Other videos you may enjoy on this topic and related topics can be found on René Nelson’s YouTube Channel. Subscribe and sign up for notifications so you are alerted when René Nelson shares more tips and tricks about the Oregon commercial real estate market.

YouTube Channel

[embedyt] https://www.youtube.com/watch?v=TfLiGl77E-8[/embedyt]

How Do You Determine an Investment Property’s Cap Rate?

Learn what information is used to establish the cap rate for your investment property.

[toggles title=”Read the Full Transcript”]
So as a commercial real estate broker what I do to help my clients get their properties ready to go on the market is I look at your current rent roll and I look at the last three years of your operating statements, and then I establish your net operating income. And then from there, we apply a market cap rate.

A lot of people say, “Well, how is the cap rate established?” And really, a cap rate is the determination of what an investor will pay for a property based on the risk and what they are willing to pay in relation to receive that income stream.

With my 30 years of experience in the commercial real estate market, I can just look at a property and I know where it should be and what cap rate should fall into it. It’s similar to when you go to sell a used car, as an example, and you look up the Kelley Blue Book, but then you really need a market expert to tell you, “Well, here’s where I think it’s going to sell.”[/toggles]

[embedyt] https://www.youtube.com/watch?v=MvrHcToKKkQ[/embedyt]

What is the Current Cap for Oregon?

Learn about the current rent cap in Oregon, how it’s determined, and current trends and opportunities available for rent increases.

[toggles title=”Read the Full Transcript”]There is a rent cap. The Oregon legislators put in rent controls several years ago. And what’s happening right now is it’s 7% plus CPI. CPI just fell in September of 2020. So, right now the maximum rent statewide that you could increase your rent is 9.21%.

Now that sounds like a lot, but most landlords right now, because of COVID, are not raising their rent to that extreme of 9% for rent increases. Where we would see people that would ask, “Hey, how much could I increase the rent?” is if they buy an apartment with the concept that they’re going to do a value add opportunity.

So they want to go in and gut the whole apartment. And then they want to raise rents to the maximum that they could. There is a cap on that of 9.21% for maximum rent increases.
[/toggles]

[embedyt] https://www.youtube.com/watch?v=GucN7FKQD2A[/embedyt]

Can You Raise the Rent For Tenants When You Buy an Existing Complex in Oregon?

Learn about Oregon’s eviction moratorium and how to handle current tenants when buying a new commercial property.

[toggles title=”Read the Full Transcript”]
Right now there’s a rent moratorium, or I should call it an eviction moratorium, happening in this state where you cannot evict tenants. I get this call a lot. If you buy an existing apartment complex and it has tenants in it, you must take the tenants that are there. You can’t just give everybody notices that you’re going to raise rent and hope that they move out. That’s against the law now. So there’s no longer a no-cause notice opportunity in Oregon. You have to actually take the tenants in place and do your rent increases per the state requirements.[/toggles]

If you enjoyed this video and have more questions about commercial real estate in Oregon or the Eugene-Springfield Area, click the link below to schedule a 15-minute Free Discovery Call with René Nelson!

SCHEDULE A 15-MINUTE DISCOVERY CALL

In this video, René Nelson goes into detail about each of the steps you can take when you are looking at buying or selling an apartment complex or multi-family unit in the Eugene-Springfield area.

[toggles title=”Read the Full Transcript”]
Well to sell your apartment complex the first thing that you need to do is contact an industry expert, especially a commercial real estate broker, and find out what’s happening in the market. So there’s several things that go into play. We look at the cap rate and we look at other sold comparable properties, and we look at the condition of your property in relation to those properties. And we establish a value and I’m going to talk over the next couple of series of videos on how to price your property and how to get it ready for the market. But it’s not just as easy as throwing a sign up in the yard or taking a couple of pictures and putting it out on Zillow or some site like that. There’s some complexity that goes into it.[/toggles]

Other videos you may enjoy on this topic and related topics can be found on René Nelson’s YouTube Channel. Subscribe and sign up for notifications so you are alerted when René Nelson shares more tips and tricks about the Oregon commercial real estate market.

YouTube Channel

[embedyt] https://www.youtube.com/watch?v=WAxRcXij6T0[/embedyt]

I’m Looking to Sell an Apartment Complex, What Actions Should I be Taking?

Learn about what a Commercial Real Estate broker looks at when you first decide to sell your apartment complex, how to get ahead of the curve on the Oregon Commercial real estate market, and how to streamline the process.

[toggles title=”Read the Full Transcript”]
Right now, most sellers need to get ahead of the curve, and the first thing that you want to do if you want to sell your apartment complex is you want to know what the true value is, and you want to get that price established.

That takes a little bit, because I have to do a thorough analysis of the property, looking at both the rent roll as well as the last couple of years of the operating expenses. And then I compare that to other properties that are in the market. What I’m trying to do there is really establish a price to make sure that the seller’s not leaving any money on the table and that we have a value that we know will transact at, where it’s going to entertain offers, buyers who’d be excited to make an offer.

So if someone wants to sell a property, I advise that they get ahead of the curve, they contact a broker, find out what the property value is, because the broker’s going to need some time to do some analysis of that and get the property ready to go to market.[/toggles]

[embedyt] https://www.youtube.com/watch?v=uhAD68A34zw[/embedyt]

What Does It Mean to Sell a Commercial Property on the Silent Market?

Learn about how the silent market works for commercial real estate and how brokers in Oregon manage properties not listed in the open market.

[toggles title=”Read the Full Transcript”]So what happens with apartment complexes that are not listed in the open market is those are typically transacting off market, where, as a broker, I have a seller that will come to me and say, “I want to sell my apartment, but I don’t want it out on the open market.” So that’s a silent market opportunity where it’s quietly available, but they don’t want it on the open market, and I have a list that I keep of both buyers that are looking to buy and sellers that are looking to sell. So frequently, I can match a buyer and seller together, but I don’t always have both the buyer and the seller. I like to represent one party in a transaction, but I have a bunch of different commercial real estate broker friends that will call me frequently and say, “Hey, I have a 1031 buyer.

They’ve got a tight timeline.” They’re looking to buy an apartment complex because a lot of, both brokers as well as property owners in the market know that apartments are my niche and that’s one thing that I do for commercial real estate in the Eugene-Springfield area, so I receive a lot of calls from people that are looking to buy apartments and they tell me what they’re looking for and then they just say, “Hey, let me know when this becomes available.” I’ve done everything from small plexes to five units up to $20 million transactions where people have just called me and said, “This is what I’m looking for. Let me know when it becomes available,” and then we put the transaction together.[/toggles]

[embedyt] https://www.youtube.com/watch?v=1HdyyuGc2sM[/embedyt]

How Does a Commercial Real Estate Broker Help in Selling an Apartment Complex?

This video discusses some of the discovery questions that a commercial real state broker asks prospective sellers in the Eugene-Springfield area and how those questions can lead to a market strategy and property value.

[toggles title=”Read the Full Transcript”]
To sell your Eugene-Springfield apartment complex, the first thing that you want to do is give me a call and let’s talk about your situation and your scenario. So some of the questions that I like to ask a seller, “Have you recently done any improvements to the property?” And I like to get a really good idea of the condition of the property. And then we look at the income stream, the net operating income that the property is generating. And then what I do is I look at comparable properties in the market. I’m continually analyzing and looking at recent sales and tracking what’s happening in the market, and so I’ll look at a seller’s property and compare that to similar properties in the market to really establish a pricing strategy on where I think that property will sell at. And then the seller and I come to an agreement on, “Yes, that’s the right price.”

And then we put together the marketing strategy. It’s not as easy as just taking a few pictures and throwing it up on a website like Zillow, because what’ll happen is buyers will show up, but they won’t be able to close the transaction. Commercial real estate is really a complex situation, the industry is continually changing. So as an example, I had an apartment complex under contract for a buyer and we had been working on this deal for almost six months and then COVID hit. Well, the lender decided, and it was really ultimately Fannie Mae because Fannie Mae is the lender that generates out the… They’re the government agency that generates out all the rules and regulations for what lenders need to follow as well as the money supply for the lenders. And Fannie Mae made a rule during COVID that a buyer has to have between 12 to 18 months’ worth of PITI reserve in the bank after closing or upon closing.

And so that made a big impact for my buyer on what they needed to have for cash reserves in the bank. So not only are they buying a $19 million apartment complex, putting a substantial 35% down payment, but now they have to have 13 months’ worth of PITI reserve in the bank. So, I recommend for somebody that’s looking to buy or sell an apartment complex, get in touch with a commercial real estate broker and deal with an expert who really understands the market. Not only on price and values, but also what’s changing in the industry and what you need to be aware of both as a buyer and a seller, because commercial real estate transactions can fall apart and you really need an expert that knows what’s happening in order to advise you.[/toggles]

If you enjoyed this video and have more questions about commercial real estate in Oregon or the Eugene-Springfield Area, click the link below to schedule a 15-minute Free Discovery Call with René Nelson!

SCHEDULE A 15-MINUTE DISCOVERY CALL

David Moore of Equity Advantage, nationally recognized leader in 1031 Exchange facilitation, answers whether exchange rules allow you to acquire a property that your business will occupy. Moore explains different 1031 exchange options that allow for more flexibility in your property investments and benefits for your income.

A lot of times people will create a business, build it, and do great with it, but ultimately the thing that makes them the most money is the business’s property—the property that the business actually occupies. To answer the question, yes, certainly, you can buy a property and have it acquired personally and have that property occupied by your business. – David Moore, Equity Advantage

To learn more, visit Equity Advantage at 1031exchange.com, or visit David Moore’s YouTube channel, Equity Advantage 1031 Exchange.

If you’re thinking of selling your property, work with a broker who understands 1031 exchanges. Call René Nelson at 541-912-6583.

Selling your apartment complex in Eugene, Oregon, requires a specialist. Many realtors will claim that they can sell commercial real estate, when in fact they lack both the expertise to understand the process and the experience to get the job done. You want an expert to advise and guide you through the process. Being equipped with the right information can help prevent a mistake because you don’t know the market—and literally save you thousands of dollars!

Selling an Apartment Complex in Eugene: Out of State Owner

Information is one of an investor’s most powerful tools. Learn about the state of the multifamily market in Lane County and what impacts sales price.
[vc_row][vc_column width=”1/2″][/vc_column][vc_column width=”1/2″]

• Lane County cap rates and sales comps
• Eugene/Springfield’s silent market
• Considerations for selling an apartment complex

[/vc_column][/vc_row]Read “Selling an Apartment Complex in Eugene: Out of State Owner” here.

Current Issues with the Eugene Apartment Market

Rent control is affecting the apartment market in Eugene and throughout Oregon. René Nelson helps to evaluate what is going on in order to help you make wise investment decisions.
[vc_row][vc_column width=”1/2″][/vc_column][vc_column width=”1/2″]

• How rent control is impacting Oregon apartments
• The top 10 issues affecting commercial real estate
• How a multifamily investor can measure performance

[/vc_column][/vc_row]Read “Key Issues Affecting the Apartment Market in Eugene” here, and watch Rene Nelson’s presentation. You can also access MAI appraiser Zoe Swartz’s presentation on the Eugene-Springfield apartment market and CoStar market analyst Emily Anderer’s presentation on trends and forecasts for the Eugene market.

[vc_row][vc_column width=”1/2″]Understanding the Eugene-Springfield Apartment Market
Zoe R. Swartz, MAI Ducan & Brown[/vc_column][vc_column width=”1/2″]Trends and Forecasts for the Eugene Apartment Market
Emily Anderer, Market Analyst CoStar[/vc_column][/vc_row]

Why Using a Broker Can Help You Sell an Apartment Complex in Eugene

There are many reasons to use a commercial real estate broker if you want to buy or sell an apartment complex. Learn how their valuable experience can benefit you, whether you’re a buyer or a seller.
[vc_row][vc_column width=”1/2″][/vc_column][vc_column width=”1/2″]A commercial broker serves as a transaction coordinator. Commercial real estate deals are complex and have lots of moving parts. René will ensure that the deadlines of your transaction are met and that you have ample time to complete your inspection and do your due diligence on the property you want to buy. This ensures that you know what you are buying before you take ownership.[/vc_column][/vc_row]
Read the full article “Why Use a Broker” here for the top ten reasons to use a commercial broker.

What a Commercial Real Estate Broker Will Do for You

Whether you want to buy or sell a commercial property, there are good reasons to work with a commercial broker. Understand what a commercial broker brings to the table and how they will guide the process.

Why is it important to use a commercial broker to sell my apartment complex in Eugene, Oregon?

Pacwest Commercial Real Estate is a Eugene-based brokerage firm specializing in selling apartment complexes. As a CCIM and commercial real estate broker, I have expertise to collect and analyze the data needed to advise you on how to sell your apartment for top dollar fast!

What is the benefit of working with a Eugene Commercial Real Estate Broker?

I am located in Eugene, Oregon, and understand the market. My primary focus is apartment complexes in Oregon. I can offer you a Free Market Report on any apartment complex in Lane County. Before you consider buying or selling your apartment, you need to get the real information on what’s happening in the market.

How do I find out how much my Oregon apartment complex is worth?

Before you decide to sell your apartment, you need to get an idea of the current market value of your property – based on the current market activity in the neighborhood where your property is located as well as the total market.

We use a detailed analysis similar to a commercial appraisal to analyze and decipher your information and assist you in determining the most probable sales price based on market facts.

Call our office for a free phone consultation. We’ll ask you some questions about your property that will allow us to get a good idea of how we can help you. Whether you are looking to buy an apartment complex or looking to sell an apartment complex, Pacwest Commercial Real Estate can advise you on the strategies needed to make the right decision based on market data and facts.

Check out the entire Pacwest Commercial Real Estate FAQ here.

The sale or purchase of commercial real estate is a significant transaction. Protect your investments and your future by educating yourself on the process and getting help from a commercial real estate broker.

As a commercial real estate broker, my goal is to help you evaluate the opportunities in commercial real estate Eugene. Staying on top of trends is one way to build awareness of opportunities. With those opportunities in mind, I can help you develop a strategy as an investor. Call or email me today if you want to talk. 541-912-6583, rene@1031guru.com.

We’ve chosen these articles to keep you up to date current as an investor with the latest news and trends in commercial real estate investing in Lane County. We are sharing articles on changes in retail trends and the rise of Dollar General, the issues of real estate transfer taxes and enforcement of fair housing laws in Oregon, and the growing demand for single-tenant net-lease properties.

Stay on top of your game as a real estate investor in Lane County. Our weekly newsletter delivers current news and tends.

SIGN UP FOR OUR NEWSLETTER

Top Articles for Real Estate Investors

More and more Dollar General stores are opening throughout the United States as the middle class gets squeezed. For commercial real estate investors, these represent a great opportunity available to Lane County investors. Find out more in the full article.

Thousands of retailers are closing – but Dollar General is opening almost 20 stores a week

Thousands of retail stores are on track to close by the end of the year as consumers embrace online shopping. But one company continues to rapidly expand its physical footprint and rake in profits year over year – Dollar General.

Back in 2012, after the great recession had done its work on housing prices, Oregon voters decided in favor of Measure 79, which prohibited real estate transfer taxes. Now Governor Brown wants to change that in the name of using the money collected toward affordable housing measures.

Take, Take, Take… Oregon’s Governor Proposing a New Statewide Real Estate Transfer Tax – 1031 Exchange Experts Equity Advantage

Despite the Fact Oregon Tax Payers have made such action unconstitutional, Gov. Kate Brown wants voters to approve a tax for affordable housing. Eight years ago, amid a cratered housing market, Oregon voters decided the state shouldn’t impose taxes when real estate changes hands.

Two Oregon Democrats are seeking greater enforcement of fair housing laws. Oregon Labor Commissioner Val Hoyle and Senator Shemia Fagan are pushing to reestablish a partnership between the state of Oregon and the U.S. Department of Housing and Urban Development to investigate cases of reported housing discrimination in Oregon.

2 Democrats call for Oregon to step up its enforcement of housing discrimination laws

The Senate Bill proposal calls for allocating $299,000 in one-time funds to hire a prosecutor and four staff members at the state Bureau of Labor and Industries to investigate complaints about housing discrimination and educate landlords on fair housing laws.

According to a fourth-quarter report on net leases from the Boulder Group, demand for single-tenant net-lease properties continues to grow and is causing cap rates to decline. Many investors realize the opportunities and benefits these properties offer.

Single-Tenant Net-Lease Market Firing On All Cylinders As Cap Rates Hit Historic Lows

9229 Lincoln Ave., Lone Tree, Colorado Competition among investors for single-tenant net-lease properties intensified last year, sending cap rates down to historic lows nationwide, and the widespread eagerness to buy in this market may not slow down in 2020, according to a Q4 net-lease report by Wilmette, Illinois-based The Boulder Group.

There are numerous opportunities in Eugene-Springfield right now for investors interested in multifamily and other commercial properties. Some of these are silent opportunities that will not be listed. Contact me to find out more: 541-912-6583, rene@1031guru.com.

Disruptions in Oregon Real Estate Episode 7:
Money Is Cheap, Should You Trade up Your Apartment Complex in Eugene?

As a commercial real estate investor, you want your investments to achieve the returns you are looking for. One way to keep your investments working for you is to stay abreast of trends and interests rates. Is your Eugene apartment complex doing what you need it to do for you? Is it time to make a change? Learn about your options and how to evaluate your motivations and goals as an investor.

What You Will Learn in Episode 7:

• The cost of money these days
• Normal interest rates for small apartment complexes and how that is changing
• Why now might be the right time to consider buying more units or going into something newer
• How rent control is affecting investment choices
• Benefits of commercial real estate investment: tenant pays taxes, insurance, and for maintenance and repairs
• Understanding your motivation as an investor
• How to analyze investment returns to achieve goals

Many factors influence how you evaluate your investment opportunities in Eugene and Lane County real estate. Interest rates, inventory, your own motivation and goals, and rent control laws are just a few. Commercial real estate broker and investor Rene Nelson explores these factors and how to measure the value of your current real estate portfolio and make decisions for the future.

[toggles title=”Read the Full Transcript”]

Money Is Cheap, Should You Trade up Your Apartment Complex in Eugene?

Barry MacGuire: Welcome to the Disruptions in Oregon Real Estate podcast with your host, René Nelson, helping you stay in the driver’s seat of your investment portfolio. As a commercial real estate broker and investor herself, author René Nelson’s passion is to keep your heart earned real estate investments working for you. Her goal is to help Oregon real estate investors analyze and measure the value of their current real estate portfolio while exploring available opportunities. And now your host, René Nelson.

René Nelson: Hi, Barry. How are you?

Barry MacGuire: Good. How are things in the market right now?

René Nelson: They are crazy.

Barry MacGuire: Tell us René.

René Nelson: Okay, so here’s the deal. As you probably know, if you’ve heard, read any media or heard anything on the news, interest rates are super low.

Barry MacGuire: Money is cheap.

René Nelson: Money is really cheap. Here’s what’s motivating that. Unfortunately, as most people know, in China, there’s the Corona virus.

Barry MacGuire: Sure.

René Nelson: And that is making an impact on international investors who are bringing their money into America now. They’re flooding our markets.

Barry MacGuire: America’s a safe haven, is that what you’re saying?

René Nelson: Yes.

Barry MacGuire: Okay.

René Nelson: Yes. That also means then money’s cheap because we have a surplus right now. Lenders, the treasury, the tenure treasury just dropped, so lenders drop their interest rates again. So I’m going to just give you a measurement, a tool, a measurement of how to look at this. Normal interest rates for a 10 to 20-unit apartment complex have been around 4.25 to four and a half percent.

Barry MacGuire: Which is historically pretty good, isn’t it?

René Nelson: Yes.

Barry MacGuire: Okay.

René Nelson: It’s really good. I got a quote yesterday on a 20-unit apartment complex, just your two story bread-and-butter, built in 1970s, no real bells and whistles, not a lot of amenities, the lender quoted 3.95%.

Barry MacGuire: Wow, under four.

René Nelson: Yeah. I mean, it’s just crazy right now what’s happening with interest rates and the cost of money. So what that does for sellers, it’s a good time to look and see if you want to trade up and go to bigger units or newer units. Because a lot of people that have an apartment complex in their portfolio, most people have owned that for a couple of years, on an average like seven to 10 years.
Now’s a good time to look at moving up and buying more units or going into something newer. So you might wind up going down to fewer units but newer, so you’re going to have less maintenance, less repair, and less headache of stuff to deal with.

Barry MacGuire: So this would be a 1031 exchange?

René Nelson: Yes, you would do a 1031 exchange into newer units.

Barry MacGuire: Okay. Are we finding a lot of people are thinking about doing this or are they just sitting there with the properties that they’ve been happy with over the last few years?

René Nelson: It’s really interesting. I have a California investor that’s looking to buy up to 10 million worth of real estate right now. He specifically wants campus. So he called me and said, “I have cash up to 10 million, find me campus. I want something within walking distance to the U of O.” I started calling all my clients and my database as well as all the multifamily owners within a one and a half mile radius of the U of O area.

A lot of people I’m finding are saying, “I don’t know what I would do if I were to sell,” and when I start asking them questions about, “Well, tell me about your property. Are you happy with your cashflow?” “Yeah, I’m pretty happy with my cashflow.” Then I start asking them questions about, “Well, how’s your maintenance been and how’s the property performed?” Then they really start to think, “Well, maybe I want to get out of student housing.”

So we’re starting to see people that are looking at getting out of a certain type of real estate and go in to something that’s more passive in commercial real estate where they’ve got a tenant that’s maintaining the property and paying the taxes and the insurance and the maintenance and repair.

That’s in more of a true commercial property compared to an apartment complex where you’re going to have a property manager that’s going to be taking care of things, but you’re still going to be responsible financially for the maintenance and repair.

Barry MacGuire: Are you finding people who are gravitating more getting out of apartments, maybe getting into more retail and stuff like that?

René Nelson: Yeah, a lot of people have been concerned about the rent control and so that’s been one of the key motivators is people have watched their real estate portfolio, specifically apartments really grow and get at the top of the market. They know that it’s probably a good time for them to do something different with that property.

So now they’re looking at other opportunities like, “Okay, if I sold my eightplex, what can I 1031 exchange into?” So an example, I have a client right now that’s going to sell an eightplex and a fourplex that are side by side. He’s going to sell those, and we’re going to 1031 exchange him into an office building where it has two tenants. They’re long-term established tenants. One tenant has been there since the year 2000, that’s how long he’s been a tenant.

Barry MacGuire: Yeah.

René Nelson: He just signed a new five-year lease with two options to renew, and both of those tenants in that office building are responsible for the taxes, the insurance, and the maintenance and repair. I know that I keep mentioning that and most people are probably like, “Why is that important?” The reason is because the rent that you are anticipating, that’s all your money, that all goes into your pocket and you don’t have to take care of the maintenance of the building. The tenant is responsible for that.

Barry MacGuire: Oh, really?

René Nelson: Yeah.

Barry MacGuire: That’s nice.

René Nelson: It is, and the taxes and the insurance and everything else. So you get to keep the building. Tenant pays everything, and that’s also nice because I find that office tenants will take care of a building better. They’ll fix things faster. They’ll take care of it better because they know they’re on the hook for the repairs.

Barry MacGuire: Good point.

René Nelson: So rather than tolerating a leak in the ceiling of, “Ooh, don’t want to call the landlord because he’ll be mad at me or he’s going to raise my rent,” instead of doing that they get on it right away and fix it.

Barry MacGuire: That’s a very good point.

René Nelson: Yeah, I see that all the time. I can’t tell you how many times I go through an apartment inspection and I’ll see either a bucket under a kitchen sink or a leak in the ceiling and I’ll say to the tenant, “Have you notified your landlord of this?” “No, not yet, because I’m afraid my landlord’s going to be mad at me, my landlord will evict me, my landlord will raise my rent,” which none of that can happen.

Barry MacGuire: It’s the opposite.

René Nelson: It is. The landlords really want to know that stuff so they’re going to fix it.

Barry MacGuire: Yeah, they want that feedback.

René Nelson: Yeah, yeah, but I just see all the time tenants are scared to approach their landlord with issue. So they don’t say anything until they have a bucket under the sink catching a drip with an issue.

Barry MacGuire: All right, so money is cheap. What’s your suggestion for people that have properties might want to trade up? What do you say?

René Nelson: Here’s what you really need to know is how’s your property performing right now. If you were to 1031 exchange into something different, how would that perform for you in the future? So I first look at cashflow. What are you earning and cashflow right now off of your property and what are you going to be receiving for the new property that you 1031 exchange into?

Some of my clients are deciding that capital gains are probably as low is there going to be and so a lot of my clients, I have one client in particular that selling an apartment complex for four million. He’s just decided he’s going to pay the capital gains and sell it and pay the tax and be done with it and put the cash in the bank. He’s tired. He just doesn’t want to own real estate anymore.

Barry MacGuire: Has it been a real headache for him or?

René Nelson: Not really. He’s got a professional management company that manages it. They do a great job. The property was built in 2012. He’s really financially secure, obviously.

Barry MacGuire: Okay. I guess he just wants to simplify his life.

René Nelson: He wants to simplify his life and he’s just at that point where he’s like, “I’m just going to pay the tax and sell and put the cash in the bank.” For him, it’s peace of mind.

Barry MacGuire: Sure.

René Nelson: So what I find for a lot of sellers is we have to really dig into what’s their motivator. If they could wave a magic wand once and could take their current existing property and go into something new and different, what would that look like? Because some people say, “I want ease of management.” Okay, that tells me they probably don’t want to go into multifamily. They probably want to go into a triple net commercial building where the tenant is responsible for everything, and they just get the check in the mail.

Some of the drawbacks of those type of properties, as an example, a lot of times the rent is fixed for five years. You have little rent increases where the rent can go up, say 3% per year annually, but that’s a big difference between multifamily where now your rent can go up 9.9% or whatever the rent cap is plus CPI.

Barry MacGuire: Sure.

René Nelson: Does that make sense?

Barry MacGuire: Yes, it does.

René Nelson: Okay. So sometimes there’s trade offs. Do you still want to be a multifamily and if you do, I own apartments, so don’t get me wrong. Apartments are a great property to own for commercial real estate, but there’s some people that are just starting to see the changes that are happening in Portland right now for the screening laws that are happening. They’re really concerned those will pass statewide within the next 12 to 24 months.

We’ve talked about it in past podcasts, that’s going to be a game changer because that will put more mom and pop operators who self-manage, that’s going to put them under the gun. They’re going to have tough situations where their tenants are going to potentially create issues for them, and they may or may not know how to handle that. If they don’t handle it properly, they can be sued. So there’s a target painted on their back right now for being savvy, knowing what they’re doing and really learning the laws. There’s so much to it with the lies, it’s hard to know it all.

So for a lot of my clients, I look at where are you at right now and where do you want to be. One of the questions I asked my client, “If you were setting here three years from today, looking back, what would need to happen in order for you to be happy with your real estate portfolio?”

Barry MacGuire: That’s a good question to ask.

René Nelson: Some people say, “Well, I want to be on a beach. I don’t want to work.” If they’re working a day job right now and their real estate portfolio is generating them $500 a month in cashflow, I’m probably not going to be able to help them quit their day job.

Barry MacGuire: Not yet.

René Nelson: Go live on a beach in three years.

Barry MacGuire: Yeah.

René Nelson: So it has to be realistic, but what they really want to do-

Barry MacGuire: They could live on a beach, but they just wouldn’t have a house to go to. They just have to stay on that beach and do a little bit of fishing for food.

René Nelson: Exactly. I guess that’s true. We could always get them there. It’s just what they like the quality of life.

Barry MacGuire: Exactly. So it really sounds it’s for those people that have properties, it is a case-by-case basis. It’s like everybody’s individually unique, right?

René Nelson: It really is, and every property is different.

Barry MacGuire: Yeah.

René Nelson: Because to me it starts with the numbers. I’m an analytical person by nature, so I like to look at their current rent roll in the last three years of their real estate schedules and their tax returns. Because a three-year history will tell me how that property is performed.

So I’m going to give you an example. A couple of weeks ago I analyzed 150-unit apartment complex. The owner has a professional management company that’s doing a great job for them. When you drive by the property, it’s got great curb appeal.

Barry MacGuire: Well-maintained.

René Nelson: Well-maintained shrubs and landscaping looks great. The exterior of the building looks great. Interestingly enough when I looked at the last three years of their income and expenses, their expenses are really high. So we’re seeing on that particular property, we’re seeing almost 60% operating expense where industry standard is about 45%.

So by looking at the numbers, I’m able to analyze it and look at it not only how has it performed in the last three years but looking at it then through the eyes of a buyer, how will it perform when they take ownership? The reason that’s important is if I’m representing the seller, I have to be able to defend that most probable sales price.

When I tell a seller, “Here’s what your property can sell for,” I have to be able to defend that number and explain to an appraiser, a buyer’s broker or the buyer. Here’s how I derived at the sales price and here’s how this property should perform based on the last three years of expenses.

Barry MacGuire: Is that what you typically go by, three years, there’s a one year, five years?

René Nelson: That’s a great question. Really three years. The reason that you don’t want to do just one year is what if last year they minimized on maintenance and repair and just scrimped by knowing that they were going to sell?

Barry MacGuire: Fudge the numbers a bit.

René Nelson: Yeah.

Barry MacGuire: Yeah.

René Nelson: So if you look at three years, you really get that trend and you start to see how the property is performed.

Barry MacGuire: Okay. All right, well, like I said, it’s a case-by-case basis. If somebody is a property owner and has been thinking about maybe selling, maybe trading up, how can people contact you?

René Nelson: You can call me at 541-912-6583.

Barry MacGuire: Website?

René Nelson: Best place to go is eugene-commercial.com. I’ve got an easy little app that you can click on and book an appointment online or reach out to me on my website.

Barry MacGuire: René, thank you so much.

René Nelson: Thanks, Barry.

Barry MacGuire: She is here to help you. Once again, 541-912-6583 or eugene-commercial.com. Thanks for listening.

[/toggles]

Learn more about the opportunities available to capitalize on the current disruptions in the Oregon multifamily market

Click the button below to download my book or request a hard copy:

If you’re ready to talk with me about your options as an investor:

SCHEDULE A 15-MINUTE DISCOVERY CALL

David Moore of Equity Advantage, nationally recognized leader in 1031 Exchange facilitation, answers how you can make sure that your exchange accommodator is insured. Making sure your investment is secure is key, and knowing your 1031 exchange accommodator is both qualified and covered is crucial to ensuring safe investments.

Anyone reputable in the business is going to be part of the Federation Exchange of Accommodators, which has a code of ethics. You have to have bonding and E&O. So the easiest way to find out is just check to see if they’re a member of the Federation of Exchange Accommodators (www.1031.org) and then you can ask your accommodator for a copy of their fidelity bond and whether they have E&O also. Those two things are what you want to confirm. – David Moore, Equity Advantage

To learn more, visit Equity Advantage at 1031exchange.com, or visit David Moore’s YouTube channel, Equity Advantage 1031 Exchange.

If you’re thinking of selling your property, work with a broker who understands 1031 exchanges. Call René Nelson at 541-912-6583.

As an investor, it pays to stay up-to-date with the trends in the Lane County apartment market. Understanding the impact of rent control as well as the construction pipeline and rent forecasts for the area will help you make sound investment decisions.

What You Will Learn in This Video

• Overview of the Oregon multifamily market, including supply, demand, and vacancy in the Portland and Eugene markets
• The construction pipeline and rent growth in the Portland and Eugene multifamily market
• The trends in multifamily market pricing and cap rate
• In-state versus out-of-state apartment sales in Oregon (March–November 2019)

Educated investors make better decisions, but it can be challenging to identify trends in the U.S. economy and the capital markets. As a result, investors sometimes wait too long to capitalize on trends. Use this valuable information to help you make the most of opportunities.

To reach Emily Anderer, CoStar market analyst, call 844-289-1145, or email her at eanderer@costar.com.

Check out the other videos from the conference:
Key Issues Affecting the Apartment Market in Eugene – René Nelson
Understanding the Eugene-Springfield Apartment Market – Zoe Swartz

Looking back at rent trends and vacancy rates in Eugene-Springfield offers a window on the future for investors. Understand where the apartment market has been to help you make wise commercial property investment decisions.

What You Will Learn in This Video

• Supply and demand in Eugene-Springfield, including the UO submarket
• Vacancy trends in Eugene-Springfield, including the UO submarket
• Eugene-Springfield rent trends and projections
• Local cap rate rent trends and projections

Low Springfield construction has mitigated potential over-supply in the market. Most volatility and risk is observed in purpose-built campus projects. Stabilization is likely in the near-term, but rent control is a major consideration for older projects. Educating yourself about the trends empowers you as an investor.

If you need an appraisal, contact Zoe R. Swartz, MAI, at 541-687-1938 or via email at zoe@duncanbrown.com.

Check out the other videos from the conference:
Key Issues Affecting the Apartment Market in Eugene – René Nelson
Trends and Forecasts for the Eugene Apartment Market – Emily Anderer

Numerous issues, including rent control, are making a profound impact on the apartment market in Eugene, Lane County, and throughout the state of Oregon. As an investor, it’s wise to educate yourself and stay ahead of the curve. Know your options as a savvy real estate investor.

What You Will Learn in This Video

• The impact of rent control on Oregon apartments
• The top 10 issues impacting commercial real estate
• Multifamily investor’s measurements for performance
• Cap rate versus investor’s yield
• Market rent study
• Commercial property analysis
• When it’s time to make a change
• How to get out of rent control

It’s valuable to understand the trends taking place in the broader commercial real estate market as well as the way rent control is affecting the apartment market in Eugene. A thorough commercial property analysis will help you to decide when and if it’s time to shift strategies and get out of rent control.

Stay current with the latest information and opportunities in commercial real estate in Eugene-Springfield. I’m here to talk with you about the apartment market and your investment goals. Let me help you identify and evaluate the best options for you. Call or email me today. 541-912-6583

Check out the other videos from the conference:
Understanding the Eugene-Springfield Apartment Market – Zoe Swartz
Trends and Forecasts for the Eugene Apartment Market – Emily Anderer