Thursday, July 18, 2019
The apartment building was owner managed and rents were below market. HFO utilized its extensive network of investor relationships to secure a buyer with the wherewithal to close quickly on this unique property.
Tuesday, July 16, 2019
Interest was high for this asset and multiple offers were received. The transaction closed smoothly without any issues.
Monday, July 15, 2019
This week: Home prices drop a bit in Seattle but are still up significantly in the past two years; The Portland City Council weighs gutting the power and influence of its neighborhood groups; Oregon house bill 5006 provides funding to support 2,100 affordable homes throughout the state, and house and senate democrats in the nation’s capital propose legislation that would restrict the ability of public housing providers to evict residents for criminal activity.
Thursday, July 11, 2019
Tuesday, July 9, 2019
Monday, July 8, 2019
The James Beared Public Market project has been on the drawing boards for over a decade. Proposed and still remains basically in concept form after $250,000 in grant money from the State of Oregon's taxpayers in 2013. The project has received nearly $1 million in taxpayer funding that includes $312,000 from the City of Portland.
Read more in this week's Oregonian.
Tuesday, July 2, 2019
Historical operations at the property were impacted by the renovations and a lack of management oversight. Vacancies were above market for the submarket and ongoing renovations limited the ability to lease apartments. HFO targeted investors with portfolios on the west side of the metro area, helping those potential buyers understand the management upside opportunity.
Monday, July 1, 2019
This week: Harvard's Joint Center for Housing Studies (JCHS) released its State of the Nation's Housing Report for 2019; companies in the Portland and Seattle Metro areas continue to announce positive hiring news; President Trump issued an executive order that creates a commission tasked with recommending ways to cut regulations in the housing market.
UPDATE: Oregon Republicans returned to the senate and passed HB 2001 late Sunday night. It heads to Governor Brown's desk for a vote.
Tuesday, June 25, 2019
This week: the Portland City Council approved Commissioner Eudaly's tenant screening and security deposit ordinances with a 3-1 vote; proposed changes to the US census could result in an undercount of over 4 million residents nationwide, including over 75,000 people in Washington and over 35,000 people in Oregon; Democrats vying for the 2020 Presidential nomination are facing pressure from voters to address housing affordability.
In the summer of 2018, a large portion of the siding was replaced and repainted, delaying full marketing of the property. The property was managed for occupancy and rents trailed the market. HFO was key in positioning the property against its historical operations with low rents and high expenses for a successful sale.
Thursday, June 20, 2019
Wednesday, June 19, 2019
Tuesday, June 18, 2019
A final adopted version will be available relatively soon after the meeting.
The asset was taken to market after completion and management companies were switched during lease-up, which resulted in limited historical operations and a longer timeline to full occupancy.
HFO successfully found a buyer seeking new product that was able to offset the impact of the property's limited financials.
Monday, June 17, 2019
This week: The Portland City Council appears poised to adopt a proposed renter screening ordinance that some argue will only serve to increase homelessness; Oregon House Bill 2001 moved forward in the state legislature, the bill would legalize duplexes, triplexes, and fourplexes in single-family neighborhoods in all cities with more than 25,000 residents; and a new report finds that tech workers from some of the most expensive cities on the West Coast are viewing Portland as a more affordable alternative.
For decades, many landlords and banks have held firm to the standard that a person should not rent a unit or buy a home that is more than 30% of gross income. The new standard set by Portland would be 50% of gross income. For people living paycheck to paycheck, any bump in the road in terms of a medical emergency, job loss or other emergency situation could lead to there not being enough savings to avoid eviction. Evictions follow a renter around for three years, which will make re-renting even more difficult for someone in that situation.
Read the op-ed piece here.
Thursday, June 13, 2019
Wednesday, June 12, 2019
“The metro added 27,500 positions in 2018, a 2.4% year-over-year employment growth rate. The construction boom taking place in the metro is supported by the office sector, which has more than 2.4 million square feet of space under construction,” the Yardi Matrix report says.
“With more than 9,320 units underway and some 6,900 units expected to be delivered this year, there are major concerns about oversupply, but a strong occupancy rate is indicating that there is a rapid absorption of new deliveries and demand for housing outpaces supply. The high occupancy rate and steady rent growth are drawing investors to the metro.
“With demand high, we expect rents to rise 1.9% in 2019,” the report says.
Tuesday, June 11, 2019
This apartment building was owner-managed and rents were significantly below market. Utilizing our extensive network of investor relationships, HFO secured a buyer with the wherewithal to close on this unique property.
Monday, June 10, 2019
A growing number of families – at all income levels – are working to find housing they can afford. As such, communities across the U.S. are seeking solutions to solve our nation’s housing crisis. To help meet this demand, federal, state and local governments must come together to reduce barriers to developing more rental housing.
"There isn’t a universal solution to solving the affordability problem," said Doug Bibby, NMHC President. "It requires a multi-faceted approach and I’m thrilled our Housing Affordability Toolkit will help communities, lawmakers and industry stakeholders nationwide explore various approaches."
Developed in partnership with HR&A Advisors, the Housing Affordability Toolkit is divided into six sections and each section delves into a specific component of addressing the affordability challenge. The Toolkit also includes case studies of eight different markets around the country to paint a diverse geographic and economic picture of how affordability challenges can differ from jurisdiction to jurisdiction. Each part can stand alone or be combined with others to bolster the recommendations within the Housing Affordability Toolkit to guide housing affordability discussions.
To download the Toolkit, visit housingtoolkit.nmhc.org.
Final Vote Expected Wednesday at 10:30 am on Portland's Proposed Tenant Screening, Security Deposit Ordinances
Meanwhile, Willamette Week obtained a copy of the City Attorney's analysis of the ordinance, which determined that the possibility of the ordinance being invalidated in court as "low to moderate." Read that story.
This week: Portland’s tenant screening ordinance moves forward to a possible vote by city council this Wednesday at 10:30 am at City Hall; Portland-area developers are bypass the City’s inclusionary housing requirements by constructing assets with fewer than 20 units, and a study finds that the migration of younger people into cities is more than a passing trend.
Thursday, June 6, 2019
Units include a full-sized washer/dryer set, vaulted ceilings plus decks in select units. The property is within walking distance of Portland State University and the city's financial and cultural districts.
HFO was able to demonstrate management upside and long-term demand for this rare townhome product. The asset was purchased by an exchange buyer from California actively seeking to build a portfolio of properties throughout metro Portland.
Tuesday, June 4, 2019
Monday, June 3, 2019
This week: The City of Portland renter and tenant security deposit ordinances progress to a second reading on June 12th; Seattle rent rates are back on the rise, and the City of Tacoma is in the news as the nation’s hottest housing market.
Thursday, May 30, 2019
Portland Unreinforced Masonry Owners Prevail in Fight for Preliminary Injunction Against City of Portland
In this case, Plaintiffs readily satisfy the elements for a preliminary injunction. Plaintiffs have demonstrated a likelihood of success on the merits of their First Amendment claim on the placard and tenant notification provisions of the Ordinance. The court finds that Plaintiffs have demonstrated they likely will suffer ineparable harm if the Ordinance takes effect. Plaintiffs have demonstrated they will be injured beginning June 1, 2019, when they are required to provide a potentially factually inaccurate and misleading statement to prospective tenants in their lease applications. Harris, 772 F.3d at 583 ("[A] colorable First Amendment claim is ineparable injury sufficient to merit the grant of [preliminary injunctive] relief.") Mr. McMonies and Mr. Beardsley testified that if the Ordinance goes into effect, they will be forced to provide false, or at least inaccurate and misleading, information to prospective tenants that their buildings are umeinforced when their buildings have undertaken seismic upgrades. See Oregon v. Azar, Case No. 6:19-cv-00317-MC, 2019 WL 1897475, at 15-16 (D. Or. Apr. 29, 2019) (discussing that plaintiffs demonstrated ineparable injury because of massive cuts to Title X funding if the final rule went into effect). Defendants' contention that the effort for Plaintiffs to provide the URM disclosure in the lease applications is relatively modest in light of other disclosures already required by law, misses the point. The question for the court is not the severity of the harm, but whether the harm is ineparable. Here, Plaintiffs will be required to speak a government-drafted message that is misleading at best. Washington Post v. McManus, 355 F. Supp. 3d 272, 305-06 (D. Md. Jan. 13, 49 -2019) (granting preliminary injunction on First Amendment grounds). Clearly, this factor weighs in Plaintiffs' favor.Furthermore, the Ordinance CatTies the risk of substantial fines for failing to comply, raising the risk for extraordinary harm. See Harris, 772 F.3d at 583 (finding the risk of criminal penalties for failing to comply with rep01iing requirement weighed in favor of granting preliminary injunction). Thus, the court finds that Plaintiffs are likely to suffer in-eparable harm without injunctive relief because if the Ordinance is permitted to take effect, it will violate Plaintiffs' First Amendment rights.The balance of equities and the public interest also weigh in favor of granting the injunction, Insisting that URM building owners post a placard and inform tenants has not been shown to demonstrably increase awareness of seismic risk or inform the public about how to "drop, cover, and hold on." Requiring URM building owners to display and distribute a factually inaccurate message would permit Defendants to infringe on the speech rights of a handful of P01ilanders while failing to take steps to actually increase seismic awareness for all Portlanders. Thus, the significant public interest in upholding First Amendment principles is acutely on display in this case, and weighs in favor of an injunction. The Ninth Circuit "consistently recognize[s] the significant public interest in upholding free speech principles." Klein v. City of San Clemente, 584 F.3d 1196, 1208 (9th Cir. 2009) (finding "balance of equities and the public interest thus tip sharply in favor of enjoining" where plaintiff likely to succeed on merits of First Amendment claim); Innovation Law Lab v. Nielson, 342 F. Supp. 3d 1067, 1082 (D. Or. 2018) ("[I]t is always in the public interest to prevent the violation of a patiy's constitutional rights.") In summary, Plaintiffs have satisfied each of the requirements for a preliminary injunction.Because the court concludes that Plaintiffs have demonstrated colorable First Amendment violations pertaining to the placarding and tenant notification provisions and that a preliminary injunction should issue on that basis, the comi consequently enjoins enforcement of the acknowledgment provision of the Ordinance. The acknowledgment provision requires URM building owners to document their compliance with the placarding and tenant notification provisions on a BDS form. P.C.C. 24.85.65(E). The court is enjoining enforcement of the placard and tenant notification provisions, therefore practically speaking, there is no compliance to acknowledge.Similarly, because Plaintiffs have demonstrated colorable First Amendment violations, the court declines to address Plaintiffs' argument that the Ordinance also violates the Due Process Clause under the Fourteenth Amendment.
HFO focused its marketing efforts on locating a buyer familiar with bricker buildings seeking to acquire a critical mass of units in downtown Portland. The building was sold to a value-add syndicate based in Colorado.
Although built in 1910, The Westfal is not unreinforced masonry construction
Tuesday, May 28, 2019
Yglesias summarized Schuetz' key ideas as follows:
- There are two only partially overlapping housing affordability crises in America, one that affects low-income households in all parts of the country and another that affects a larger share of households in a minority of markets (mostly in coastal metro areas) that suffer from an acute shortage of housing.
- To help low-income families, we should make housing assistance an entitlement — like SNAP or Medicaid — that’s available to every family that meets the income eligibility standards.
- We probably shouldn’t tie housing assistance to local housing costs, because high local housing costs reflect housing scarcity, which means extra subsidy will be captured by landlords. Instead, we should tackle the shortage.
- In California, the Northeast Corridor, Greater Seattle, Greater Portland, and, to a lesser extent, Greater Denver and many college towns, there is simply not enough housing being built to meet the demand to live in these areas, creating problems that no amount of subsidy or rent control can really solve.
- Many of these supply-constrained metro areas do in fact feature building booms in select areas — downtown or in gentrifying neighborhoods — but the vast majority of urban and suburban land is generally set aside for single-family homes and has almost no construction happening in it.
- The most socially and economically valuable place to build new housing would be in the most expensive, most affluent neighborhoods and suburban towns — but to make that happen, state governments will have to override local zoning regulations.
- Federal policymakers hoping to incentive more house-building need to look beyond funds from the Department of Housing and Urban Development, which are not a very strong carrot, and consider using transportation money as a lever to influence state and local policy.
Sue Scott is a semi-retired fitness consultant and the owner of 25 rental units in two properties in Portland. She lives in Happy Valley.
by Sue Scott
The city is using legislation and threats of huge penalties, fines, and fees to put the housing crisis on the backs of those who provide housing.
The proposed regulations for tenant screening and security deposits are 40-plus pages of verbiage and mandate huge fines only to rental providers. This will greatly increase risks for landlords. It's not fair.
Worse, the new proposals hit small investors hardest. That's all wrong too. It is the mom-and-pop landlords who are consistently most flexible with tenants. The big out-of-state providers are already here, and evictions are part of best practices for them in protecting their investors and bottom lines.
There are no risks here for the city. It makes the rules and dictates fines. It doesn’t offer to share the risk and gives us little or no respect Senate Bill 608, which imposed statewide rent control and prohibited landlords from ending most leases flew through all public hearings, and its legislative backers accepted no changes. While the proposed screening and security deposit regulations have had some small changes, it seems the policy as a whole is going down this same intractable path, which will only make the market worse for renters.
Portland City Commissioner Chloe Eudaly especially seems to enjoy pitting renters against the "evil" landlords that maintain the homes and safe places renters live in. We are apparently the biggest easy target. As landlords, we do not have enough political power or numbers. The us against them attitude needs to stop. A workable and sustainable solution needs to be a shared solution.
Writers of these regulations should include all sides. Tenants, housing providers (large and small), financial institutions, and non-profits. The changes must result in sustainable housing for our great city.
And what about property rights? The city now says we must accept applicants who may not be able to afford the rent or are felons in our properties.
Felons are not a protected class, like race, gender, religion, families with kids, sexual preferences, service dogs, disabilities, etc. etc. And tenants who are financially vulnerable are a great risk for any landlord.
As property owners, responsible for the debts and expenses related to those properties, we should have protected rights to assess the financial risk we are willing to take. We pay taxes, mortgages, repairs, legal and all other costs. It takes several years to break even on most properties. For most of us, the big financial rewards come only at the end of our careers and are part of our retirement.
There are more equitable, broader-based solutions that the city should consider.
Last week's planned public hearing on Portland's latest tenant screening ordinance draft was rescheduled to this Wednesday from 6-8 pm after council members publicly struggled over the city budget; four of Multnomah county's five commissioners come out in favor of the city's renter screening ordinance, and unreinforced masonry owners are hoping a federal judge rules in their favor this week by granting an extended injunction against the city of portland's placard requirement.
The purchase price of $8.2 million reflected numerous capital improvement projects scheduled to take place post-closing. The property amenities include underground parking.
Thursday, May 23, 2019
Tenant Screening Ordinance Hearing Postponed to 5/29 at 6:00 pm. After Council Bickering Blows Up Budget Talks [video]
Unable to take a final vote on the budget, the council was forced to reschedule the public hearing for the draft tenant screening and security deposit ordinances. Those issues are rescheduled to Wednesday, May 29th at 6:00 pm.
See the video of yesterday's discussion by clicking here.
Read the latest screening ordinance here.
Read the latest security deposit draft here.
This post was updated 05/23/19 at 3:54 pm with the date and time of the rescheduled hearing.
This post was updated again 05/23/19 at 7:15 pm with yet another date and time of the rescheduled hearing.
The property's operations requried adjustments for costs associated with capital improvements and owner management. HFO worked with investors familiar with the outer east side neighborhoods of Portland and Gresham to complete a successful sale of this asset.
Wednesday, May 22, 2019
Judge Acosta spent much of the City Attorney's time asking questions, offering his counter-argument, and expressing concern over the City's ever-changing ordinance.
A ruling is expected in the case by the end of next week.
In a two-day trial last week, unreinforced masonry building owners learned in testimony by Mike Haggerty how buildings were placed on the City's "official" URM list.
- From 1990 to 1993 the City of Portland had a total of 3 Portland State University students conduct the survey over the course of three summers
- The students were not the same students each summer and conducted their official survey on foot
- The areas only included downtown and the exact perimeter is unknown
- The city did not survey buildings on the east side, Multnomah Village, St. Johns or other areas
- The students eyeballed a building and checked a box
- They did not know that the list would be used 27 years later as the City of Portland's official list, and they did not know that by accidentally checking the wrong box they could impact real people
- They had no significant training for the job and there was no field manual
- Their work was "spot checked" by an actual engineer
- The project had no budget
"The URM database was established in the mid-1990s.Trained City staff, in collaboration with Portland State University (PSU), surveyed all commercial buildings in the City of Portland using procedures developed by American Technology Council (ATC) to identify different building types. This survey was based on site visits and visual inspections of building exterior combined with research of existing building records and permit history. Based on this survey of buildings, buildings that were identified as URMs were listed in a URM database." ~ Shelly Duquette
Tuesday, May 21, 2019
And as commissioners and staffers are patting themselves on the back for collaborative work and building a good product, an individual working closely with the rental services commission bluntly confirmed: "It's not that different at all."
The only change we noted aside from clearer wording was this single item cited in Willamette Week:
Instead of requiring landlords to set the minimum income required for an apartment at two times the rent, the new policy will benchmark the requirement to apartments affordable to 80 percent of area median income: above that, landlords will be required to accept income that's twice the rent; below that the requirement will be 2.5 times the rent.A hearing on the draft tenant screening ordinance is Thursday, May 23rd at 3 pm at Portland City Hall.
Note: this article updated May 22nd at 2:54 pm with a draft screening criteria that was updated on the City of Portland's auditor website after 7:34 am on Monday, May 20th.
Monday, May 20, 2019
Smart Growth advocacy group up for growth released a report criticizing Portland's inclusionary zoning policy, and the Mayor is requesting $150,000 for an independent review of the program; a US magistrate judge heard from building owners and city officials as the lawsuit against placarding signs for unreinforced masonry buildings moved forward; and Vancouver, BC continues to face a tight housing market despite efforts to upzone and new taxes on foreign buyers.
City Council to Hold Hearing on Revised Tenant Screening & Security Deposit Ordinances Thursday, May 23rd
Revised Tenant Screening Ordinance
Revised Security Deposit Ordinance
Note: this article updated May 22nd at 2:54 pm with a draft screening criteria that was updated on the City of Portland's auditor website after 7:34 am on Monday, May 20th.
Friday, May 17, 2019
Portland City Attorney Warns City Council about Legal Issues in Tenant Screening & Security Deposit Ordinances
Thursday, May 16, 2019
A legal summary of that change is on the following page. It indicates that the law enacts a new graduated rate scale for real estate. The flat tax of 1.28% will be replaced January 1, 2020, by the following rates:
- 1.1% – Portion of selling price less than or equal to $500,000
- 1.28% – Portion of selling price greater than $500,000 and equal to or less than $1.5 million
- 2.75% – Portion of selling price greater than $1.5 million and equal to or less than $3 million
- 3.0% – Portion of selling price greater than $3 million
Historical operations were impacted by a broken water main. HFo worked to help investors understand the challenging historical operations and appreciate the asset's upside opportunity.
Tuesday, May 14, 2019
Prior to sale, the property had new windows, roofs and siding. HFO worked with investors familiar with outer east side neighborhoods of Portland and Gresham to orchestrate a successful sale.
Monday, May 13, 2019
Hearings Begin Tomorrow in Federal Court as URM Owners Seek Preliminary Injunction Against the City of Portland, OR
In early April the City of Portland was found in violation of a temporary restraining order by attempting to enforce its placard ordinance. A few weeks later, the court found the City in violation of the restraining order a second time.
Attorneys representing owners of unreinforced masonry buildings had to send a letter demanding remedies for the second round of violations of the court's temporary restraining order, specifically for these violations:
- The City illegally recorded contracts on titles.
- The City illegally accepted contracts after the temporary restraining order date.
- The City failed to remove enforcement language on websites.
The judge ordered the City of Portland to:
- Remove the encumbrances off titles and deeds.
- Return the contracts to building owners.
- Refund the costs related to contract recording.
- Update placard websites with a restraining order notice.
- Follow a phone and email script approved by Judge Acosta.
Judge Acosta begins two full days of hearings Tuesday, May 14th and Wednesday, May 15th at 8:30 am in courtroom 11B at the Federal Courthouse located at 1000 SW 3rd, Portland, Oregon.
Unreinforced Masonry Owners are hoping to win this first round of hearings in order to move forward with a motion for a permanent injunction on the placard requirement.
Listen to our latest podcast.
Friday, May 10, 2019
Thursday, May 9, 2019
HFO targeted investors with properties on the east side of the metro area, helping the potential buyers factor in management upside opportunity.
Wednesday, May 8, 2019
Tuesday, May 7, 2019
Monday, May 6, 2019
Listen to our latest podcast.
Friday, May 3, 2019
Given the unique unit mix and property vintage, HFO worked to demonstrate possible upside through ongoing interior updates. Hampton HIlls was sold to a buyer participating in a 1031 tax-free exchange.
Wednesday, May 1, 2019
Tuesday, April 30, 2019
HFO Investment Real Estate worked with investors familiar with Vancouver assets without stabilized historical operations to finalize a successful sale.
Monday, April 29, 2019
Despite dismal reports on the City's inclusionary housing policy City of Portland Housing Program Specialist Brett Eisenbrow responded to an HFO inquiry on potential revisions by saying "...there are no program changes scheduled... as we review and revaluate [sic] the IH program in the future..."
This week: The Portland City Council will vote May 23rd on screening and security deposit reform after Mayor Ted Wheeler called for significant changes to the proposals; a growing number of high-income households are renting instead of buying; and the New York Times reports that 2020 presidential candidates are working on strategies to help renters.
Friday, April 26, 2019
Wednesday, April 24, 2019
Tuesday, April 23, 2019
Monday, April 22, 2019
This week: The US Treasury Department issues long-awaited guidance on opportunity zones; new data pinpoints dramatic effects of climate change on Portland neighborhoods; and a Harvard Business Review study has found that in cities with increasing Airbnb listings, housing costs also rise.
- Rental vacancy rates in Greater Portland increased 55 basis points to 4.95%--but remaining relatively unchanged from one year earlier.
- Rent rates increased 4% in the past six months and were up 7.7% on average from one year ago.
- Note that these rent rates do not represent "effective" rent rates due to the offering of concessions, which are becoming more prevalent in the market.
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