some of the trends likely to endure and shape the future of the rental housing market are: • Most rental prospects (84%) use online resources to find an apartment, yet connecting with property owners or managers (62%) and referrals from family and friends (59%) are also common search activities.

• The average rental housing prospect contacts 4.7 apartment owners or managers during his or her search, and 53% consider property staff to be a useful resource while searching.

• The majority (61%) of apartment residents sign a one-year lease, while 14% rent month-to-month, 9% sign a lease longer than one year and 5% have no lease at all.

• Did you know that 57% of apartment residents are female, and that number may exceed 60% soon?

• Residents’ median age is 32 and median yearly income is $37,500.

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• Millennials make up 56% of all residents, followed by Generation X (28%) and Baby Boomers (12%).

• Slightly more than half of apartment residents are Caucasian (52%), 19% are Latino/Hispanic, 17% are black/ African American and 9% are Asian/ Pacific Islander.

• 45% of residents are single, 35% are married and 20% are unmarried partners.

• Over half (51%) have a college degree—either a two-year, a four-year or a graduate degree.

• More than a third (35%) has a pet, that’s why you’ll want to read my recent article on this topic.

One of the certainties of life is change.

Bubbles burst, Humpty Dumptys eventually fall off the wall, and demographics shift. Visionary property managers keep up with the trends and adjust accordingly.

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Rental Housing Journal Metro

Market Overview ...continued from page 1 (+) growth to specify a 97.7% adjusted -R2 (S.E.=0.4%) forecasting equation. Based on our base case economic forecast, the model projects moderately faster PORT job growth in 2017, followed by slower but useful gains in 2018. Metro growth is likely to slow toward the end of the decade; but growth should remain well above the national average rate throughout.

Occupancy Rate Summary Occupancy Rate (Reis) 94.6% RED 50 Rank 41st Annual Chg. (Reis) -1.3% RCR YE16 Forecast 94.9% RCR YE17 Forecast 95.0% RCR YE18 Forecast 95.4% RCR YE19 Forecast RCR YE20 Forecast

95.4% 95.4%

3Q16 Absorption and Occupancy Rate Trends Reis report Portland occupancy plunged -50 basis points sequentially to 94.6% during 3Q16, lowest metric in six years. Supply was primarily responsible: developers delivered 1,220 units, 20% greater than 1Q and 2Q16 combined, But weaker demand also was a factor. Tenants absorbed only 531 units, about –40% fewer than in the comparable periods of 2014 and 2015. Average annual rent hikes of 7.1% since 3Q13 may have contributed.

The –130bps yearon- year decline was tied largest among the RED 51 markets and was the second largest such y-o-y Portland decrease since 2003.

Average occupancy among stabilized, same-store properties surveyed by Axiometrics was 95.3%, down –80bps y-o-y. But overall occupancy, including 5,699 units in properties still in lease -up,

was only 93.3%. Across classes, stabilized occupancy was nearly indistinguishable as each segments was 95.5% and 95.7% full. With pre-stabilized assets considered classes-A and-B fell to 89.3% and 93.0%, respectively.

Milwaukie submarket posted highest occupancy at 96%; supply rich Northwest (93.9%) lowest. Northeast (-200bps) submarket suffered the largest y-o-y decline.

Job(t-0) (+) and supply(t-1) (+) growth are the primary factors driving demand in RCR’s 94.9% ARS occupied stock model, balanced to some degree by home price appreciation(t-2) (-). The outlook for each variable is robust, laying the groundwork for annual absorption in the 2,500-3,250 unit range through 2018. Occupancy appears likely to hover in the low-95% area through decade’s end.

Effective Rent Summary Mean Rent (Reis) Annual Change RED 50 Rent Change Rank RCR YE16 Forecast RCR YE17 Forecast RCR YE18 Forecast

$1,082 7.4% 3rd 6.9% 5.8% 5.3%

RCR YE19 Forecast RCR YE20 Forecast

4.2% 3.2%

3Q16 Effective Rent Trends Rent trend estimates from Reis surveys indicate that Portland renters found no relief from rent burdens over the summer.

The service avers that rents increased $29 (2.7%) sequentially to $1,082, representing the fastest quarter-to-quarter advance in a year. Class-B&C renters bore the brunt of it as segment asking rents increased 2.9% against 2.5% among class-A units.

Expressed on a year-on-year basis, effective rents rose 7.4%, the smallest

gain since 2Q15, but strong enough to rank RED 51 #3.

By contrast, same-store, stabilized properties surveyed by Reis displayed decelerating pricing trends. This 262-property sample recorded sequential growth of 1.5%, down from 4.2% in the comparable period of 2015. Annual rent growth declined to 5.5%, slowest since 1Q13. Weak class-A trends were largely responsible. Class year-on-year growth fell to 2.1% from 12.4% in 3Q15. Robust growth continued in classes-C (7.4%) and –B (6.2%). Lower rent Gresham submarket posted a 10.2% y-o-y advance, while supply challenged Northeast (1.2%) and Northwest (0.5%) trailed.

RCR’s 93.4% ARS rent model employs quarterly occupancy change(t-1) (+), job growth (+) and Baa bond yields( t-1) (-) as independent variables. The Reis series-specified model projects above series average (3.0%) rent growth throughout the 5-year forecast interval (CAGR=4.5%), with trends above 4% through 2019. Axiometrics (3.6%) are on the same page save for a sluggish 2017, while Reis are more pessimistic (3.1%) for the 2016-2020 period.

Trade & Return Summary $5mm+ / 80-unit+ Sales Approximate Proceeds

12 $334mm

Average Cap Rate (FNM) Average Price / Unit Expected Total Return RED 46 ETR Rank

5.2% $146,924 7.8% 8th

Risk-adjusted Index RED 46 RAI Rank

4.62 26th

3Q16 Property Markets and Total Returns

Portland’s property market experienced a second consecutive quarter of moderating trade during 3Q16. After investors consummated 41 transactions valued at $5 million or more during the nine months ended March 31, trade slowed to 10 and 7 transactions during the second and third quarters, respectively. Proceeds fell from a peak of $631mm during 4Q15 to $280mm and $272mm in 2Q16 and 3Q16. The average 3Q price per unit sold was $189,540, up 28% sequentially, and within a whisker of Portland’s 4Q15 series record of $190,507.

Velocity gained momentum in 4Q16.

Through mid-December, investors closed on 19 transactions valued at $1.15bn, a one quarter record by more than $400mm.

The average unit price was $223,343, also a record. By the same token, the average disclosed cap rate was 5.52%, second highest observed since 3Q13.

Reinforced steel and concrete infill midrises traded to low 4% cap rates; suburban B+/A– garden projects to mid-4% yields.

Value adds and peripheral submarket class-B’s trade from 5% to 5.25%.

RCR elected to push the cap B+ purchase cap rate proxy down 10 basis points to 4.6%. Employing a 5.2% terminal cap and model derived rent and occupancy point estimates, we calculate that a PORT investor would expect to achieve an 8.4% unlevered total return over 5 years, up from 7.8% in 2Q16. The risk-adjusted index (ETR/όETR) is 3.53, ranked 29th among the RED 47 peer group.

By Daniel J Hogan

Director of Research djhogan@redcapitalgroup.com 614-857-1416 Office 1-800-837-5100 Toll Free

continued on page 19

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Rental Housing Journal Metro · January 2017

Rental Housing Journal Metro

More Than One in 10 Homeowners ...continued from page 1 The numbers are another sign that the housing market has nearly regained the value lost during the recession, and is only 2.7 percent below the peak reached at the height of the bubble. Not all regions have experienced the same recovery, though, and some markets are still well below those bubble highs.

Underwater homeowners can't refinance to take advantage of still-low mortgage rates and they can't sell their homes except in short sales, which keeps these homes off the market, contributing to low inventory.

Seven of the 10 large metros with the lowest rates of negative equity are along the West Coast, and also have strong economic markets. Fewer than five percent of homeowners are underwater in San Jose, San Francisco, Portland, Ore., Denver, and Dallas. In these metros, home values have also surpassed the highest point reached during the bubble, and are now higher than ever.

Chicago and Las Vegas have the highest levels of negative equity, with 17 percent and 16.8 percent of homeowners underwater respectively. Home values

in these markets remain well below their peak levels.

"As the housing market recovers and home values rise, the number of homeowners underwater on their mortgages continues to drop," said Zillow Chief Economist Dr. Svenja Gudell. "In addition to the individual homeowners who are underwater, negative equity affects the housing market as a whole, so this is good news not only for these owners, who are now able to either sell their home or at least regain some financial stability, but also for buyers

who may find more options now. I expect homes will gain value steadily, for solid economic reasons, and that negative equity rates will continue to fall."

Homeowners who have less than 20 percent equity in their homes may find it difficult to cover the associated costs of selling, such as agent fees, closing costs, and a new down payment if they are buying a new home. More than a quarter of homeowners with a mortgage are in this situation, known as effective negative equity.

Metropolitan Area

Percent of Underwater Homeowners

Total Amount of Negative Equity

Number of Homes in Negative Equity

Effective Negative Equity Rate

United States

10.9%

$479 billion

5,269,166

26.1%

New York/Northern New Jersey

10.0%

$40 billion

250,842

21.5%

Los Angeles-Long Beach Anaheim, CA

5.7%

$18.8 billion

90,452

14.0%

Chicago, IL

17.0%

$29.8 billion

277,867

33.5%

Dallas-Fort Worth, TX

4.4%

$5 billion

44,998

12.7%

Philadelphia, PA

11.8%

$10.7 billion

124,492

29.4%

Houston, TX

6.9%

$6.1 billion

59,000

19.4%

Washington, DC

12.4%

$19.9 billion

136,068

30.5%

Miami-Fort Lauderdale, FL

10.6%

$9.8 billion

88,840

21.1%

Atlanta, GA

13.0%

$10.8 billion

127,592

30.3%

Boston, MA

6.2%

$7.9 billion

49,005

14.3%

San Francisco, CA

3.7%

$5.9 billion

24,224

8.9%

Detroit, MI

12.2%

$5.8 billion

93,270

24.0%

Riverside, CA

10.5%

$8.3 billion

65,609

26.3%

Phoenix, AZ

11.2%

$9.1 billion

79,519

29.6%

Seattle, WA

6.6%

$6.8 billion

41,667

17.2%

Minneapolis-St Paul, MN

7.3%

$5 billion

48,956

22.4%

San Diego, CA

6.3%

$4.9 billion

27,452

18.1%

St. Louis, MO

12.6%

$4.2 billion

66,607

30.8%

Tampa, FL

10.5%

$3.6 billion

48,764

24.9%

Baltimore, MD

14.4%

$7.9 billion

73,895

34.4%

Denver, CO

4.4%

$3.3 billion

22,326

11.9%

Pittsburgh, PA

8.1%

$2.2 billion

33,395

19.8%

Portland, OR

3.8%

$2.1 billion

15,152

11.7%

Charlotte, NC

8.1%

$3.6 billion

34,268

24.2%

Sacramento, CA

7.6%

$3.6 billion

27,123

20.9%

San Antonio, TX

10.2%

$2.9 billion

30,933

28.3%

Orlando, FL

11.4%

$3.3 billion

39,743

27.0%

Cincinnati, OH

10.8%

$3.1 billion

43,385

29.6%

Cleveland, OH

14.6%

$3.3 billion

55,547

31.1%

Kansas City, MO

12.4%

$3 billion

44,646

33.1%

Las Vegas, NV

16.8%

$5 billion

49,809

36.8%

Columbus, OH

9.0%

$2.7 billion

31,314

24.1%

Indianapolis, IN

12.8%

$3 billion

46,772

33.9%

San Jose, CA

2.6%

$1.9 billion

6,905

6.4%

Austin, TX

6.6%

$2.2 billion

18,383

18.6%

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ZillowÂŽ is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with the best local professionals who can help. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow's Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Zillow also sponsors the bi-annual Zillow Housing Confidence Index (ZHCI) which measures consumer confidence in local housing markets, both currently and over time. Launched in 2006, Zillow is owned and operated by Zillow Group (NASDAQ: Z and ZG), and headquartered in Seattle.

The data in the Zillow Negative Equity Report incorporates mortgage data from TransUnion, a global leader in credit and information management, to calculate various statistics. The report includes, but is not limited to, negative equity, loan-to-value ratios, and delinquency rates. To calculate negative equity, the estimated value of a home is matched to all outstanding mortgage debt and lines of credit associated with the home, including home equity lines of credit and home equity loans. All personally identifying information ("PII") is removed from the data by TransUnion before delivery to Zillow.

Overall, this report covers more than 870 metros, 2,400 counties, and 23,000 ZIP codes across the nation. i

13

Rental Housing Journal Metro

The Housing Crisis is a Problem the City Helped Create

by Landon Marsh, Portland Landlord, Owner of the S.E. 119th & Ash Street Apartments

W

hen I read Oregon State Representative Tina Kotek’s op-ed piece, “Oregon’s housing crisis too big to ignore,” back in October, it stopped me in my tracks. Not because the headline or the overall sentiment was incorrect, but because she has oversimplified a complex issue with nearly Donald Trump-like rhetoric, and that’s just not fair to renters, property managers or building owners.

This fall I found myself unwittingly tossed into a lions’ den of controversy centered on landlords vs. tenants, specifically regarding a 12-unit building I purchased in mid-2016 in East Portland on S.E. Ash Street. I own three small multifamily properties, each in a different neighborhood throughout the Portland Metro Area. My tenants are longstanding, and we have an open line of communication and have always enjoyed good relations.

When I bought the S.E. Ash property I was asked by several tenants to make improvements to it, so I set to replacing flooring and making other upgrades per their request. I should also mention I purchased the building at today’s market value, which, if you’ve been following Portland’s real estate market, is significantly higher than it was even five years ago. In simple terms this means that,

in order to make my monthly mortgage payment on the building, I would need to raise rents to market value. That, coupled with the improvements I was asked to make to the property, basically meant I’d have to pass along some of the marketdriven increase to my tenants.

Bringing rents to market value I discussed this with the management firm who handles the leasing of my properties, A&G Rental Management, and we decided to bring the tenants whose leases were about to expire up to the low end of market-value rent.

For most of my tenants this wasn’t an unreasonable increase. But for one, who had paid the same rent for the past three years, it meant a 45-percent raise in rent.

I can understand that might be hard to swallow. But, again, I was only increasing the rent to the low end of market rates, I was significantly improving the building, and I had to pay my mortgage. I guess that was lost on the tenant whose rent went up 45 percent.

The next thing I knew, I was a target of Portland Tenants United, the activist tenants’ rights group. PTU demonstrated outside my S.E. Ash building, showed up at A&G Management and barged into its offices, yelling and disrupting employees, and set up a demonstration

in my neighborhood of residence, trying to convince my longtime neighbors I was a bad man by handing out flyers and marching up and down my block.

I offered my tenants who were moving out free rent through October of 2016, while we worked out an arrangement— either a new lease or a move-out. I thought we’d reached somewhat of an agreement, but apparently I was too optimistic: PTU members camped-out overnight in front of my house and defecated on my lawn. That’s how the “opposition” to rent increases is handling this situation.

I want to re-emphasize something: I own only three small rental buildings.

Yes, they are investment properties for the long haul, but they’re not a truly profitable enterprise at present. That was never my intention. I own a very small interior architecture business, and that’s where I derive my income. I’m a very small operator, and 80 percent of Portland’s property owners are just like me—small. The housing crisis is not making us rich. At all.

I try to do right by my renters I try—and have always tried—to do right by my renters. I want them to be long-term tenants, and I do everything I can to ensure that. I think the vast majority of property owners probably feel the same way. But when properties are significantly improved—or a new property is purchased at market value— rents must be raised to pay the cost. That’s simply fair.

I’m also a liberal, progressive Portlander, not an “evil landlord.” Representative Kotek mentioned “property owners making excessive profit and benefitting from this housing crisis” in her op-ed. I have neither benefitted nor seen excessive profit from the housing crisis. In fact, it has only given me grief.

The housing crisis is a problem the city helped create Looking at the big picture, we need to build more new affordable housing throughout the Portland area and beyond.

But from what I’ve experienced, the City’s permitting and licensing processes are byzantine—to put it diplomatically— and only serve to slow the process down, oftentimes for inexplicable reasons.

14

Representative Kotek wants to hang the onus on property owners and managers, but it’s a market-driven situation, aggravated by archaic city bureaucracy that’s far out of step with today’s Portland.

That’s what truly needs to be fixed; the market’s health is a good thing overall.

For the sake of tenants, managers and owners, and all of those affected by this incredibly uncomfortable situation, I implore the city and state to work with owners and managers to fast-track the development of more affordable housing.

It’s the only real solution for stabilizing this rental market.

Landon Marsh, Owner, S.E. 119th & Ash Street Apartments Resources: Want to lower housing costs? Increase the supply http://www.oregonlive.com/opinion/index. ssf/2016/01/want_to_lower_housing_costs_in.html Portland Tenants United Picket Housing PAC http://patch.com/oregon/portland/portland-tenants-united-picket-housing-pac Multifamily NW The high cost of rent control http://www.multifamilynw.org/blog East Portland tenants plaster landlord’s neighborhood with flyers http://www.wweek.com/news/2016/09/08/ faced-with-rent-hike-east-portland-tenantsplaster-landlords-neighborhood-with-fliers/ National Multifamily Housing Council http://www.nmhc.org/News/The-High-Cost-ofRent-Control/ Ash Street Tenants Association letter to landlord Landon Marsh https://medium.com/@ptu/dear-landonlandlord-of-the-ash-street-apartments6388a54800e5#.t4gul6i4 Portland tenants publicly shame their landlord http://www.oregonlive.com/portland/index. ssf/2016/09/portland_tenants_publicly_sham. html Portland Tenants United protest housing awards http://koin.com/2016/05/26/portland-tenants-united-protests-housing-awards/ John McIsaac Communications and Public Relations https://www.linkedin.com/in/mcisaaccommunications Oregon’s housing crisis too big to ignore - opinion http://www.oregonlive.com/opinion/index. ssf/2016/10/oregons_housing_crisis_too_big. html

Rental Housing Journal Metro · January 2017

Rental Housing Journal Metro

Home Sales Expected to Expand ...continued from page 2 reaching their prime buying years will keep demand for the most part on solid footing. The key will ultimately come down to what the housing market desperately needs: more inventory.

However, more expensive mortgage rates could also slow the pace of homeowners listing their home for sale.

"Some would-be sellers may be reluctant to move up or trade down – especially if they've refinanced in recent years," said Yun. "That's why it's extremely necessary for homebuilders to step-up their production of homes catered to buyers in the affordable price range. Otherwise the nation's low homeownership rate will struggle to shift higher in 2017."

NAR President William E. Brown, a Realtor® from Alamo, California, says buyers searching for available homes in a tight market next year can get ahead by working with a Realtor® who's very familiar with the buyers' targeted area. "A Realtor® will have their pulse on current market conditions and can ensure a buyer is only searching for and making offers on a home that fits within the budget."

Brighter enthusiasm about the direction of the economy, personal financial outlook mostly unchanged This quarter's survey found that another full year of robust job gains and lower unemployment is finally translating into stronger confidence about the economy.

The share of households believing the economy is improving has increased quite a bit (to 54 percent) since the third quarter (48 percent), and is currently at its highest share since the survey's debut a year ago.

The most optimistic about the economy are those under the age of 44, living in urban areas and with higher incomes.

The HOME survey's monthly Personal Financial Outlook Index,2 showing respondents' confidence that their financial situation will be better in six months, has picked up a tad (to 59.8 in December) since September (58.6) and is mostly in line with the sentiment from respondents a year ago (59.6). In 2016, the index was its highest in May (61.1).

Roughly two-thirds think it's a good time to sell, most expect prices to hold steady or increase With price growth holding steady in most of the country since the summer, roughly the same amount of homeowners (62 percent) believe it is a good time to sell compared to the third quarter of this year (63 percent). As has been the case all year, respondents in the West continue to be the most likely to think now is a good time to sell, while also being the least likely to think it's a good time to buy.

Mirroring current conditions in most markets and unchanged from last quarter, nearly all of those surveyed (91 percent)

believe that prices will stay the same or rise in their community in the next six months. Respondents living in suburban areas, renters and those from the West are most likely to believe prices will go up in their communities.

About NAR's HOME survey In October through early December 2016, a sample of U.S. households was surveyed via random-digit dial, including half via cell phones and the other half via land lines. The survey was conducted by an established survey research firm, TechnoMetrica Market Intelligence. Each month approximately 900 qualified households responded to the survey. The data was compiled for this report and a total of 2,776 household responses are represented.

The National Association of Realtors®, "The Voice for Real Estate," is America's largest trade association, representing over 1.2 million members involved in all aspects of the residential and commercial real estate industries.

1NAR's Housing Opportunities and Market Experience (HOME) survey tracks topical real estate trends, including current renters and homeowners' views and aspirations regarding homeownership, whether or not it's a good time to buy or sell a home, and expectations and experiences in the mortgage market. New questions are added to the survey each quarter to reflect timely topics impacting real estate.

HOME survey data is collected on a monthly basis and will be reported each quarter. New questions will be added to the survey each quarter to reflect timely topics impacting the real estate marketplace. The next release is scheduled for Wednesday, March 15, 2017 at 10:00 a.m. ET. 2Index ranges between 0 and 100: 0 = all respondents believe their personal financial situation will be worse in 6 months; 50 = all respondents believe their personal financial situation will be about the same in 6 months; 100 = all respondents believe their personal situation will be better in 6 mon ths.

Housing Data Reveals Gaps ...continued from page 3 their finances were recovering during a decade of the highest rent appreciation in history.[ix] • Homeowners are disproportionately white and college-educated.

Three-quarters of all homeowners who bought in the past year have a college degree.[x] Zillow's Economic Forum will be held Jan. 11 at the Newseum in Washington D.C. and broadcasted online. For more information about the event and how to register, please visit www.zillow.com/ public-engagement/2017-economic-forum.

Zillow Zillow® is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with the best local professionals who can help. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow's Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Zillow also sponsors the

bi-annual Zillow Housing Confidence Index (ZHCI) which measures consumer confidence in local housing markets, both currently and over time. Launched in 2006, Zillow is owned and operated by Zillow Group (NASDAQ: Z and ZG), and headquartered in Seattle.

Zillow is a registered trademark of Zillow, Inc. [i] Zillow Housing Confidence Index (June 2016) [ii] U.S. Census Bureau: Current Population Survey, March Supplement, 2015, made available by the University of Minnesota, IPUMS-USA [iii] U.S. Census Bureau: Current Population Survey, March Supplement, 2015, made available by the University of Minnesota, IPUMS-USA [iv] http://www.zillow.com/research/ first-time-homebuyer-profile-11188/ [v] Zillow analysis of U.S. Census Bureau Housing Vacancies and Homeownership (CPS/HVS), 2016, made available by the University of Minnesota, IPUMS-USA [vi] Zillow analysis of 2015 HMDA records and Zillow analysis of U.S. Census Bureau, American Community Survey, 2015, made available by the university of Minnesota, IPUMS-USA [vii] http://www.zillow.com/research/social-mobility-housing-costs-12138/ [viii] http://www.zillow.com/research/affordability-2016q1-12763/ [ix] http://www.zillow.com/research/homeownership-rate-us-housing-12961/ [x] Zillow Group Report on Consumer Housing Trends

Text REALESTATE-ROI to 44222 to receive a digital copy of this year's

Real Estate Opportunities in Investing (ROI) Finding Investing Success in Today's Housing Market

Information about NAR is available at www. nar.realtor. This and other news releases are posted in the "News, Blogs and Videos" tab on the website. Some statistical data in this release, as well as other tables and surveys, are posted in the "Research and Statistics" tab. Follow NAR Media's Newsline blog at http://narnewsline.blogs.realtor.org and Twitter at @NARMedia.

SOURCE National Association of Realtors Related Links http://www.realtor.org

Rental Housing Journal Metro · January 2017

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Rental Housing Journal Metro

Home Values Rise ...continued from page 8 Metropolitan Area United States New York, NY Los Angeles-Long Beach-Anaheim, CA Chicago, IL Dallas-Fort Worth, TX Philadelphia, PA Houston, TX Washington, DC Miami-Fort Lauderdale, FL Atlanta, GA Boston, MA San Francisco, CA Detroit, MI Riverside, CA Phoenix, AZ Seattle, WA Minneapolis-St Paul, MN San Diego, CA St. Louis, MO Tampa, FL Baltimore, MD Denver, CO Pittsburgh, PA Portland, OR Charlotte, NC Sacramento, CA San Antonio, TX Orlando, FL Cincinnati, OH Cleveland, OH Kansas City, MO Las Vegas, NV Columbus, OH Indianapolis, IN San Jose, CA Austin, TX Zillow Zillow® is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with the best local professionals who can help. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow's Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100

Zillow Home Value Index (ZHVI) $192,500 $400,500 $590,000 $203,400 $200,400 $213,800 $176,000 $378,000 $245,200 $172,300 $408,400 $824,600 $134,400 $318,200 $228,900 $412,600 $235,000 $526,500 $147,800 $177,200 $256,600 $352,800 $133,400 $351,800 $166,600 $350,200 $156,200 $198,100 $147,800 $130,600 $151,900 $213,700 $160,400 $133,600 $961,600 $259,800

Year-over- Year ZHVI Change 6.5% 6.0% 6.3% 5.0% 12.0% 4.1% 7.0% 2.9% 8.8% 7.5% 6.1% 4.9% 9.4% 6.7% 6.9% 12.2% 6.6% 6.1% 6.8% 11.2% 3.6% 9.7% 4.8% 14.1% 7.1% 7.5% 6.5% 9.9% 5.6% 5.2% 5.9% 9.6% 3.9% 1.5% 4.3% 8.4%

leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Zillow also sponsors the bi-annual Zillow Housing Confidence Index (ZHCI) which measures consumer confidence in local housing markets, both currently and over time. Launched in 2006, Zillow is owned and operated by Zillow Group (NASDAQ: Z and ZG), and headquartered in Seattle.

Zillow and Zestimate are registered trademarks of Zillow, Inc. The Zillow Home Value Index (ZHVI) is the median estimated home value for a given geographic area on a given day and includes i

Zillow Rent Index (ZRI) $1,403 $2,389 $2,616 $1,637 $1,556 $1,574 $1,562 $2,123 $1,879 $1,329 $2,322 $3,385 $1,169 $1,742 $1,301 $2,095 $1,552 $2,436 $1,123 $1,336 $1,729 $2,006 $1,081 $1,802 $1,244 $1,707 $1,324 $1,383 $1,243 $1,145 $1,241 $1,243 $1,293 $1,188 $3,486 $1,701

Year-over- Year ZRI Change 1.5% 0.5% 5.2% -0.1% 4.0% 1.0% -1.1% 0.6% 3.1% 4.3% 3.5% 1.8% 3.2% 3.1% 4.1% 8.8% 3.3% 5.2% 0.1% 3.2% 0.7% 2.8% -1.4% 7.1% 1.8% 6.8% 1.6% 3.1% 1.5% 1.6% 3.8% 2.4% 1.7% 0.3% 1.9% 0.9%

the value of all single-family residences, condominiums and cooperatives, regardless of whether they sold within a given period. It is expressed in dollars, and seasonally adjusted.

The Zillow Real Estate Market Reports are a monthly overview of the national and local real estate markets. The reports are compiled

by Zillow Real Estate Research. For more information, visit www.zillow.com/research/.

The data in Zillow's Real Estate Market Reports are aggregated from public sources by a number of data providers for 928 metropolitan and micropolitan areas dating back to 1996. Mortgage and home loan data are typically recorded in each county and pubii

Year-over-Year Inventory Change -5.9% -10.4% -7.1% -10.2% -13.9% -12.3% 0.6% -18.8% 11.8% -5.7% -25.5% -5.0% -17.2% -8.1% -1.4% -6.5% -18.2% 2.8% -14.5% -10.7% -16.0% 4.0% 0.3% -3.6% -10.4% -6.3% 12.8% -11.1% -16.3% -10.8% -20.5% 26.0% -18.9% -20.7% -14.4% 11.9%

licly available through a county recorder's office. All current monthly data at the national, state, metro, city, ZIP code and neighborhood level can be accessed at www.zillow.com/local-info/ and www.zillow.com/ research/data.

SOURCE Zillow - http://www.zillow.com

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Dear Maintenance Men ...continued from page 9 Dear Rick: You are very lucky it was you and not one of your resident’s children that found out about the dangers of a tipping oven.

First let us explain what a tipping oven is: Most stoves with an oven are free standing appliances. The stove is placed in the kitchen, gas or electrical lines are installed and it is ready for use, very simple. The issue arises when a resident is using the stove and they or a child opens the oven door and puts weight on the open door. This causes a cantilever effect

legs to slide into. Replacement parts are available at any hardware or home center stores, however, if not installed, there is a good chance, it is still in the plastic bag tied to the back of the stove. Shut off the circuit breaker or gas line feeding the stove, carefully slide the stove away from the wall, ensure a bracket isn’t installed (the last time the stove was slid against the wall it may have simply missed the bracket) and if not installed, search around for the original plastic bag.

Hopefully, the instructions and template is still in the bag.

Keep in mind installing an anti-tipping bracket is both a resident safety issues as well as an owner liability issue. This is a $10.00 part and a ten minute install that will keep both you and your resident out of hot water.

Bio:

which may pitch the whole stove forward causing the stove top pots or pans to fly off the stove and onto the person or child in front of the stove. Best case scenario is this causes a mess in the kitchen and worse case is a resident or child is badly burned or disfigured. It is not uncommon to hear about a small child wanting to see what Mommy is cooking by using the oven door as a stepping stool or even more common, removing a turkey, roast or other large item from the oven and placing it on the open door. The extra weight is enough to tip the stove forward.

The solution is an “anti-tip bracket” installed behind the stove. An anti-tip bracket is “L” shaped and usually installed on the floor and against the wall (towards the back of the stove) for one of the rear

If you need maintenance work or consultation for your building or project, please feel free to contact us. We are available throughout Southern California. For an appointment please call Buffalo Maintenance, Inc. at 714 956-8371 Jerry L'Ecuyer is a licensed contractor & real estate broker. He is currently on the Board of Directors and Chairman of the Education Committee of the Apartment Association of Orange County. Jerry has been involved with apartments as a professional since 1988.

Frank Alvarez is the Operations Director and co-owner of Buffalo Maintenance, Inc. He has been involved with apartment maintenance & construction for over 20 years. He is also a lecturer & educational instructor. Frank can be reached at (714) 956-8371 Frankie@BuffaloMaintenance.com For more info please go to: www.BuffaloMaintenance.com

Is My Uber Driver Holding ...continued from page 10 married to a partner earning $20,000 per year, their benefits would be cut by almost one-half.

• Welfare benefits: A single parent earning $20,000 per year who married a partner earning the same amount would stand to lose about $12,000 per year in welfare benefits.

• Income taxes: Unmarried parents could face a penalty as large as 12% of their combined income by filing their taxes as a married couple. For lower-income households with children, these penalties result from a smaller Earned Income Tax Credit (EITC), as combining the parents’ incomes could easily phase them out of the eligible range.

• An unmarried couple from California, each making $25,000, with two children would pay about $3,450 more in taxes if they got married and filed jointly because they would no longer be eligible for EITC. (With two children, combined income for a married couple must be under $49,974.)

Government influences demographics and housing I don’t want to get into the pros and cons of these specific government policies, nor hear anyone’s political views, please. I am not suggesting that these are good or bad policies. My goal is to help building industry executives recognize that these policies clearly have some unintended consequences that are likely holding back the housing market.

John Burns’ new book is on sale and called “Big Shifts Ahead.” The huge demographic shifts are explained and quantified for decision makers in the book with co-author Chris Porter.

In the book Burns explains, “We developed something we call the 4-56 Rule, where 4 stands for the Four Big Influencers that have impacted demographic behavior over time.

Government is one of the four influencers.

It has had huge impacts over time, from establishing and eventually running the mortgage industry we have today to investing in the infrastructure that created suburbia in the 1950s and 1960s.

Government has also made many changes to immigration law over the years. All forecasts for the housing market need to consider current and likely future government policies.

P.S. As an interesting side note, it turns out that it makes financial sense for this same couple to get married much later in life. The lower earner can receive much higher Social Security benefits, and the survivor will receive estate tax benefits.

This article courtesy of John Burns Real Estate Consulting.

About the Author: John Burns founded the company to help executives make informed housing industry investment decisions. The team enables the profitable development and ownership of the best places to live in the world through great research for industry executives and their investors. The team’s consultants and analysts navigate their clients through housing cycles, helping them satisfy homebuyer and renter demand.

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Your Residents Can't Recycle ...continued from page 1 1) Walk new residents through the system: Include the garbage and recycling collection areas with the move-in tour and show them where to put recyclables.

2) We have free brochures and refrigerator magnets to include in lease-up packets. Order now and we’ll keep you stocked!

3) Consider a recycling lease addendum: Encourage new residents to manage recycling correctly while discouraging noncompliant behaviors.

We offer template language for recycling lease addendums.

4) Set clear and consistent expectations about cardboard boxes, foam peanuts and other packaging materials: Instruct residents to break down cardboard boxes for recycling and provide information about where to drop-off packing peanuts and other materials that aren’t accepted onsite for recycling. Consider providing these guidelines at lease-up!

5) Use a similar approach for bulky waste at holidays and move-outs: A lease addendum can include fines for leaving furniture, mattresses and electronics in the trash. Consider creating a swap room for reusable materials!

Provide ongoing education Don’t stop the recycling education after move-in time! Keep all residents up to speed on how garbage and recycling works through regular, ongoing education.

If you have any regular meetings with residents, consider devoting a portion of the agenda to recycling education or a question and answer session.

Make sure all residents know how to dispose of items not accepted in the garbage and recycling area. This includes: • Electronic devices including computers, monitors and TVs. • Materials not recyclable onsite including, plastic bags, Styrofoam and light bulbs.

• Bulky waste like furniture and mattresses.

• Batteries, paint, motor oil, compact fluorescent light bulbs and other household hazardous waste

accumulating and creating a sanitary hazard between collections.

• Inform new residents. You’re responsible for providing new residents with information on how to recycle within 30 days of move-in.

• Conduct an annual reminder. Update existing residents on how to recycle at least once a year. An easy to use system and regular, ongoing education keeps residents up to speed on how garbage and recycling work.

Provide regular reminders Update residents on what is recyclable.

From “Green Tip” articles for a monthly newsletter to recycling door hanger cards — we have free tools and resources designed specifically for multifamily properties. Research shows that posting two or three reminders (signs, brochures, updated stickers on roll carts) can improve recycling at your property.

How to select a commercial garbage and recycling company in Portland Unlike surrounding cities, Portland’s multifamily property owners and managers select a garbage and recycling company from over three dozen Citylicensed businesses. We can provide a list of commercial companies, as well as offer guidelines to choosing the service you want for your property.

Get ahead of holiday waste Residents generate extra garbage during the holidays. Early communication goes a long way towards ensuring proper disposal and controlling the costs of extra garbage.

Provide guidance around recurrent concerns such as holiday tree disposal.

Don’t forget the City of Portland’s garbage and recycling requirements for multifamily properties Owners and managers of multifamily properties are required to provide and pay for adequate garbage and recycling service: • Provide adequate service. Get the right combination of garbage and recycling containers to allow recycling of all permitted materials. Prevent garbage from

• Ask for recommendations. Connect with other property managers in your company or in the neighborhood.

Learn about how their garbage and recycling company is working for them.

• Obtain multiple bids and negotiate. Reach out to several different companies. Select the one that will provide the best services for your community.

Cost, number and size of containers, frequency of service and days of collection are all negotiable.

• Identify the best location. Ensure collection trucks easily access your collection system. When possible, outside is best. The company you select will provide the roll carts and containers for garbage and recycling collection.

• Ensure containers are in working condition. They must have up-to-date photo and text stickers that clearly identify the items that can go inside. We have free stickers in a variety of languages.

Establish a successful relationship your garbage and recycling company to help you establish and maintain a clean, effective and successful collection area. Contact them with: • Questions about recycling and composting.

• Requests for collection of bulky items, such as furniture and mattresses.

• Service requests to adjust containers, collection time, days and frequency.

• Questions about billing and account information or other concerns.

Free tools and resources from the City of Portland We can help you prevent mistakes with waste before they happen at your multifamily property. And save time and money in the process.

Sign up for our Multifamily Matters e-newsletter and get free tips, resources and technical assistance delivered to your inbox. Multifamily Matters will help you manage your property in an effective and sustainable manner with every-othermonth emails. You’ll find something in each issue aimed to make your workload just a little bit lighter.

Call us at 503-823-5054 or email multifamily@portlandoregon.gov with questions, concerns or requests for assistance and information.

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Market Overview ...continued from page 12

The information contained in this report was prepared for general information purposes only and is not intended as legal, tax, accounting or financial advice, or recommendations to buy or sell currencies or securities or to engage in any specific transactions. Information has been gathered from third party sources and has not been independently verified or accepted by RED Capital Group. RED makes no representations or warranties as to the accuracy or completeness of the information, assumptions, analyses or conclusions presented in the report. RED cannot be held responsible for any errors or misrepresentations contained in the report or in the information gathered from third party sources. Under no circumstances should any information contained herein be used or considered as an oer or a solicitation of an oer to participate in any particular transaction or strategy. Any reliance upon this information is solely and exclusively at your own risk. Please consult your own counsel, accountant or other advisor regarding your specific situation. Any views expressed herein are subject to change without notice due to market conditions and other factors.

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