Let’s talk about the climate. We’ve turned the corner into 2019. Let’s talk about the commercial climate.
Bob Nelson, Eugene real estate investment broker
Marcia Edwards, Eugene residential real estate broker
Marcia Edwards: Bob, are you seeing activity from both the buyers and the sellers out there in investing?
Bob Nelson: Yes. It’s interesting because the market has become extremely unsettled as far as residential income properties, apartment complexes specifically. The rent control that is being voted through our state legislature as we speak will impact five-plexes and larger as to the amount of rent that you can increase in a one-year period of time, which is a touchy situation because if you had to re-roof your property or you had to do any capital improvements, that means that you’re most likely going to have to either put additional capital into the project or go out and borrow money, additional mortgage to cause that to happen. If you can’t pass the cost through, you simply won’t do the improvement. That’s a touchy situation.
Marcia Edwards: Well, Bob, let’s talk a little bit from the other perspective.
Bob Nelson: Right.
Marcia Edwards: Housing is becoming less and less affordable. From the tenant’s side, it seems like it’s legitimate to say, “I can’t afford to live anymore in the city.” How do you respond? How is this not a benefit to society a whole for that parcel of the tenant population?
Bob Nelson: Well, actually, I guess if that’s the case, my knee-jerk is … I watched the testimony for this thing, and I heard one person say, “If we don’t have rent control, small children won’t have their medicine, won’t be able to get medicine.” I mean, it’s interesting, but if you’re a permanent owner, is it your obligation to support society for those who can’t afford to live anymore? I think that’s what public housing is about, but I get confused here.
Marcia Edwards: Well, in addition-
Bob Nelson: What a rhetoric.
Marcia Edwards: It’s challenging where the responsibility lies. I think that looking at the 70% cap in increase, what it could do is backfire because as a landlord, I may say, “Well, I’m going to grab my 7% increase in rents every single year because I’ve got to keep up with this because I won’t be able to absorb it later.” It could backfire with an increase in rents is what I was thinking.
Bob Nelson: It will. I can tell you right now, it will, but at the same time, while that’s unfair to the tenant, the landlord is in a real interesting predicament. Do I continue to own or should I simply sell and go into some other type of asset where the government cannot control the amount of income that I would receive?
Join Eugene, Oregon, real estate experts: Bob Nelson, Real Estate Investment Broker with Pacwest Real Estate Investments, and Marcia Edwards, Residential Real Estate Broker with Windermere Real Estate, daily at 5:30 on KPNW for the “Real Estate Today” radio show.