Oregon Rent Control Senate Bill 608 introduces some major changes for landlords. Real estate and property management attorney Brian Cox examines some strategies for ways to increase rent. This is critical information for owners of multifamily properties. Learn the ins and outs of the new law.
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Strategies for Raising Rents
In situations where a tenant moves out (whether it’s for cause or because they have chosen to move on), your strategy should be to make changes in your contracts at that point. If you need to make major changes in the rent that you’re charging, that is the time. You’re probably raising your rent 3, 4, or 5 percent a year, so this 10.3 percent cap isn’t going to scare you at all.
Another strategy is if you’re going to do upgrades on your unit and the tenant can stay there, that doesn’t affect their tenancy under this bill. So it’s a good idea to bundle your renovations. But if you need to move the tenants out for the renovations because damage has rendered the unit unsafe or unfit to occupy, then that is a situation where you can give the tenants notice to move and you can ratchet your rent up if you’re undervalue.
If you want to make changes in your contract, offer (don’t require) people to enter into continued leases. You know, first year, hey do you want another year lease? Some tenants absolutely want to lease for a year because they want to know that you’re not going to kick them out, and a whole bunch of them aren’t going to know for a while that you can’t, so you can certainly offer them new leases. You can’t induce changes, but you can certainly lead the changes by simply offering. I suggested to a landlord that he can make some changes to his property or to the amenities being offered as an inducement to get people to change their leases.
If you decide to sell your property, the law doesn’t require you to provide any notice to your tenants. You need your buyer to recognize that if there are tenants under lease, they’re still under lease. But if they’re under month-to-month tenancy and the new owner is going to occupy the property or half the property and the new buyer doesn’t have a comparable property to move that person into, that new buyer (or you on behalf of the new buyer) can give the tenants notice that they have to move.
There’s a time period to complete that. You have to do it within no later than 120 days after you’ve accepted the offer to purchase, so you want to ask those questions and know those answers. Are your buyers going to move into that duplex and do you have to give a 90-day notice to that tenant to make this work? And it’s only on a month-to-month tenancy. If you’ve got a tenant occupying that property and they’re only three months into a lease, they have nine more months to stay. You would have to notice them 90 days out.
If you don’t have any property up in Portland, you should look at these figures to get a sense of what things can look like when they get ugly. It was Portland that scared the legislature. People bought properties and rents going from $800 to $1800 and even more in a single transaction. As a result, now they have to pay tenants up to $4,500 in relocation costs depending on the size of the unit they had rented. I don’t know about your return on individual properties, but that would put a dent in any individual balance sheet.
If you need a real estate attorney, contact Brian Cox.
If you want to learn more about the impact of Oregon Senate Bill 608, visit Pacwest Commercial Real Estate’s Oregon Rent Control Central for the latest information.
Due to the complex nature of these changes, Landlords should contact an attorney with any questions or clarification of Oregon Rent Control SB 608.