When Oregon announced that it was going to be the first state to enforce statewide rent control, many investors panicked. Most bristled at the idea of having government dictate what they could or could not do with their property. We did see a large percentage of multifamily owners in Lane County race to give tenants rent increases before the new law took effect—some by as much as $450 per month. Many of the investors who did so were out of the area and despite the fact that they had professional property managers managing the property, they had not kept pace with rents and needed to get them up to market before rent control went into place. Most of those investors are now selling their multifamily property in Eugene and using 1031 exchanges into triple net properties or commercial properties.
On the flip side I have many clients who own multifamily and feel that it is a safe investment. They believe it is a great place for them to put their money. Many investors plan to stay in the market and buy more units. I actually have a list of buyers who are currently looking to acquire more multifamily properties in Eugene. There are some good reasons for this, as Henry Manoucheri outlines in this article from National Real Estate Investor:
Communities around the country continue to push toward instituting rent control laws, creating an environment of political uncertainty that is driving many multifamily investors out of those markets. But there are investors who have opted to take on the challenge of buying rent-controlled properties, believing that if handled correctly, such properties offer great opportunity.
A few of the reasons rent-controlled properties can be attractive to investors are that their average price is lower, which can provide investors with the money needed for capital improvements. In addition, turnover among tenants tends to be lower, reducing the trouble and costs associated with finding and qualifying new tenants. As Manourcheri says:
So rent-controlled properties actually provide owners with a recession-proof revenue stream, providing a level of consistency market-rate buildings can’t guarantee.
Whether you are interested in buying or selling multifamily properties in Eugene or Springfield, call me. And if you have questions about rent control, please let me know. I want to be a resource for you during these changing times. Call me today: René Nelson, CCIM, CRE (541) 912-6583. firstname.lastname@example.org www.eugene-commercial.com