September 2020 RHA Update Newsletter

September 2020

A monthly newsletter published by the Rental Housing Alliance Oregon

rha est. 1927

www.rhaoregon.org

In this issue:

RHA Calendar of Events...........................................page 2 President’s Message............page 3 Dear Maintenance Men......page 4 Landlord Community Must Unite................................................page 5 F.A.I.R-City of Portland Ordinance....................................page 6 Everything regarding emotional support animals..........................................page 7 Personal Use of 1031 Replacement Property........page 8

Rental Housing Alliance Events & Classes DATE

EVENT

09/07

Labor Day

09/09

Board Meeting

Zoom

4:00pm

09/19

Mentor Round Table

Zoom

11:00am

10/14

Board Meeting

Zoom

4:00pm

10/22

Mentor Meeting

Zoom

6:00pm

LOCATION

TIME

INFORMATION

Office will be Closed

DATE

CLASSES

LOCATION

TIME

INSTRUCTORS

09/03

Plumbing: What goes down, can come up and other things you should know

Zoom

11:30am

Michelle Card w/Apollo Drain & Rooter service

09/03

How to use Landlord-Reference.com

Join.me

7:00pm

Robert Collier w/Landlord-Reference.com

09/08 How to use Landlord-Reference.com

Join-me

7:00pm

Robert Collier w/Landlord-Reference.com

09/10

Managing Rental Properties

Zoom

6:30pm

Amber Clark w/ The Garcia Group

09/16

How to use Landlord-Refernce.com

Join.me

7:00pm

Robert Collier w/Landlord-Reference.com

09/17

Fair Access in Renting Ordinance

Zoom

11:30am

Charles Kovas w/Charles Kovas law

09/24

Online Tenant Screening

WebEx

11:00am

Marcia Gohman w/ National Tenant Network

09/24

How to use Landlord-Reference.com

Join.me

7:00pm

Robert Collier w/Landlord-Reference.com

09/29

Online Tenant Screening

WebEX

7:00pm

Marcia Gohman w/National Tenant Network

09/29

How to use Landlord-Reference.com

Join.me

7:00pm

Robert Collier w/Landlord-Reference.com

10/6

Online Tenant Screening

WebEX

11:00am

Marcia Gohman w/National Tenant Network

10/7

How to use landlord-Reference.com

Join.me

7:00pm

Robert Collier w/Landlord-Reference.com

10/8

Online Tenant Screening

WebEx

7:00pm

Marcia Gohman w/National Tenant Network

10/15

Successful Real Estate Investing

Zoom

6:30pm

Cliff Hockley w/Bluestone & Hockley

10/15

How to use Landlord-Reference.com

Join.me

7:00pm

Robert Collier w/Landlord-Reference.com

10/20

How to use landlord-Reference.com

Join.me

7:00pm

Robert Collier w/Landlord-Reference.com

10/27

Online Tenant Screening

Webex

7:00pm

Marcia Gohmanw/National Tenant Network

10/27

Terminations

Zoom

7:00pm

Mark Passannante w/ Broer & Passannante, P.S.

10/28

How to use Landlord-Reference.com

Join.me

7:00pm

Robert Collier w/Landlord-Reference.com

10/29

Online Tenant Screening

WebEX

11:00am

Marcia Gohman/National Tenant Network

For additional class/event information visit: https://rhaoregon.org/education 2

RENTAL ALLIANCE UPDATE September 2020

www.rhaoregon.org

President’s Message Ken Schriver, RHA Oregon President

I do not have a “back-to-school” message this month, as it appears that a majority of Oregon students won’t be going back in the traditional sense. So, I will call this my “back-to-legislative-session” message instead.

To begin – thank you! Thank you to all the members of Rental Housing Alliance Oregon, as well as all the other landlords, who have taken part in the RHA and Multifamily NW surveys over the past few months. Your feedback has helped generate quantitative and qualitative data characterizing the impact of the Oregon eviction moratorium.

Unfortunately, there are still forces at work that will make the lives of small landlords even more difficult.

While the state was able to allocate $55 million in emergency rental relief for those with incomes under 80% of Area Median Income (AIM), this is likely less than 20% of what is needed to make up for all the unpaid rents since April. Do not expect a bailout for landlords. It is particularly frustrating that the federal government appears to have an approach like our state: evictions should be banned, but there are no funds forthcoming to keep tenants in place.

And it is likely to get worse. Oregon Speaker of the House Tina Kotek announced in mid-August that, “My top priority for September is making sure we can extend the eviction and foreclosure protections for another six months.” It is not yet clear what the legislation to accomplish this would include, but RHA Oregon is doing all we can to make our legislators aware that even if the eviction moratorium is extended, there are certain items that needs be addressed:

•Even if the moratorium is extended, rent payments must begin again in October as was agreed

to in HB 4213 during the July special legislative session.

•Tenants that are unable to pay rent because of COVID-19 should have access to rental vouchers

so that their landlords may pay their ongoing expenses.

•Small landlords are disproportionately affected by the inability of tenants to pay rents. For those

who own just one to four units (most of our members), rent losses can run between 25% and

100% of monthly income.

•There must be a means test for tenants that do not pay rent, just as there was for recipients of

the state’s $500 Emergency Check Program. One of the most common frustrations expressed

by our members in our surveys has involved tenants that have the means to pay their rent but

choose not to because of the moratorium.

•The same exceptions for terminating lease agreements that were allowed under 2019’s SB608

legislation should be allowed now, including the termination of fixed-term agreements that

have reached (or exceeded) the original termination date.

•“Rent forgiveness,” is unconstitutional. Full stop.

The current eviction moratorium ends on September 30. All landlords who have rents owed should prepare to communicate with their tenants to arrange for repayment by March 31, 2021, as is outlined in the HB4213 legislation passed in July. I encourage you to visit the COVID-19 resources page on the RHA Oregon website for more information. Also, please watch your e-mail for up-to-date information from RHA Oregon. I anticipate that we will be calling on you to provide written testimony regarding any proposed legislation. If you are not a member of RHA Oregon, now would be a really good time to join so that your voice may be included in our lobbying efforts! www.rhaoregon.org

RENTAL ALLIANCE UPDATE September 2020

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Dear Maintenance Men

by Jerry L’Ecuyer & Frank Alvarez

Dear Maintenance Men: I have a nine-unit apartment building with a 100-gallon water heater that serves all the residents. The problem is that only the about three quarters of the units closest to the water heater gets any hot water. The units at the other end of the building get warm or cold water. The heater seems to be working and producing hot water. How do I solve this dilemma?

David Dear David: Sounds like your circulation pump is not working properly. Calcium or hard water deposits in the water heater and lines may also aggravate this problem. The circulation pump’s job is to bring hot water to all the units at the same time. When the pump is not working or is clogged, the hot water will take much longer to get to the units furthest away from the heater. The first step is to determine if the pump is working. Locate the pump near the water heater, check that the motor is plugged into an electrical outlet. Next, touch the water lines on either side of the pump and determine the temperature.

If it is working properly, the lines should be warm or cool to the touch, not hot. If the pipes are hot or very hot to the touch, the pump is not working properly. If the pump does not spin when plugged in, it may need to be replaced. If the pump motor is working, the pump may be clogged with debris. Remove the pump and clear out the lines. Take care to clean the line from the pump to the water heater. This is generally the problem. While you have things apart, this is a good time to clean out the calcium deposits in the water heater. Water heater clean outs should be done at least once a year depending on the hardness of the water in your area.

Dear Maintenance Men: I am the new owner of a four unit apartment building and have experienced repetitive sewage backups since I purchased the building about a year ago. I am retired and do not have deep pockets. The plumber I use keeps on urging me to install a 4-inch main line clean out, camera and other things I don’t think I need. Why can’t the plumber just rooter the thing right!

Maryam Dear Maryam: Your plumber is giving you good advice. Using the camera will determine exactly what the problem is and 4

RENTAL ALLIANCE UPDATE September 2020

will help you decide the best course of action to solve your plumbing problem. The 4-inch clean-out will be your best bet to keeping your drains clear on a preventive maintenance basis. We would follow the advice of your plumber and preform the following: 1.Hydro-jet – To clean your main line thoroughly 2.Camera the main sewer line to determine the actual cause of your problem i.e. Roots, pipe break or crack, pipe collapse, etc.

3.Install a 4-inch main line clean out with street sweep.

Note: It may be necessary to install the 4-inch main line clean out before you can perform # 1 and # 2.

This work may not be cheap, but in the long run you will benefit from lower plumbing bills, late night emergency calls and happier residents.

Dear Maintenance Men: I have a problem with moisture buildup and wall damage in my apartment bathrooms. The bathrooms do not have windows as they are constructed away from any exterior walls. They do have vent fans, but they don’t seem to do the job. How can I solve this problem?

Bill Dear Bill: First things to check is whether your vent fans are working and not clogged with lint or dust. If the fan is operating properly, check the CFM or Cubic Feet per minute of air movement. The minimum number should be 50 CFM. If the bathroom is getting more than the average amount of use, you may want to replace the existing fan with one that has a higher CFM rating. We recommend using at least a 120-CFM fan. And equally important, many bathrooms have two wall switches; one for the light and the other for the fan. If this is the case, we recommend combining the two switches into one.

That way when the resident switches on the light the fan will come on automatically. We find most residents will not turn on the fan if it has its own switch.

Plumbing Trivia. One drip per second from a leaky faucet can waste over 8 gallons of water a day. ... Toilets use from 25% to 40% of the homes water consumption.

WE NEED Maintenance Questions!!!

If you would like to see your maintenance question in the “Dear Maintenance Men:” column, please send in your questions to: (continued on page 10)

www.rhaoregon.org

The Landlord Community Must Unite to Truly Help the Industry

by Robert Collier

The world is changing! Never in my life have I seen such united and powerful forces making what I want to assume are well-intentioned changes to the rental industry that in effect, vilify landlords and paint them all as nothing but greedy, evil people.

Landlord/Tenant attorney led a session during which they pleaded with their audience of landlords, property managers, and screening companies to better protect themselves by leveraging the Landlord Community.

She said, “please share landlord references and require landlord references as they are the best tool we have in finding qualified applicants.”

Landlord references provide valuable, real-world insight into an applicant’s renting history. Similar to a person’s As we all know, landlords need renters as much as renters transparent credit history, an applicant’s renting history need landlords. While there are many large, regional, may not perfectly predict their renting future, but it is the and national players in the residential rental industry, best tool available. As renters perform better over time, approximately 72% of all rental units in the United States their improvement should be documented, shared, and are owned by small, “mom-and-pop” landlords. This large rewarded. Unfortunately, each renter’s renting history group does not even include those who operate as an LLC. is only known to their current and former landlords.

These normal, hard-working people usually have full-time Therefore, to help the Landlord Community and Renters, jobs and are just trying to build a small business to bring landlord references must be factual, transparent, and in some extra money to help raise their families, send their consistently shared. By following this standard, objective kids to college, or provide some income during retirement. process, the likelihood of being sued for sharing facts will Unfortunately, politicians and tenant advocates are virtually be eliminated. creating laws eliminating landlords’ abilities to run their business as they see fit to protect themselves, their tenants, If we refuse to unite our Landlord Community to and their business. Frequently these idealistic laws are directly address the organized, powerful, and united detrimental to the very people they were supposed to help. forces dedicated to “helping renters,” we are sure to lose.

The City of Seattle no longer allows its landlords to reference an applicant’s criminal history. Even more frightening, there is a moratorium on evicting tenants during the winter months even when the tenant does not pay their rent. If this law passes, many landlords in Seattle will declare bankruptcy. I know I could not survive if I do not receive rent for six months. Portland has implemented many changes, including reducing the amount a landlord can charge for a security deposit. If landlords use the Low Barrier Screening process, they cannot deny an applicant due to a low credit score if it is above 500! Fortunately, the low margin, long-horizon rental business can work as most applicants are trustworthy and pose no extreme risk.

Unfortunately, it is difficult to truly know which applicants are high-risk and which ones are low-risk.

Even more importantly, if we fail to unite, we will be unable to find qualified applicants while inspiring renters with historically poor renting history to perform better, improve their lives, and bolster their ability to rent the home of their dreams.

Landlords must unite to truly help renters!

Robert Collier is a member of RHA Oregon and the CEO of Portlandbased Landlord-Reference.com – The “Credit Agency” for LandlordReferences™

Every applicant comes with some level of risk. Even if they are the “perfect” tenant, they are most likely a stranger to you when they apply. While we should use Credit, Criminal, and Eviction reports, these reports’ value has diminished. Credit reports contain nothing about an applicant’s renting history and using criminal reports is illegal in various cities. Eviction reports are usually empty as attorneys wisely suggest that landlords pay the tenant to vacate to return the unit so that it can be re-rented. What can the landlord community do?

During the 2019 Fair Housing Conference, a prominent www.rhaoregon.org

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F.A.I.R (Fair Access in Renting) City of Portland Ordinance

By Ron Garcia, The Garcia Group & Past President of RHA Oregon

“We’re in the middle of one the greatest transformational periods of our lifetime. We get to write the future. And the city (of Portland) will be proudly at the center of that transformation.” Today on July 30th, Mayor Ted Wheeler made this opening remark addressing a news conference (held on-line due to Covid restrictions of assembly). It was staged to address the controversial deployment of federal troops in Portland, stationed here to stop the nightly rioting in front of the Federal Court House.

I believe his statement is revealing as to the nature of our current City Councils’ self-vision towards the leadership roles they have assumed, as they navigate our city through uncharted areas of governance. Whether it’s steps to install more green bike boxes, or to “de-fund” the police force, or requiring landlords to pay large relocation fees to tenants in order to reclaim their property, Portland City Council has been on a trek to re-engineer social norms for some time now.

And while most current news from City Hall is focused on the frenzied chaos in the streets, there is still much happening as well behind its boarded-up doors and windows. On March 1, 2020 Portland adopted its Fair Access In Renting (F.A.I.R.) ordinance. This law landed on the community just as quarantine rules began to take affect and the pandemic absorbed our full attention. The F.A.I.R. ordinance became even further un-regarded with the death of George Floyd and the escalation of protests and social unrest. Yet quiet, it is not dormant, and now this new law is actually growing!

The Mayor’s bold proclamation to stand up for Portland community values came just 24 hours after the Portland Housing Bureau (under his command) proposed new additional Administrative Rules to its F.A.I.R. law. These additions and resolve to carry this ordinance forward are sure to antagonize Portland rental property owners and create deeper divisions between Tenants and Landlords. These protests may be less loud but are likely still to come (if not on the streets, maybe in the court houses left standing).

As City leaders speak proudly of their dreams for our future, it is worth noting that F.A.I.R. has been roundly criticized by landlords and industry associations as over-reaching and onerous. Many argue that it does nothing to alleviate our well-publicized affordable housing shortage and in fact, may hinder any real efforts to address the issue. This is a law that when written had claimed to seek professional input, but upon implementation, summarily dismissed all the recommendations that were offered. And whichever way it is read, it is obviously intended to re-engineer long held established industry standards of practice. It is an ordinance without precedence in any other city of America – so does that qualify it as an apt centerpiece of transformation? You be the judge.

What does F.A.I.R. do? It regulates 2 activities: 1.Rental housing application and screening procedures and 2.Rental housing tenant security deposit accounting.

You may wonder if those topics are not already regulated? The answer is a resounding yes. Local, State and Federal housing laws abound. So, you may ask, why must they be further regulated? Simply put, the authors believe that Tenants are abused and routinely taken advantage of. They believe that the existing laws present insurmountable barriers to vulnerable segments of our society from finding a home. They want to stamp out homelessness. Okay, sounds “fair”, right?

Imagine if there were a movement to cure hunger - and it required that all restaurants in a city were to book all parties at all requested times in their eateries, no matter what style food they serve and at what prices they charge. If the diner was late, they could not give the table to someone in line until they allowed 3 missed mealtimes over the course of the day (effectively holding the table for a no-show). Imagine further that if the diner didn’t like the food or was allergic to the ingredients the chef would be required to change the meal to fit their needs. Or if they couldn’t afford the bill, the owner would be required to pay the tab on behalf of the customer.

Not only that, imagine that all restaurants would be required to post all of the rules and regulations and options for all of the diners on all of their advertising at all times to insure that all the people who came into contact with it were made aware of all of their rights, including the penalties they might seek for any misunderstanding or oversight (long waits no water refills, dirty silverware etc) that may occur from any actions or statements of any of their staff at the establishment.

Enter F.A.I.R. This is how it treats Landlords. Are these Rules made with good intentions? Maybe, but they’re all a bit (continued on page 11) draconian and confrontational. Do I exaggerate? What is bad about the Fair Access In Rentals 6

RENTAL ALLIANCE UPDATE September 2020

www.rhaoregon.org

Everything Landlords Should Know Regarding Emotional Support Animals

By Holly Welles

Owning a rental property presents many challenges landlords may not anticipate until they become reality.

Landlords may not think about certain kinds of insurance until it’s too late, or value community outreach until tenants leave online reviews when their leases end.

It’s also common for landlords to feel caught offguard when presented with their first emotional-support animal (ESA) letter.

Many communities, including those that don’t allow pets, find themselves home to individuals who need support pets to live their daily lives. It may challenge landlords to take a second look at their rules and guidelines while they figure out what is or isn’t allowed under each lease.

Read on to learn everything landlords should know about emotional support animals. After brushing up on federal guidelines, the options available to tenants and landlords will become apparent, and will make the conversation easier for everyone involved.

TENANTS NEED A SIGNED LETTER Landlords unfamiliar with emotional-support animals may wonder if some tenants want to circumnavigate no pet rules when they don’t actually require the support. If they present a signed letter, it means they’ve visited with a licensed mental-health professional and have received a diagnosis that requires a companion.

Legally, landlords cannot call the health-care provider unless they receive written and signed consent from the tenant. The doctor may also leave a note welcoming landlords to call him or her with any questions or concerns. During that call, rental management cannot ask for someone’s medical history, even if the tenant gives written consent.

EMOTIONAL SUPPORT ANIMALS DON’T COUNT AS PETS Some landlords may struggle with allowing an emotional support animal on their property because they’ve already established a no-pet policy.

According to guidelines from the Department of Housing and Urban Development (HUD), assistance animals don’t count as pets because they work to provide service, tasks or assistance to make life easier for people with disabilities.

Whether a person has a dog, cat or another kind of animal, if they’ve received a verified letter from a medical professional, landlords must make changes to accommodate them on the property. www.rhaoregon.org

TENANTS HAVE RIGHTS As long as a tenant meets the definition of being disabled, they’re allowed to have an emotional-support animal.

When they require one, landlords must change their policies and services to accommodate them. This includes strict no-pet communities. Even if a tenant has already signed a lease and agreed to having no animals in their unit, they can still bring home an emotional-support animal if it’s verified. It’s illegal to nullify a lease based on a person’s need to accommodate their disability or reject a potential candidate because they require a service animal.

LIABILITY INSURANCE MAY INCREASE Because emotional-support animals don’t legally count as pets, they’re not required to meet any community rules regarding restricted breeds and weight limits. It’s one less barrier for people in need to worry about, but it can cause some concerns for landlords.

Restricted breeds and animals above the required weight limit may increase the property’s liability insurance, causing landlords to pay more or lose their policy altogether. Property managers struggle with this, and it’s often the reason a few of the rare emotional supportanimal cases go to court.

If the court is to rule in a landlord’s favor, the landlord must prove that the increased or lost insurance creates an undue administrative or financial burden. Although this is a legal route for landlords to take, these cases rarely result in rulings in their favor. Most of the time, tenants are allowed to keep their emotional-support animals as long as they have their verified letter from a mentalhealth professional.

RULES LANDLORDS CAN FOLLOW To help navigate these sometimes-tricky situations, HUD has issued an assistance-animal notice to clarify the terms and legal allowances for emotional-support animals. It guides both landlords and tenants by getting into the finer details of common questions regarding what is and isn’t legal.

Landlords should also be aware that they may need to navigate these waters more often. Emotional-support companions are becoming more common each year, causing people to worry that this allowance will be taken advantage of. Federal law has already considered this because it limits one service animal per person, although in some cases people are allowed to have two or more depending on their disability.

As long as the emotional-support animal doesn’t have a documented history of harming (continued on page 8) RENTAL ALLIANCE UPDATE September 2020

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Emotional Support Animals Cont.

CONTINUED FROM PAGE 5

others, landlords cannot reject it from living on their property. Any shown history of threats to other tenants must contain overwhelming evidence to hold up in court.

LOOK TO THE FUTURE OF PET POLICIES It’s smart for landlords to look to the future and plan for pet-policy changes as the rental landscape adjusts to the needs of tenants. More young people are living in rental units for more extended periods, including when they start families.

As their families expand, individuals in their unit may require emotional-support animals and an understanding landlord. If property managers have any questions or concerns regarding their rights or the rights of tenants, they can look to the assistance-animal notice recently published by HUD for more clarity. It covers most situations that could occur so disputes may find a resolution without the need to go to court.

Holly Welles writes about real estate market trends from a millennial perspective. She is the editor behind The Estate Update, a residential real estate blog, and keeps up with the industry over on Twitter @HollyAWelles Permission to reprint from the Rental Housing Journal Personal Use of 1031 Replacement Property Austin Bowlin, CPA – Partner at Real Estate Transition Solutions

“Can I exchange into a property and use it for personal use?” We frequently field this question from investment property owners, especially those who have owned investment real estate for years and are exploring ways to reap the benefits of their hard work.

Fortunately, the IRS provides guidance that specifically addresses the question of tax-deferred 1031 Exchanges into personal use property. Section 1031 of the Internal Revenue Code states “No gain or loss shall be recognized on the exchange of real property held for productive use in a trade or business or for investment if such real property is exchanged solely for real property of like kind which is to be held either for productive use in a trade or business or for investment.”¹ The answer is YES, this is, in fact, possible, however, the rules outlined in Revenue Procedure 2008-162 must be followed in order to qualify.

IRS Revenue Procedure 2008-16 If the rules below are adhered to, IRS Revenue Procedure 2008-16 explicitly provides a safe harbor and the IRS will not challenge whether the property qualifies as being held for productive use.

•If: The dwelling unit is owned by the taxpayer for at least 24 months immediately after the exchange (the “qualifying use period”) •And: Within the qualifying use period, in each of the two 12-month periods immediately after the exchange, the taxpayer rents the dwelling unit to another person or persons at a fair rental for 14 days or more, and the period 8

RENTAL ALLIANCE UPDATE September 2020

of the taxpayer’s personal use of the dwelling unit does not exceed the greater of 14 days or 10 percent of the number of days during the 12-month period that the dwelling unit is rented at a fair rental.

In layman’s terms, this boils down to three key points: •Hold the replacement property for at least two years •Rent the property at fair market value for 14 days or more, for each of the two years •Personal use should not exceed the greater of either 14 days per year or 10% of total days rented out for the year Example 1: If a beachfront property in Hawaii is rented out for 30 days of the year following its acquisition via a 1031 exchange, the owner may use the property for personal purposes a maximum of 14 days that year.

Example 2: If the same beachfront property is rented out for 250 days, the owner may then use the property for a maximum of 25 days, which is 10% of the total days rented out.

After 24 months, can the owner decide that they would like to exclusively use a replacement property for personal use? The IRS does not speak directly to this question, however, because the safe harbor includes a defined period of time in which the replacement property must have rental income, it is safe to assume that any use of the property following the 24 month period is permissible.

While the intent of an exchange is to hold property for business use or as an investment, an owner’s situation does change over time. The IRS understands this and does allow for reclassification of properties from investment property to personal use, and vice-versa, provided sufficient holdperiods are adhered to. It is commonly recommended www.rhaoregon.org

that owners report rental income on at least two tax returns before converting a property to solely personal use. Additionally, documenting the property was rented at market rates is a best practice, especially if the property is to be rented to friends or family.

Lastly, should a replacement property be converted to not only personal use but also a primary residence, it pays to take note of the Internal Revenue Code section 121 exclusion, which allows taxpayers to exclude up to $250,000 ($500,000 if married) of gains on the sale of a property used as a primary residence for two of the five years leading up to the sale. For more information on 1031 Exchanges and primary residence real estate, see our article entitled “Tax Strategy for your Highly Appreciated Primary Residence.” As every investor situation is unique, one should always consult with their tax preparer to ensure compliance with all rules and regulations.

1031 Exchanges provide investors a great degree of flexibility and ability to reposition their investment properties to meet their objectives. With our deep understanding of the rules and tax-mitigation strategies available for investment property owners, we can help you define your objectives and develop an optimal strategy moving forward.

and competition, lack of operating history, interest rate risks, the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multi-family properties, financing risks, potential adverse tax consequences, general economic risks, development risks, long hold periods, and potential loss of the entire investment principal. Potential cash flows/returns/appreciation are not guaranteed and could be lower than anticipated. Diversification does not guarantee a profit or protect against a loss in a declining market. It is a method used to help manage investment risk.

DST 1031 properties are only available to accredited investors (typically have a $1 million net worth excluding primary residence or $200,000 income individually/$300,000 jointly of the last three years) and accredited entities only. If you are unsure if you are an accredited investor and/or an accredited entity, please verify with your CPA and Attorney. Because investor situations and objectives vary this information is not intended to indicate suitability for any individual investor. This material is not to be interpreted as tax or legal advice.

Please speak with your own tax and legal advisors for guidance regarding your individual situation.

Real Estate Transition Solutions offers securities through Concorde Investment Services, LLC (CIS), member FINRA/SIPC. Advisory services through Concorde Asset Management, LLC (CAM), an SEC-registered investment adviser. Real Estate Transition Solutions is independent of CIS and CAM.

If you are considering selling your investment property and would like to find out if a tax-deferred 1031 Exchange is right for you, we invite you to take advantage of our Complimentary Consultation to discuss your investment property, objectives, potential tax liability, and tax-deferral options. Our free consultations can be done over the phone, via web meeting, or in person at our office in Mercer Island, Washington, or in Portland, Oregon. To schedule your complimentary consultation, simply call 206-686-2211 Austin Bowlin, CPA – Partner at Real Estate Transition Solutions, provides exit strategy analysis, execution, income and equity replacement options for investment property owners. ¹ https://www.law.cornell.edu/uscode/text/26/1031 ² https://www.irs.gov/irb/2008-10_IRB#RP-2008-16 About Real Estate Transition Solutions Navigating the Exchange process successfully can be challenging and complex. For over 20 years, Real Estate Transition Solutions has helped investment property owners navigate and execute tax-deferred 1031 Exchanges, Delaware Statutory Trusts (DSTs), complex real estate investments, and tax planning strategies. Our team of dedicated 1031 Exchange consultants will help you select and acquire Exchange properties that seek to meet both your financial and lifestyle objectives. To learn more about Real Estate Transition Solutions, visit our website at www.re-transition.com.

The information herein has been prepared for educational purposes only and does not constitute an offer to purchase or sell securitized real estate investments. There are material risks associated with investing in DST properties and real estate securities including liquidity, tenant vacancies, general market conditions www.rhaoregon.org

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LIMITED-TIME BONUSES TO HELP YOU SAVE Energy Trust of Oregon is offering limited-time bonuses to customers who upgrade qualifying equipment at condo, townhome and plex properties before December 1, 2020.

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Maintenance Men Cont.

CONTINUED FROM PAGE 5

DearMaintenanceMen@gmail.com Bio: 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 Frank Alvarez is licensed contractor and the Operations Director and co-owner of Buffalo Maintenance, Inc. He has been involved with apartment maintenance & construction for over 20 years. Frankie is President of the Apartment Association of Orange County and a lecturer, educational instructor and Chair of the Education Committee of the AAOC. He is also Chairman of the Product Service Counsel.

Frank can be reached at (714) 956-8371 Frankie@BuffaloMaintenance.com For more info please go to: www.BuffaloMaintenance.com Jerry L’Ecuyer is a real estate broker. He is currently a Director Emeritus and Past President of the Apartment Association of Orange County and past Chairman of the association’s Education Committee. Jerry has been involved with apartments as a professional since 1988.

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RENTAL ALLIANCE UPDATE September 2020

www.rhaoregon.org

F.A.I.R City of Portland Cont.

CONTINUED FROM PAGE 6

law in Portland? Google it. The first thing you will notice is how confusing it is, and how many conditions it addresses.

On March 1st one section (of many) read: “If a Landlord simultaneously advertised the availability of more than One Dwelling Unit in the same property, the Landlord can fulfill the requirements (of the ordinance) by Publishing notices at least 72 hours prior to the Open Application Period for rental of the available Dwelling Units through a combined notice that specifies… ( and it then lists 7 specific conditions).

Today, the Proposed Rule adds more conditions: “If a Landlord publishes multiple Notices at different times or through different methods for the same availability and same Dwelling Unit the Open Application Period must be at least 72 hours after publishing the initial Notice of Dwelling Unit Availability.” Got it? Hm. Me neither. The pamphlet the city publishes to explain how to screen a tenant is 24 pages long.

The rules for Security Deposits are even more challenging. They require specific depreciation schedules for damages that they define and specific timelines when the value must be established with the tenant (Prior to the “Commencement Date), New provisions now proposed include: F. 3: “ Within 1 week following the Termination Date, as defined in Subsection B.10 of the Rental Housing Security Deposit Administrative Rule, a Landlord shall conduct a Final Inspection to document any damage beyond ordinary wear and tear not noted on the Condition Report.” Sounds easy, right? Add to that the documentation process: “2. The Landlord shall update the Condition Report to reflect all repairs and replacements impacting the Dwelling Unit during the term of the Rental Agreement that the Landlord intends to apply against the Tenant Security Deposit. The Landlord shall provide to the Tenant the updated Condition Report within 10 business days of repair or replacement…. “ The penalties for noncompliance are stiff. There are 8 sections to this Rule (A through H). In Section C they establish the time frames from which the new accounting methods they demand must take effect. Section C – 4. states: “For Rental Agreements entered into prior to March 1, 2020 PCC 30.01.087 (F.A.I.R. ordinance) Subsections C.2, C.4, C.5, E, F, G and H apply…” In other words, the law is essentially retroactive.

Does it sound a little scary? I repeat, Google it. The link I am working from here is this: https://www.portland.gov/phb/ rental-services/news/2020/7/29/public-comment-proposed-permanent-administrative-rules-fair As a Property Management firm, at The Garcia Group, we are doing everything to digest, learn and implement the best practices to comply with the law. It’s our business. I recommend any self-managing landlord to take a class as soon as possible to learn what they need to do to implement this law. It’s either that or sign up to become (voluntarily or nonvoluntarily) the Test Case in Court. (It could be safer to volunteer for a drug trial.)

It’s not a new epiphany on this particular Mayor’s part to push Portland’s trajectory in the path of daring social reasoning. Remember (it was about 10 years ago) when the green bike lanes were first painted on our streets by the City? At that time, they were challenged by ODOT as non-compliant with Oregon traffic codes. Drivers were confused. Many bicyclists worried they’d be more vulnerable. Tourists had (and still have) no clue what they mean…. But to their credit the green lanes and boxes have remained, and we car drivers have learned to navigate around and through them as best as we can and to respect their directions. Maybe F.A.I.R. will seem that transformational and tame in 10 years from now too. (Or not).

www.rhaoregon.org

RENTAL ALLIANCE UPDATE September 2020

11

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