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Oregon Rent Control Law Informational Presentation 2019 - René Nelson, CCIM CRE

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René Nelson, CCIM CRE, Pacwest Commercial Real Estate, discusses how Oregon's rental control Senate Bill 608 affects your multi-family property and how to thrive in a changing market. Why now might be the time to consider a move into commercial real estate.

Disclaimer: This presentation is meant to answer general, broad questions about the changes to Oregon Rent Control Senate Bill 608 (“SB 608”). Landlords should consult with an attorney before taking any action as it relates to End of Tenancy/Non-Renewal Notices and/or increasing rent. All opinions are my own. These statements are not meant to be taken as investment advice.

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Oregon Rent Control Law Informational Presentation 2019 - René Nelson, CCIM CRE

  1. 1. Zoe R. York, MAI 260 West 12th Avenue, Eugene, OR 97401 (541) 687-1938 / (541) 683-0932 zoe@duncanbrown.com www.duncanbrown.com Rene’ Nelson, CCIM, CRE 895 Country Club Rd, Eugene, OR 97401 (541) 912-6583 rene@1031guru.com www.eugene-commercial.com Rachel McLaughlin Exchange Facilitator Cascade Title Company 800 Willamette Street, Eugene, OR 97401 (541) 687-2233 rmclaughlin@cascadetitle.com www.cascadetitle.com Brian Cox Real Estate & Property Mgmt Attorney Brian Cox Law Offices 142 W 8th Avenue, Eugene, OR 97401 (541) 683-7151 bcox@coxassociates.info www.briancoxeugeneattorney.com
  2. 2. Rene’ Nelson, CCIM Commercial Real Estate Broker Pacwest Commercial Real Estate
  3. 3. How Does Recent Legislation Affect Your MF Property?  Puts Landlords in a Difficult and Misrepresented Position  Uses Political Response to an Economic Problem  Out of State Investors Will Shy Away From Oregon  Fewer Investors Buying = Could Soften Prices
  4. 4. Why Would You Consider Selling? 1. Some Want Out of Government Control 2. Some Are Worried About Being Targets for Tenants 3. Some Want Out Before Local Municipalities Get Involved With Rent Caps 4. Some Want Out While Prices Are Still High
  5. 5. Market Stats: Eugene 2-4 Units Last 12 Months of Sales Activity: 66 Duplexes Sold $315,625 Median Sales Price 99.01% Sales Price/List Price 9 Day On the Market 7 Triplex/Fourplexes Sold $427,500 Median Sales Price 100.23% Sales Price/List Price 9 Day On the Market Duplexes 3-4 Units
  6. 6. Market Stats: Springfield 2-4 Units Last 12 Months of Sales Activity: 35 Duplexes Sold $259,000 Median Sales Price 100.6% Sales Price/List Price 6 Day On the Market 4 Triplex/Fourplexes Sold $416,000 Median Sales Price 101.49% Sales Price/List Price 5 Day On the Market Duplexes 3-4 Units
  7. 7. Why Sell Your Multifamily and Move into Commercial Real Estate? 1. No Rent Control 2. Tenants stay longer with commercial leases 3. Tenants are usually responsible for maintenance of the property 4. NN or NNN tenants often have corporately guaranteed leases by nationally traded companies Examples: Dollar General Stores O’Reilly or Advance Auto Parts AT&T or Verizon Stores DaVita or Fresenius Dialysis
  8. 8. How To 1031 Out of Multifamily and Into Commercial Property: SINGLE FAMILY REAL MARKET VALUE PRICE RENT #1 RENT #2 GRM GIM Azalea Drive $254,000 $300,500 $850 $850 177 14.73 Fox Hollow Rd $230,700 $244,600 $950 $1,000 125 10.45 Barger Drive $207,500 $228,300 $625 $650 179 14.92 Fuller Avenue $226,800 $249,900 $650 $695 186 15.48 Clairmont Drive $295,000 $304,500 $800 $825 187 15.62 Totals: $1,214,000 $1,327,800 $3,875 $4,020 Annual Gross Rents $94,750 Less Operating Exp. $36,000 38% Net Income $58,750 Value of Portfolio $1,327,800 Less Selling Costs -$106,225 Net Profit to Invest $1,221,575
  9. 9. Commercial Properties For Sale: 5892 Main St $1,400,000 Price $114,500 NOI - 7.5% Cap 14th & Oak Street $1,165,000 Price $70,000 NOI - 6.08% Cap 1225 Lawrence Street $1,100,000 Price $60,000 NOI - 5.00% Cap
  10. 10. Example of NNN Opportunities: Dollar General – Georgia $398,500 – Low Price Point $33,875 Rents - 8.5% Cap O’Reilly Auto Parts – Oklahoma $600,000 – Corp. Guaranteed Lease New 10 Year Lease National Tenant - 6.17% Cap Rate Family Dollar – Mississippi $696,000 – Corp. Guaranteed Lease National Tenant – 8.75% Cap Rate
  11. 11. Get Ahead of Property Issues: Get Proactive Before Listing For Sale 1. Tour All Units Prior to Listing w/Broker Old adage . . . “you get what you inspect, not what you expect” 2. Have trusted contractor go through units including attic and crawlspace Surprises Kill Deals!
  12. 12. Cure Issues On Your Timeline And Your Budget!! Cure Property Issues Now, Save $$ Work On Your Timelines not Buyer Transaction Deal Deadlines Termite & Dry Rot Inspection: Duplex $ 195.00 Triplex $ 250.00 Fourplex $ 250.00 Commercial $300
  13. 13. The Process of How To Do It: 1. Walk Through Properties With Broker 2. Schedule Meeting to Determine Listing Prices 3. Talk to Your CPA – Tax Consequence? 4. Identify Target of New Property For Exchange 5. Broker Calls Listing Broker To Gauge Activity 6. Cure Any Property Issues, Then List For Sale 7. Talk to Cascade Exchange Services 8. Talk to Your Insurance Broker Be Accessible To Close Your Deals - Plan Vacations / Travel Accordingly!!
  14. 14. Want Your Real Estate Portfolio To Thrive Through Market Changes? Too Many Options – Not Enough Time Tonight…. 1. Schedule an Initial 15 Minute Phone Appointment (Free) 2. Enjoy a Listening Session 3. Execute A Custom Strategy
  15. 15. My Thoughts About Rent Control? You Should Decide How Things Happen…. No Investor Should Have to Roll the Dice on Their Financial Freedom!
  16. 16. Where Do I Go Now? Visit Rene’s Website For Latest Information… Oregon Rent Control Center www.eugenecommercial.com
  17. 17. For further information: Zoe York – zoe@duncanbrown.com (541) 687-1938 Rene’ Nelson – rene@1031guru.com (541) 912-6583 Rachel McLaughlin – rmclaughlin@cascadetitle.com (541) 687-2233 Brian Cox – bcox@coxassociates.info (541) 683-7151

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