Rental Housing Journal Valley March 2016

Rental Housing Journal Valley

March 2016

2. Oregon’s Bill 4134 and How it May Effect You Commercial Real Estate Experts – Mopderate Expansion, Easing Prices Expected in 2016

3. Ask the Secret Shopper – Don’t Have A Vacant Apartment to Show?

6. Rents to Flatten in 2016

EUGENE · SALEM ·ALBANY · CORVALLIS WWW.RENTALHOUSINGJOURNAL.COM • PROFESSIONAL PUBLISHING, INC

Why Buy Earthquake Insurance?

By Cliff Hockley, President Bluestone & Hockley Real Estate Services

M

any of our clients have asked us over the years if they should purchase earthquake insurance.

This is a difficult question to answer specifically because every property is constructed differently (i.e. wood, masonry, concrete, metal) and is located on different soil(i.e. clay, rock, sand). The height of the building also makes a difference.Imagine the impact on a one story building versus a thirtystory unreinforced masonry building.The age of the building, and the code requirements in every state and city, need to be taken into consideration as well.

Most importantly, building owners want to know what risks their buildings face located in the Cascadia subduction zone, a seismic area that encompasses the coastal areas of Northern California to Vancouver Island and inland to I-5.

T

he Fair Housing Act protects people from discrimination when they are renting, buying, or securing financing for any housing transaction. The Fair Housing Act specifically cover’s discrimination because of race, color, national origin, religion, sex, disability and the presence of children. (Provided by HUD)

Fair housing laws prohibit illegal housing discrimination.

Discrimination is illegal in any housing situation if it is based on, or adversely affects, a “protected class.” That is, if someone is denied a home, is treated differently, or is harassed because of one of the reasons listed below, it is illegal.

Consistency is Key!

1. Remember to be consistent within your daily job performance & Interactions when dealing with residents, prospective residents and their guests 2. Never make assumptions regarding a. Disabilities b. If an animal is a companion or pet c. Treat everyone the same!

Discrimination is sometimes deliberate or unintentional due to lack of Fair Hous-

The Impending Risk

In the cover story in theJuly 2015 edition of the New Yorker Magazine titled,“TheReally Big One:Anearthquake will destroy a sizeable portion of the coastal Northwest.”Author Kathryn Schulz pointed out, “we now know that the odds of the big Cascadia earthquake happening in the next fift y years are roughly one in three. The odds of the very big one are roughly one in ten.”

Chris Goldfinger, professor and paleoseismologistat Oregon State University, is an expert in seismic and tectonic studies and one of the main sources of the New Yorker article. In 2011, he also authored a comprehensive studyon the Cascadia subduction zone for the US Geological Survey based on 13 years of research that exposed a pattern of earthquakes reflected in the region’s earthquake history.

“Over the past 10,000 years, there have been 19 earthquakes that extended along most of the margin, stretching from southern Vancouver Island to the Ore-

continued on page 4 Professional Publishing Inc., PO Box 6244 Beaverton, OR 97007

Fair Housing Facts & Tips

ing knowledge toward residents, prospective residents & their guests that fall into any protected class category More often than not discrimination occurs during the leasing process while dealing with prospective residents.

BE CAREFUL!

The information and purpose of leasing and Fair Housing is not to scare you out of the industry. It is an extremely important part of the job performance and expectation. Fair Housing classes will give

continued on page 5

EPA Cracks Down On Lead Violations

By Jo Becker, Education/Outreach Specialist, Fair Housing Council of Oregon

L

ate last year the Environmental Protection Agency (EPA) announced it took action against 75 renovation contractors and others to protect people from harmful lead dust and debris exposure, as required by federal Lead-based Paint Renovation, Repair, and Painting (RRP) regulations.

PRSRT STD US Postage PAID Portland, OR Permit #5460

These cases show EPA is cracking down on businesses and renovators who ignore federal requirements that have been in effect for several years now. These requirements apply to many repairs and renovations done to painted surfaces in homes

and daycare facilities built prior to 1978.

Pre-78 properties are of concern, as they are a major source of lead exposure that can cause lead poisoning, especially in our nation’s young children. continued on page 5

Advertise in Rental Housing Journal Valley Circulated to over 6,000 apartment owners, on-site and maintenance personnel monthly.

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Rental Housing Journal Valley

Oregon’s House Bill 4143 and How It May Affect You

I

Commercial Real Estate Experts Moderate Expansion, Easing Prices Expected in 2016

f you have been following Oregon’s income. Property owners that have been 2016 legislative session, you know that apprehensive to raise rents in lieu of scarespite various global and domesthere have been two hotly debated bills ing away their long term tenants may now tic hurdles hindering econombrought before our elected officials that find themselves more comfortable with ic growth, steady job gains and will have an impact on real estate. One be- the idea of moving their rents to current ing the Oregon’s new minimum wage in- market values. For those owners, there stable leasing demand should help keep crease which was signed into law by Gov. are a couple of important items to factor in commercial real estate activity expanding Kate Brown on March, 2nd 2016. The oth- now that HB 4143 has passed with regards in 2016, according to the authors of an aner being HB 4143 which addresses sever- to noticing tenants including no rent in- nual report published jointly by Situs Real al topics having to do with rent increases creases within the first year of month to Estate Research Corporation (RERC), and evictions. HB 4143 as of the writing of month tenancy and 90 day notice after Deloitte and the National Association this article has passed the Oregon House that period. Also changing is the increase of Realtors®.

According to the report, Expectations and Senate and is expected by most to be- to 90 days notice for no cause evictions. & Market Realities in Real Estate 2016— come signed into law by Gov. Brown. Law If you are confident in your manageNavigating through the Crosscurrents, makers have added the following emer- ment abilities and enjoy the income these gency declaration as the last piece of that properties produce for you, I would en- commercial real estate activity is forecast bill making it effective immediately upon courage you to do a couple things. First to gradually grow this year with demand VALLEY, METRO, ARIZONA APT. NEWS its signing. would be to educate yourself. Make sure for space holding steady across all com“This 2016 Act being necessary for the that you are up to snuff with changing mercial sectors. While commercial propimmediate preservation of the public landlord/tenant laws. If you are not well erty values and price gains are expected peace, health and safety, an emergency is versed, join a local association like Ore- to flatten after surpassing 2007 peaks in declared to exist, and this 2016 Act takes gon Rental Housing Association. They some major markets, investors will still have several local chapters throughout benefit from the strong income flows geneffect on its passage.”

Our firm has had many discussions over the state and can help you with the forms erated from new and existing leases.

Feb, Apr, Jun, Aug, Oct, Dec The fift h annual release of the joint rethese two bills with the general public, and knowledge that you need to protect property owners, and other real estate in- yourself from liability. If you don’t have port draws on the three organizations’ dustry professionals and it is the opinion the time or desire to learn, seek the help respective research and expert analysis and offers an objective outlook on comof most that the momentum was driven of a professional management company.

For owners who self-manage and are mercial real estate through forecasts and by historically low vacancies and rapidly rising rents. These trends were primarily fed up with the increasing difficulties that commentary on the current economy, effecting the Portland and Bend rental new “tenant protection” legislation is cre- capital markets and commercial real esmarkets in recent years but have made ating, it is my opinion that now is the ide- tate property markets. A research-based their way down the Willamette Valley al time to plan your exit strategy and take assessment of the office, industrial, apartadvantage of a strong sellers’ market. In ment, retail and hotel property sectors is into the Salem-Keizer area.

According to the speaker at an event addition to the rents moving up, we are also provided.

“Historically low interest rates, espeI recently attended put on by the Salem seeing a significant rise in property values Rental Housing Association, renters are for 2-4 unit multifamily properties in the cially in treasuries, combined with commercial real estate’s stable prices and value becoming more organized. HB 4143 is the Mid-Valley. make this asset an attractive investment,” tip of the iceberg and is actually a combiChris Salaz is Small Plex Broker at VALLEY, METRO, ARIZONA APT. says KenNEWS Riggs, president of Situs RERC. nation of HB 4143/HB 4001. Ideas from SMI Commercial Real Estate, LLC .

“Looking into 2016, the commercial real Please contact Chris if you would both bills were combined to make them be interested in receiving SMI’s free estate market should moderate, which more palatable for law makers to pass. As bi-annual newsletter which includes the calls grow louder and more frequent the most comprehensive rent and could stabilize prices.” vacancy survey in the mid-valley, the for tenant protections, Oregon’s law makSMI Apartment Update. ers will undoubtedly be introducing more legislation in the coming years to appease their constituents.

Jan,wage Mar, May,to Jul, Sep, Nov, With the minimum scheduled 1010 East 62nd Street, Los Angeles, CA 90001-1598 rise over the next several years many tenPhone: 1-800-624-5269 • Fax: 1-800-624-5299 ants will find themselves with additional

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Vacancies are expected to continue to decline slightly in 2016 for all property types, except in the apartment sector, where they are forecast to increase modestly by the end of the year as more new project completions come onto the market. Continued job growth, demand exceeding supply and limited new construction (outside of multifamily) should lead to rising rents and steady investor returns, which overall will shift away from capital appreciation as price growth levels off in many markets.

Continuing on the same slow trajectory seen for many years, the U.S. economy – facing headwinds from a rising dollar, financial market volatility and geopolitical concerns – is forecast to grow at a rate of 2 percent to 3 percent in 2016, which is stronger than most global economies and enough to generate around two million net new jobs over the next year. Deflationary pressures related to low gasoline and energy prices are expected to diminish by mid-2016, in part because of robust growth in apartment rents.

“Supported by solid hiring in most parts of the country, the demand for ownership and rental housing will continue to increase in 2016 despite another year of meager economic expansion,” says Lawrence Yun, NAR chief economist. “While supply shortages will weigh on housing affordability and push home prices and rents higher, the housing sector will keep the U.S. economy afloat and lead the residential investment component of GDP growth by up to 10 percent this year.”

SOURCE National Association of Realtors

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CCB# 155631 Rental Housing Journal Valley · March 2016

Rental Housing Journal Valley

sk The Secret Shopper Don’t Have a Vacant Apartment to Show?

W

hile market conditions remain strong, there may be times when you find yourself in a situation where you have no apartments to show. Maybe you don’t have a model or you’re in a make ready process with the vacant apartments that are available. Here is the question:

Q

I know I shouldn’t show an apartment that isn’t ready, but I hate to ask someone to come back. Everyone is so busy I just don’t think they’ll make the time to come back for another visit. What can I do?

A

First of all, you do not have to show an apartment in order to rent one. While many people are “visual” and having a model or vacant apartment to show may seem like an advantage, it is not the only sales tool you have at your disposal. Here is what can happen when there is no apartment available to show: With a diagram of a 2 bedroom, the consultant “walked me through” the apartment as though we were inside. She used the terms “you” and “yours” during the entire “visual” tour. She pointed out the various storage areas, and also showed me the shelf and cabinet over the washer and dryer. The consultant used descriptive words like “oak cabinetry” and “spacious breakfast bar.” She mentioned the wood-burning fireplace and vaulted ceilings, and pointed out the fireplace and indicated where the ceiling begins to get higher. The consultant also helped me visualize what type of furniture would fit in each room.

When the apartment “presentation” was completed, the consultant walked me over to the location of the upcoming apartment. She pointed out and described the amenities we saw along the way and discussed the proximity of each one to the apartment. She indicated where I and my guests could park. Standing outside the apartment, the consultant pointed out other advantages to this location. She drew my attention to the private patio, nearby fountain and lush landscaping.

She also mentioned the friendly neighbors upstairs and next door.

Once the leasing consultant confirmed I was pleased with what I had learned about the apartment and community,

she asked if I would like to put a hold on the apartment until it was ready to view.

When I declined, she told me she understood my hesitation since I had not actually seen the apartment. However, she reminded me it was the only one she had coming available; without a deposit she couldn’t hold it for me. As I continued to hesitate, she told me my deposit would be fully refundable if I did not like the apartment once I saw it.

As you can see, having no apartment to show did not hamper the leasing consultant’s ability to sell AND close the sale! In fact, it was quite the opposite: She became even more creative in selling her product!

She had the opportunity to go the extra mile and “create a visual,” and she took advantage of it. The prospective renter in this situation got a more comprehensive tour when there was no apartment available to show!

Remember: You only get one chance to make a good first impression. Selling what you have to offer will increase your leasing ratio. Rather than demonstrating a dirty apartment or asking the client to come back, put your product knowledge to the test: Give a thorough presentation with whatever sales tools you have at your disposal, and then close the sale. Once you rent that last vacant apartment sight unseen, you will have the confidence to prelease all those upcoming notices . . .

If you are interested in leasing training or have a question or concern you would like to see addressed, please reach out to me via e-mail. Otherwise, please contact Jancyn for your employee evaluation needs: www.jancyn.com ASK THE SECRET SHOPPER Provided by: Joyce (Kirby) Bica Former owner of Shoptalk Service Evaluations Consultant to Jancyn Evaluation Shops E-mail: shptalk2@gmail.com Copyright © Joyce (Kirby) Bica

Rental Housing Journal Valley · March 2016

3

Rental Housing Journal Valley

Earthquake Insurance ...continued from page 1 gon-California border,” Goldfinger noted in a 2012 OSU news release on the paper.

“These would typically be of a magnitude from about 8.7 to 9.2 – really huge earthquakes.We’ve also determined that there have been 22 additional earthquakes that involved just the southern end of the fault,” he added. “We are assuming that these are slightly smaller – more like 8.0 – but not necessarily. They were still very large earthquakes that if they happened today could have a devastating impact.”

Jay Patton, a co-author on the study, added, “By the year 2060, if we have not had an earthquake, we will have exceeded 85 percent of all the known intervals of earthquake recurrence in 10,000 years. The interval between earthquakes ranges from a few decades to thousands of years, but we already have exceeded about three-fourths of them.”The last major earthquake along the Cascadia subduction zonewas estimated to have occurred in approximately 1700.

The Predicted Impact

What that mean to owners of Pacific Northwest properties is that there is a risk and we need to prepare for it.A 2011 Cascadia earthquake study by the Federal Emergency Management Agency (FEMA) estimated that only 20 percent of the buildings located in the Portland Metro region would escape damage; the other 80 percent would suffer damage from slight to complete loss.

Table 1: Analytical Baseline Study for the Cascadia Earthquake and Tsunami (Source: FEMA, November 18, 2011) Commercial Metro Outside Metro Total

None 6,759 14,333 21,092

Slight 10,106 7,596 17,702

Moderate 12,270 11,878 24,148

Extensive 4,647 7,904 12,551

Complete 461 3,072 3,533

Total 4,242 44,785 79,027

Statewide, the report predicted that about 27 percent of commercial buildings would survive without damage, and 22 percent would suffer slight damage. The remaining buildings which would suffer moderate damage (31 percent) or extensive damage (16 percent)or will be completely destroyed(4 percent)will not be unusable for commercial purposes. More importantly, the Oregon and Washington coastline will most likely be swamped with a tsunami.

It predicted that the most dangerous impact at the 9.0 scale will be felt all along the Oregon coast and be particularly devastating to the coastal communities of Crescent City, California; Cannon Beach and Warrenton in Oregon; as well as the Moclips/ Westport area in Washington. It will include a tsunami and the following impacts along the I-5 corridor.

This major FEMA study also included significant details regarding the infrastructure impact of such a large earthquake: Electric power: Extensive electric power outages would be experienced throughout the region. Outages could last several weeks along coastal areas but most customers in

other areas are expected to have power restored within 1 to 8 days.

Natural Gas: Damage to both the transmission and distribution pipeline networks in the affected region could cause the majority of customers in western Washington and western Oregon to lose natural gas service. Many homes may lose all sources of heating due to the combined effects of natural gas and electric power outages.

Telecommunications: Major undersea transpacific cables are likely to be severed; disrupting communication service to East Asia as well as between Alaska and the contiguous United States, with a two- to three-month expected restoration time.

Transportation Fuels: A significant number of pump stations along the Olympic and Oregon Line refined-product pipeline system, as well as a substantial number of refined product terminals in the region, are expected to sustain considerable damage; the inability to store and distribute fuels locally is likely to have a major impact on regional fuel supplies.

Road Transportation: Significant damage to roads can be expected, particularly those along the coast and connecting the coast to the I-5 corridor. U.S. 101 is expected to suffer substantial damage due to both ground shaking and tsunami, resulting in a limited capacity to carry traffic for several months. Nearby coastal areas may be isolated for a short period.

Water Transportation: Tsunami damage at the mouth of the Columbia River is likely to impact navigation and the ability to export agricultural commodities.

Rail Transportation: Long-term rail traffic disruptions along the I -5 corridor and a complete loss of key rail bridges in the Olympia and Seattle area and downtown Portland are expected.

Banking and Finance: Loss of major transpacific undersea cable capacity would affect transoceanic commerce, settlement, and transpacific financial market exchanges.

Emergency Services: Widespread damage to police stations, fire stations, and hospitals along the coast is expected.

Health Care: The potential of 15,000 to 30,000 casualties and the expected loss due to damage of 15-27 hospitals comprising 524-1708 regular beds and 60-228 critical bed facilities concentrated near the coast would be sufficient to saturate the excess capacity of other hospitals within a 250- mile range of the worst damage.

Water and Wastewater: Disruptions to potable water supply are expected with restoration times of three weeks to seven months with the greatest damage and restoration times occurring near the coastline.

It is clear that the impact for a 9.0 earthquake will affect many businesses. Many small companies, because they lack the financial resources to survive, will be put out of business. This will have a direct impact on residential and commercial investments since businessesleasing commercial space might fail due to a lack of power, fuel, and communications.If some commercial tenants fail due to the earthquake, then many people will be left without the incometo pay residential rent with. continued on page 7

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503-933-6437 Rental Housing Journal Valley · March 2016

Rental Housing Journal Valley

Fair Housing Tips ...continued from page 1 you the understanding of pitfalls of falling into possible discrimination in Fair Housing. It also prepares and gives the tools necessary to help avoid complaints.

Here are a few examples that occur during leasing:

Example: Oh my, your children are beautiful! I have the perfect home for you on the ground floor by the playground! I am so excited to show you this apartment Intention: More than likely the leasing associate has the best intentions for the prospective residents, it is still DISCRIMATION. Perception: This is discrimination in the form of Steering, and could prompt a complaint.

Correct Action: Anyone applying for an apartment can live in any available unit and must be show the same apartments as anyone applying Prevention: EDUCATE, EDUCATE, EDUCATE! It is necessary to make certain that the associates working for you are knowledgeable and trained to minimize the risk to you and your company

Perception: This could be construed as discrimination base on the fact that these types of doodles and or comments were not present on all guest cards. These guest cards would be brought into question should a complaint be filed Remember not to doodle or make marks on applications, guest cards or any paperwork related to prospect or resident

Fair Housing Laws apply to: • Owner / Agents

• Property Management Companies • Maintenance, Leasing & Administrative staff • Outside Vendors such as Landscapers, Painters, • Exterminators, Insurers, etc.

• Real Estate Agents, Brokers, Lenders • Homeowners & Condo Associations • Individuals, Corporate & Business Owners • Architects, Engineers

Ignorance Of The Law Is No Excuse!

Builders,

Developers,

• Responsibility is non-delegable

Discrimination is Discrimination!

Unfortunately, even the best of intentions of the leasing consultant can put them, the owner and Management Company at risk. Make no mistake, Fair Housing and discrimination is real and happens.

EPA Cracks Down ...continued from page 1

• Ignorance of the law is no excuse A couple of thoughts, ask your associates and how they would address these scenarios in the leasing process? (In red are common answers and or thoughts your will receive from the well intentioned leasing associates and are discriminatory, in my experience during training)

Learn about the Federal, State and Local protected class on The Fair Housing website http://fhco.org

• Women with 2 young children? Do not make assumptions! . This women and children will be quite, I can put them upstairs

My best advice is Document, Document, and Document!

• Married couple with 2 teen aged boys? . Those boy are going to be trouble

Documentation

• Married couple with 1 teen aged girl? . Quite residents

How does documentation have the potential for a complaint?

Example: You may have a star on one guest card and not another or you may have written she is so sweet make a great resident!

Intention: You really liked that prospect and really thought they would make a great resident and noted as much on their guest card

The RRP Rule, which is part of the federal Toxic Substances Control Act, is intended to ensure that owners and occupants of pre-1978 “target housing” and “child-occupied facilities” receive information on lead-based paint hazards before renovations begin, that individuals performing such renovations are properly trained and certified, and that renovators follow specifically prescribed lead-safe work practices to reduce the potential for exposure to lead for all, including workers.

Renovators are required to give the pamphlet to property owners and occupants within 60 days before starting a renovation. Housing providers, similarly, have obligations to notify residents prior to covered repairs and renovations, to share informational literature with them, including a disclosure form, and to be lead-safe certified or hire a contractor who is.

To protect yourself and your investment, it’s important, that you assure the contractors you hire are in fact lead-safe certified and complying with the EPA’s safe work practice requirements. To learn more about what repairs are covered and what these work-safe practices are, visit http://www.epa.gov/sites/production/files/documents/renovaterightbrochure.pdf.

The EPA reported that rough twothirds of the cases they recently settled involved failure to obtain EPA certification prior to conducting renovations. Over half the cases were related to violations of required safe work practice standards.

The EPA states its aim in seeking penalties against RRP violators is to help deter other violations and to level the playing field for companies that do follow the law.

Such fines and settlements help eliminate the financial advantage a violator may get by underbidding competitors that are compliant.

You can read the full EPA media release here: http://yosemite.epa. gov/opa/admpress.nsf/0/0D3D2DBE30561BAD85257EEB00698FC7 ‘Looking for a lead-safe contractor or want to become certified yourself in order to do work on your own properties?

Call the Leadline for free information at 503/988-4000.

A reminder that although lead poisoning is especially dangerous for kids, the fear of lead poisoning or liability does not give housing providers the right to deny or discourage families with children away from pre-1978 housing. Familial status is a protected class under federal fair housing law1 and doing anything to deny or discourage otherwise qualified families is illegal. Visit www.FHCO.org for more information on this topic.

This article brought to you by the Fair Housing Council; a civil rights organization. All rights reserved © 2016.

Federally protected classes under the Fair Housing Act include: race, color, national origin, religion, sex, familial status (children), and disability. Oregon law also protects marital status, source of income, sexual orientation, and domestic violence survivors. Additional protected classes have been added in particular geographic areas; visit www.FHCO.org for more information.

Discrimination is real and can be prevented!

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Rental Housing Journal Valley

Rents to Flatten in 2016

A

fter years of record rent appreciation, Zillow’s rental forecast shows relief in sight for cashstrapped renters.

• National median rent at the end of 2015 was $1,381, and is expected to increase slightly to $1,396 over the next 12 months.

• The slowdown in rents means that, by the end of the year, they will be rising at a slower pace than incomes in many markets.

• In December, home values rose 4 percent to a Zillow Home Value Index of $183,500.

Rent appreciation will level off over the next 12 months, slowing to an annual rate of 1.1 percent by December 2016, according to the new Zillow® Rent Forecasti. The national Zillow Rent Indexii at the end of 2016 is projected to be $1,396 -- compared to $1,381 in December 2015.

Zillow is forecasting a decrease in the rate of rental appreciation amid a rental affordability crisis that has renters in some markets spending almost half of their income on rent. Some of the fastest growing metros had double-digit annual rental appreciation at the end of 2015.

Zillow expects rental appreciation to slow down most significantly in Nash-

ville, Tenn., San Francisco, Portland, Ore. and Denver. Rents in San Francisco saw 12.5 percent appreciation in 2015. Zillow forecasts rent in San Francisco will grow half as fast in 2016 -- 5.9 percent.

Even with the slowdown, rents will remain unaffordable in many of the major markets across the U.S., especially on the West Coast. Renters in San Francisco and Los Angeles can expect to spend 40 percent of their income on a rental paymentiii.

“Hot markets are still going to be hot in 2016, but rents won’t rise as quickly as they have been,” said Zillow Chief Economist Dr. Svenja Gudell. “The slowdown in rental appreciation will provide some

relief for renters who’ve been seeing their rents rise dramatically every single year for the past few years. However, the situation remains tough on the ground: rents are still rising and renters are struggling to keep up.”

The slowdown in rental appreciation indicates that supply of new multi-family homes is catching up to demand. Substantial new housing supply is becoming available in Atlanta, Denver, Portland, Seattle, and other markets.

The Zillow Home Value Index rose 4 percent year-over-year in December 2015, to $183,500, according to the Zillow® December Real Estate Market Reportsiv.

Metropolitan Area

Dec. 2015 ZHVI

Dec. 2015 ZRI

ZRI Forecast for Dec. 2016

United States New York/Northern New Jersey Los Angeles, 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

$183,500 $381,200 $554,700 $193,000 $177,200 $203,100 $170,100 $357,800 $225,700 $160,000 $382,900 $785,800 $121,800 $298,200 $216,000 $368,700 $214,300 $499,900 $141,000 $160,100 $242,300 $320,800 $126,700 $310,200 $157,800 $331,500 $148,000 $180,600 $141,800 $124,300 $146,600 $199,800 $150,900 $130,100 $933,000 $242,900

$1,381 $2,384 $2,491 $1,633 $1,500 $1,558 $1,579 $2,107 $1,822 $1,274 $2,247 $3,338 $1,132 $1,691 $1,249 $1,931 $1,500 $2,316 $1,123 $1,296 $1,714 $1,952 $1,090 $1,689 $1,221 $1,599 $1,301 $1,343 $1,225 $1,124 $1,199 $1,212 $1,271 $1,181 $3,431 $1,683

$1,396 $2,400 $2,561 $1,611 $1,532 $1,550 $1,619 $2,118 $1,886 $1,280 $2,309 $3,536 $1,128 $1,723 $1,266 $2,018 $1,511 $2,348 $1,115 $1,302 $1,702 $2,031 $1,079 $1,753 $1,250 $1,654 $1,306 $1,373 $1,243 $1,117 $1,228 $1,191 $1,289 $1,138 $3,699 $1,741

Forecasted Difference Between Dec. 2015 ZRI and Dec. 2016 ZRI 1.1% 0.7% 2.8% -1.4% 2.1% -0.5% 2.5% 0.5% 3.5% 0.5% 2.7% 5.9% -0.4% 1.9% 1.4% 4.5% 0.8% 1.4% -0.7% 0.5% -0.7% 4.0% -1.0% 3.8% 2.4% 3.4% 0.4% 2.2% 1.5% -0.6% 2.4% -1.8% 1.4% -3.6% 7.8% 3.4% Source Zillow

Publisher Will Johnson – will@propubinc.com Designer/Editor Kristin Flores – kristin@propubinc.com

Advertising Sales Will Johnson – will@propubinc.com Terry Hokenson – terry@propubinc.com Larry Surratt – larry@propubinc.com

Rental Housing Journal Valley is a monthly publication published by Professional Publishing Inc., publishers of Real Estate Opportunities in Investing & Real Estate Investor Quarterly

www.rentalhousingjournal.com The statements and representations made in advertising and news articles contained in this publication are those of the advertiser and authors and as such do not necessarily reflect the views or opinions of Professional Publishing, Inc. The inclusion of advertising in this publications does not, in any way, comport an endorsement of or support for the products or services offered. To request a reprint or reprint rights contact Professional Publishing Inc. PO Box 6244 Beaverton, OR 97007. (503) 221-1260 - (800) 398-6751 © 2015 All rights reserved.

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Rental Housing Journal Valley · March 2016

Rental Housing Journal Valley

Earthquake Insurance ...continued from page 4 I believe all properties should be covered by earthquake insurance. In that vein, we have included some tips to consider when shopping for earthquake insurance.

Understanding Earthquake Insurance

There are typically three (3) main parts of the basic earthquake coverage, your property coverage which covers your property up to a certain amount, called the limit; personal property coverage; and loss of rents coverage.

Property coverage needs to be researched, as do deductibles. In Oregon, unlike California, there is no regulated coverage and only a limited pool of providers. Choose a company that is strong,rated by A.M. Best or check with the Oregon insurance commissioner.Note that earthquake insurance may not cover landscaping, pools, fences, masonry, and out buildings like storage or garages.If you rent or own a condo, you do not need this coverage as long as you make sure your association has the coverage.

Loss of rents coverage should be on an ”actual loss guaranteed basis” and extend for at least 24 months, preferably 36 months(if you can find it). The longer the better since after a major earthquake you may have trouble finding tenants.

Other coverages to consider include building code upgrade coverage or coverage for limited debris removal, land restoration, and emergency repairs.

It is also important to know what your earthquake insurance policy does not cover.All insurance policies have exclusions. Have your insurance agent help you understand your policy. In general, earthquake insurance usually does not cover anything that your normal build-

ing insurance policy already covers.You definitely need to check with your insurance agent to confirm where fire and liability insurance leave off and where earthquake insurance kicks in.Common exclusions include: Fire: Even if an earthquake causes the fire, your building insurance policy covers fire damage.

Land: Usually, earthquake insurance does not cover damage to your land, such as sinkholes from erosion or other hidden openings under your land. You may be able to buy limited additional coverage to restore or stabilize land.

Vehicles: Earthquake insurance does not cover damage to your vehicles or your tenants’ vehicles. If you have a fleet of vehicles that might be damaged you may want to check into additional insurance.

Flood: Even if you live near a lake that floods your home after an earthquake, water damage from floods, including those caused by a tsunami, are covered by flood insurance, not earthquake insurance.

When purchasing earthquake insurance, you may need to buy on a secondary market. Askyour insurance agent to scour the market and make sure that you are getting the best deal you possibly can.

Don’t be surprised if the deductibles run from 15 – 25%. Consider how much cash you will have on hand to jumpstart a repair process. After a 9.0 earthquake it may take 6 – 8 months before the city will clear your building for occupancy.

Earthquake insurance premiums vary depending on many factors, including the age of your building, the rent collected, the location, the kind of soil, the cost to rebuild, and the deductible. Don’t be shocked if it is expensive.

What else can you do to protect your property and manage your risk from a major earthquake?

• Bolt theproperty to the foundation.

• Brace any chimneys.

• Strap water heaters to the wall.

• Put in automatic gas shut-off valves.

• Advise tenants to screw bookshelves and book cases into the wall.

• Research the location of the property on a local hazard mapto assessyour risk.

• Follow government issued earthquake proofing recommendations.

• Reserve funds for earthquake proofing capital projects.

• Tie the roof to the studs during roof replacements.

Resources

The Oregon Resilience Plan https://multco.us/em/oregon-resilience-plan The City of Portland Hazard Map: https://www.portlandoregon.gov/pbem/58572#maps Story: Historic Earthquakes, Teara: The Encyclopedia of New Zealand http://www.teara.govt.nz/en/historic-earthquakes/page-13 The Really Big One: An earthquake will destroy a sizeable portion of the coastal Northwest, The New Yorker http://www.newyorker.com/magazine/2015/07/20/ the-really-big-one Turbidite Event History—Methods and Implications for Holocene Paleoseismicity of the Cascadia Subduction Zone, U.S. Geological Survey http://pubs.usgs.gov/ pp/pp1661f/ 13-year Cascadia study complete – and earthquake risk looms large, OSU News & Research Communications http://oregonstate.edu/ua/ncs/ archives/2012/jul/13-year-cascadia-studycomplete%E2%80%93-and-earthquake-risk-looms-large Analytical Baseline Study for the Cascadia Earthquake and Tsunami, Department of Homeland Security https://www.bluestonehockley.com/wp-content/uploads/2016/01/FEMA-earthquakestudy.pdf

• Tie the roof structure to the wall structure.

The main recommendation in all documents regarding the impending Cascadia earthquake stress preparation and planning. We may not have the power to prevent the earthquake, but we do have the knowledge and technology to reduce the damages it may inflict. Even if you own one of the 20 percent of properties not affected, you still will be faced with the infrastructure problems such as a lack of power andtelecommunications for days or weeks resulting in tenants unable to pay the rent. All buildings will be affected and all building owners need to prepare.

The first step to mitigating your risk is to buy earthquake insurance.

COMMERCIAL REAL ESTATE, LLC

MID WILLAMETTE VALLEY APARTMENT SPECIALISTS

Call us today for a free market update.

W (503)3 90.6060 w w w. s m i c r e . c o m

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Rental Housing Journal Valley · March 2016

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Rental Housing Journal Valley

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Rental Housing Journal Valley · March 2016