A local attorney, Jeffrey Bennett of Warren Allen, has 20+ years of experience in dealing with tenant and landlord issues in Portland.
He’s written a very useful article on the subject you can download at the link below (right-click to save):
Whether you’re an owner or manager this article is very useful. Jeff goes over basics like:
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Forms and the need to keep current
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Delivery options and timelines
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30-/90-day notices
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Filling in forms correctly
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For cause notices
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Charges, late and partial payments
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Preventing mistakes and giving yourself the best case
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Deposits, charges and dealing with tenant requests
I assure you it’ll be the best (not being over-dramatic) 30 minutes of your time invested in your apartments.
The environment for landlords was difficult and new rules don’t make it easier. Being knowledgeable is a minimum requirement for successful landlords today.
Posted in
Apartment Operations,
Apartments - Other Topics,
Portland,
Portland, Salem and Vancouver Apartment Market Issues,
Salem and Vancouver Apartment Market IssuesTags:
financials,
invest,
Law,
note,
operations,
portland,
rates,
Washington
When we have a well-informed buyer and seller agreed on a price why/when do we need an appraisal and what goes into one?
Why do appraisals exist:
- Usually at the request of a 3rd party like a lender who needs to assure (their shareholders) a property in their portfolio has “true” value.
- Part of the sales agreement. Sometimes an appraisal is used to set the price or (like most sales contracts) there is a clause stating a sales price must “meet or beat” appraisal.
- Risk-averse buyers – Governmental or non-profits chartered with the stewardship of public funds or donations in a prudently need to ensure they are paying a “fair” price for an asset.
An appraisal is an estimate of value made by an objective disinterested (i.e. neither in favor of the buyer or seller) party and considers multiple market factors.
What does an appraiser look at to establish real-world value? The object is to see if there is an “average” value of a similar property that has been recently purchased. They do this by looking at:
- The operating numbers, condition and current use (i.e. can it be repurposed and bring higher value) of the property. This is used to determine a rate of return since commercial property is bought for investment purposes.
- Comparable sales of similar properties to normalize/adjust pricing of the appraisal.
What makes a property “comparable” to the appraised property?
- Proximity to appraised property (location makes a big difference in value).
- Condition of the property (does it need a lot of CapEx just to make it average) will affect sales price.
- Age. The average 70s vintage property sells for the min $/unit compared to other decades. [cf. The 5-year Portland sales history (on this WEBsite)]
- Size – You have different types of buyers dependent on property size. Smaller buyers may place aesthetics over investment return.
- Unit mix – Comparing an apartment with all studios vs. one with all 3 bed units is not representative.
Whether for an appraisal, your investment return or max sales price, you need to keep your property in good shape (for buyer/tenant appeal), stay on top of maintenance and maximize your NOI.
Steve Morris | Vice-President
IMG Northwest
1234 SW 18th, Suite 102
Portland, OR 97205
Phone: 503.970.4593
steve@imgnorthwest.com | www.imgnorthwest.com
OR License # 200202054 | WA License # 24512
For the Oregon Real Estate Agency Pamphlet click here.
For the Washington Real Estate Agency Pamphlet click here.
You pay a broker a good chunk of money to sell your property. While we can’t make guarantees, a good broker can improve the odds of a successful sale at a good price and with the least hassle. Here are some questions you’ll want to ask yourself and them:
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PRICING AND COLLATERAL – Does your broker make a compelling case for a listing price? Does he establish some financial metrics and then verify them with comparable sales? If you look at his marketing package, would you buy your property at this price?
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RESUME – Ask for one outlining closed sales. Do they outline previous sales and speak to the property type, challenges in selling and how they overcame them to close? Every property is unique – It has its appeal and also has issues – If nothing else, why is it worth such a high price? How will he address your property issues?
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MARKETING / DUAL AGENCY – You will get the best price with the maximum exposure. Does your broker use his own “platform” with controlled access or will the property be posted on public listing services like LoopNet, RMLS, and CreXi? If you go to their WEBsite can you easily identify your property by units, pictures, and address with the price? It’s the difference between having your broker call his short list vs. running an advertisement for the world to see. The broker should be able to give you a link that anyone interested can access easily. In some instances, dual agency happens (e.g. a broker brings you an unsolicited offer) and in other instances, a broker may fight to keep both sides of a commission by not actively listing the property. You can always specify two commission rates – One for a co-op with another broker and a lower one if the listing broker handles both sides of the transaction
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ORGANIZATION – Once your property is in contract, he’ll need to be organized and keep you informed. One of the biggest items is keeping everyone on schedule. Once things start slipping, it creates a more casual attitude – “Time kills deals”. Have your broker show you a sample timeline – Do you understand your obligations? How is earnest money handled and what written approvals do you need from the buyer? Are documents labeled and organized in some sort of taxonomy? We use cloud storage for records and once together, we send a buyer a link and the document delivery is done. Once records are in a shared location, there should be no need to re-ask for paperwork.
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TITLE – As the seller, you usually pay for standard title insurance. You should have a say in who the title person is. Ask your broker for his history with an escrow agent and if they have worked with apartment deals prior. They handle all the monies involved and the closing paperwork. The main thing is that they promptly notify all parties of critical events – Like a deposit of earnest money received.
Do not be afraid to ask questions. There are plenty of brokers that want to list your property – Make sure you pick the most effective one.
Property management serves a vital function and while you can do it yourself and save a noticeable amount of fees, here are some questions to ask yourself, in order to see if it’s something you want to do on your own:
- PAPERWORK – With all of the laws in place (and more coming) most will require more paperwork and proper notice to tenants. Unfortunately, with a relationship between tenant and landlord that is growing more adversarial, you’ll need to understand what you are required to do and deliver notice tenants in a legally acceptable way. Do you keep up with the rules and regulations constantly?
- TIME – It does take time and effort to pay bills, deliver notices, respond to maintenance items and make a plan on growing your NOI. You’d be the most motivated individual for your property, but are you willing to invest the time from your other activities?
- CONTRACTING – Some management companies have services like maintenance and billing in house. In any case, you need to understand whats required to keep a property in good shape (which attracts good tenants) and just doing the day-to-day things (e.g. paying bills and collecting rents). Do you have the organizational skills to manage this?
- TENANT MANAGEMENT – You’re striving to keep a cast of tenants that live well together and respect your property and other tenants. This requires a lot of observation and then learning how to deal with bad actors. Some properties require a major amount of effort to stabilize and get a good population in if things have gone sideways. Again, do you have the time and experience to do this?
- PLANNING – While the state requires fee managers to give you a full and complete accounting of funds, on a small property, this can be a daunting stack of paper. An ongoing conversation with your property manager should be on how to separate signal from noise, for example asking: “What are the 3 measurable things we’re going to do this month to increase NOI?”
If you’re new to apartment ownership or deal with low-income housing, hiring an experienced manager can be cheap tuition and train you on what to do or understanding what needs to be done running an apartment.
Steve Morris | Vice-President
IMG Northwest
1234 SW 18th, Suite 102
Portland, OR 97205
Phone: 503.970.4593
steve@imgnorthwest.com | www.imgnorthwest.com
OR License # 200202054 | WA License # 24512
For the Oregon Real Estate Agency Pamphlet click here.
For the Washington Real Estate Agency Pamphlet click here.
Unsolicited offers sometimes work out for a seller. However, what can you ask yourself to rate if it is a GOOD and SOLID offer worth your time to proceed? Here are some questions to ask yourself, in order:
- PRICING – A breath-taking price may be not that high if you haven’t done an analysis on your property lately. In 2013, the average sale was $88,934/unit in 2017 YTD = $161,131/unit or a 16% per year increase. While we don’t anticipate this continuing, do a valuation / financial analysis. Actively marketing the property will get you the best price 99% of the time – Unsolicited offers are seeking opportunities.
- EARNEST MONEY – CASH OR NOTE? If you accept a note, a buyer may be able to tie your property up until closing with no cash out of their pocket. Worse, they may be able to tie up multiple properties (as in a 1031 search) this way. Without his cash at risk, the buyer loses a lot of motivation to negotiate with a seller.
- EXPOSURE/RESUME – Has the buyer seen your property? Does he own property in town? Does he have a financing reference?
- WHEREWITHAL – Is the buyer willing to show proof of funds for a down payment? If he is expecting to get a property for less than 25% down (or a LTV > 75%) that is probably unrealistic.
- NEGOTIATION – Assume the first number is not the best offer from a buyer on an unsolicited offer. It may be a good test to see how they react to a counter.
We can do a very thorough financial analysis on your property which will point out how to increase your Net Operating Income. We compare your rents and expenses to neighboring properties to address your priorities. In addition, we provide a valuation with comparable sales to correlate value. eMail me if you’d like a sample report to examine.
I apologize for the short notice, but this is a very good training for anyone that runs properties in the Portland area. It is all day, however, very well worth it since it’ll go over rules that are in effect today.
Unfortunately, due to the changing landscape rule changes will be a way of life for landlords anywhere.
To apply go to:
http://www.PortlandOregon.gov/BDS/LandlordTraining
I’ve attached a list of topics and app form for download:
CoP_LandlordTraining_Topics_Spring17
CoP_LandlordTraining_Application_Spring17
Steve Morris | Vice-President
IMG Northwest
1234 SW 18th, Suite 102
Portland, OR 97205
Phone: 503.970.4593
steve@imgnorthwest.com | www.imgnorthwest.com
OR License # 200202054 | WA License # 24512
For the Oregon Real Estate Agency Pamphlet click here.
For the Washington Real Estate Agency Pamphlet click here.
Attached is the 5 year (2011-2016) Portland Apartment Market Summary:
<<<<<< IMGNW_2016-2011_PortlandApartmentHistory_March2017 >>>>
Right-click to download the report. It includes 2016 stats and 2011-2016 history of:
2016 Operating Dynamics Trends
2011-2016 5 year history overview
2016 and 2011-2016 New construction overview
2016 Sales By County
2016 and 2011-2016 Sales By Neighborhood ($/unit, $/SqFt and reported CapRate).
2016 and 2011-2016 Sales By Complex Size (<100 units vs. 100+ units)
2016 and 2011-2016 Sales By Decade Built
2016 and 2011-2016 Largest Sales by Gross $ and $/unit
2016 and 2011-2016 Largest Sales by County
If you’d like more information on:
– Details/background on individual sales in the report or a breakdown by neighborhood
– Free copy of our 80-page book – Buying, Selling and Operating Apartments Using Financial Analysis
– A very useful financial analysis of your property, call. It will include I&E comparison to neighboring properties along with recent sales and rent comparables.
Please contact me:
Steve Morris | Vice-President
IMG Northwest
1234 SW 18th, Suite 102
Portland, OR 97205
Phone: 503.970.4593
steve@imgnorthwest.com | www.imgnorthwest.com
OR License # 200202054 | WA License # 24512
For the Oregon Real Estate Agency Pamphlet click here.
For the Washington Real Estate Agency Pamphlet click here.
To download the individual sales report, right-click the link below and “Save As”:
Highlights:
- CapRates reported are still in the mid-high 5% compared to 2015 in the high 5% range.
- $/unit June 16 YTD is a 8.7% increase over June 15 YTD.
- $/SqFt June 16 YTD is a 95.5% increase over June 15 YTD.
- June 2016 YTD sales = $939M vs. June 2015 YTD sales of $1026M
If you’d like more information on:
– Details/background on individual sales in the report or a breakdown by neighborhood
– A Free copy of our 80-page book – Buying, Selling and Operating Apartments Using Financial Analysis
Please contact me:
Steve Morris | Senior Advisor
Sperry Van Ness | Bluestone & Hockley
9320 SW Barbur Blvd, Suite 300
Portland, OR 97219
Phone: 503.970-4593 | Fax: 503.222.6459
steve.morris@svn.com | www.svnbluestone.com
OR License # 200202054 | WA License # 24512
All Sperry Van Ness®Offices Independently Owned and Operated
For the Oregon Real Estate Agency Pamphlet click here.
For the Washington Real Estate Agency Pamphlet click here.
Posted in
Apartment Buying,
Apartments - Other Topics,
Portland,
Portland, Salem and Vancouver Apartment Market IssuesTags:
$/sqft,
$/unit,
CapRate,
Clackamas,
Clark,
Multnomah,
sales,
transactions,
Washington
RIGHT-CLICK ABOVE LINK (and SAVE LINK AS) TO DOWNLOAD THE DETAILED REPORT
Attached is a list of individual Portland-area sales of apartment complexes greater than $450,000 in May 2015.
Included are $/unit, $/sqft , unit count, year built and Cap Rate (as reported) and a comparison to May 2014 averages.
May 15 had a huge increase in sales over May 14. May 15 had 20 sales for a $60M total vs 12 sales in May 14 for a $15.6M total. YTD shows about a 86% increase over 2014 YTD sales in terms of dollar volume.
May 15 had ONE large (>100 units) sales and May 14 had ZERO large sales.
Total apt sales in 2014 were $1.5B. 2015 is forecast, as of today, at about $1.55B. 2014 had the majority of sales from June thru EOY.
Be aware of the current value of your apartment with unsolicited offers. We offer valuations that include expense analysis with rent and sales comparables to back up any pricing.
If you’d like more information on:
– Details/background on individual sales in the report or
– A Free copy of our 80-page book – Buying, Selling and Operating Apartments Using Financial Analysis
Please contact me:
Steve Morris – Senior Advisor Multi-Units
Sperry Van Ness – Bluestone & Hockley
steve.morris@svn.com / (503) 970-4593
OR Principal Broker License 2002002054 / WA Managing Broker License 24512
RIGHT-CLICK ABOVE LINK (and SAVE LINK AS) TO DOWNLOAD THE DETAILED REPORT
Attached is a XLS with multi-unit new construction in the Portland METRO area (OR – Multnomah, Clackamas, Washington counties and WA- Clark county.) For reference, the estimated total unit count in the Portland METRO is about 275,000 units. I’ve included a couple of pivot tables to filter, however, here is a summary:
Disclaimers/Notes:
- This is from public records and while should be close, is not guaranteed to be 100% accurate.
- Portland – SubE describes Portland East of NE/SE 82nd, West of 162nd in Multnomah county
- 2012/2013 build dates mean project is done and leased up
- 2014 is in process of lease-up or very close to completion
- 2015 implies in process of construction with completion in 2015
- 2016 implies in planning/permitting process.
- 2017 involves multi-unit lots in Clark county being sold with potential construction.
******
If you’d like more information on:
– Details/background on individual sales or
– A Free copy of our 80-page book – Buying, Selling and Operating Apartments Using Financial Analysis
Please contact me:
Steve Morris – Senior Advisor Multi-Units
Sperry Van Ness – Bluestone & Hockley
steve.morris@svn.com / (503) 970-4593
OR Principal Broker License 2002002054 / WA Managing Broker License 24512
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