Alright, folks! If you've ever thought about becoming a landlord, you might want to tune in, because Eric G is serving up some serious wisdom on what to consider before you dive headfirst into buying that rental property. Picture this: you’re at a carnival, excited for the rides, but first, you have to navigate through a maze of rules and regulations that could make even the most seasoned rollercoaster enthusiast dizzy. Eric starts this midweek episode with a story that ties the local sports scene to the rental market, setting the stage for a deep dive into the complexities of being a landlord. He doesn’t hold back when discussing the challenges of rental regulations, especially in a city like Portland where the rules can feel like a game of chess—only the pieces keep changing. From the headaches of lease terminations that could cost you thousands to the nuances of rent increases that are more complicated than they seem, Eric lays it all out in a way that’s both engaging and relatable. He paints a vivid picture of the rental landscape, where landlords are often left holding the bag while trying to keep their properties profitable amidst a sea of red tape. But it’s not all doom and gloom! Eric wraps up this insightful chat by encouraging potential landlords to do their due diligence. He underscores the importance of understanding local laws and preparing for the unexpected, all while keeping a light-hearted tone. With a mix of humor and practical advice, he reassures us that while the rental market can be a wild ride, it can also be a lucrative venture if you play your cards right. So, if you’re considering stepping into the rental arena, make sure to check out Eric’s tips and tricks to set yourself up for success!

Takeaways:

• Before jumping into the rental game, it's crucial to understand local laws and regulations that could affect your potential profits.
• In many cities, rent caps can make it tricky to increase rents later, so set your initial prices wisely from the get-go.
• The math is simple: if you're a landlord in a capped market, expect to price in risks to cover future costs you can't control.
• When considering rental investments, be mindful of potential costs and liabilities, including tenant issues and property maintenance.

Links referenced in this episode:

• aroundthehouseonline.com
• cpsc.gov
• aroundthehousehq

Companies mentioned in this episode:

• Moda Center
• RIP City Management
• Blazers
• Portland Tribune
• Consumer Product Safety Commission
• Panasonic
• Conair
• Cuisinart
• Greenworks

Thanks for listening to Around the house if you want to hear more please subscribe so you get notified of the latest episode as it posts at https://around-the-house-with-e.captivate.fm/listen

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We love comments and we would love reviews on how this information has helped you on your house! Thanks for listening! For more information about the show head to https://aroundthehouseonline.com/

Information given on the Around the House Show should not be considered construction or design advice for your specific project, nor is it intended to replace consulting at your home or jobsite by a building professional. The views and opinions expressed by those interviewed on the podcast are those of the guests and do not necessarily reflect the views and opinions of the Around the House Show.

Mentioned in this episode:

Episode 2241 — Real Design Starts with American-Made Tile: Inside Daltile | Made in America 250

Great design starts with great materials. In this episode of our Made in America 250 campaign, Eric G digs into what makes American-made tile the right choice for your next project — and why Daltile has been a go-to for designers and pros for decades. As a Certified Kitchen Designer with 35+ years in the industry, Eric uses Daltile in his own projects, and in this conversation he breaks down how the right tile elevates a design, what to look for in quality and selection, and why manufacturing here in America matters for the products going into your home. If you haven't experienced Daltile, you need to check them out — from kitchens to baths to outdoor living, they've got the surfaces to bring real design home. Learn more at daltile.com. https://player.captivate.fm/episode/07a8c105-8e88-40eb-b8f1-a5340d6a3518/ In this episode: How American-made tile elevates your next design project What separates quality tile from the bargain-bin stuff Why Daltile's selection gives designers and homeowners more to work with Daltile is a featured brand in the Around the House Made in America 250 campaign, celebrating the American manufacturers shaping real design.

Daltile

Evolve Stone

We tell the story of Evolve Stone and how they are made in the USA. To listen to the complete episode: https://player.captivate.fm/episode/ef96f15d-b960-44a8-9522-1c3fa56c7cb7/ To find out more and order your free samples with promo code ATH26 head to EvolveStone.com

Evolve Stone

Foreign.

The House with Eric G. Your go to source for everything home improvement.

Whether you're a DIY enthusiast or just looking to make your space shine, Eric.

G is here to guide you through the latest tips, tricks and trends.

So grab your toolbox, put on your thinking cap and let's get to work right here on around the House with.

Eric G. Welcome to the around the House show.

I'm Eric G. Thanks for joining me today.

Boy, this is midweek special.

This is where we talk about the stuff that didn't make it into last weekend show and of course isn't make it into this weekend's show.

And we got one where we're going to be talking about rentals today.

And this is kind of an important discussion.

So I've been watching here in my city of Portland and bear with me on this, this isn't some sports talk, but I got to tell this story first.

It'll make sense in a minute.

So this is interesting.

And the Motor center is now owned by the city of Portland, making the city the Blazers landlord.

Now we have been going through, are we going to lose the team?

Yeah, we probably could.

I've seen this happen in Seattle where the NBA let my Seattle supersonics get ripped out of our hands.

And well, this is building up the exact same way.

So if we look at the July 16 draft term sheet that the city sent over to them, it requires a 20 year lease commitment, all home games played at the arena, an annual three million dollar property tax payment from ownership, clear caps on public funding, safeguards against cost overruns.

And then Councilor Pertle Ginn stated ASS included a long haul claim to stay in Portland with consequences for breaking the lease early and on due diligence.

The city signed an NDA specifically so it could see under the hood of the Blazers finances, including information the team wouldn't want shared.

And that's from the Portland Tribune.

Now if you're a landlord in Portland, you get one year leases.

You're renting a home out to somebody, the tenant can leave.

And if you want to end it because maybe you need to do work on it or something happens where you need that house, you're going to Pay anywhere from 2,900 to $4,500 to your tenant to end it.

The city also has rules for income Screening Capped at 2 times rent.

Individualized assessment required before denial.

There is that 9.5% cap, but the property taxes on those increases come out of that 9.5% cap.

So there is a whole set of rules if you are a landlord.

But you know something?

The city of Portland, now that they're a landlord, doesn't want anything to do with that for themselves.

So here's the problem of the thought process of all these rules that they put for landlords, and we're talking today, if you haven't figured out is if you want to be a landlord or not, do you want to have a rental property?

These rules get very interesting.

So here's the first rule that I see.

If you can't fix rent later, you're gonna set it higher.

Now this is simple math.

Caps constrain increases, not initial rents.

Every landlord in a capped market prices the risk that costs overrun the cap for the next five years.

So they're figuring out going, oh my gosh, we're gonna have to go high because I can't change it later.

That's a permanent premium that are paid by every new tenant, including the ones the law was written to help.

And then screening limits get mutualized into everybody's rent.

As a landlord, when you can't decline risk, you price it.

A tenant with a 750 score and eight years of clean history subsidizes the loss.

Your statistics you're statistically going to eat.

It's just insurance math.

This is just basic business math.

Small landlords sell and that entire unit leaves the rental pool.

So if you look at the.

I think it's the diamond.

So as a reduced supply, then citywide rents go up 5.1%.

So the compliance cost is roughly fixed per unit.

So it hits on the owner of one or two houses heaviest.

And those are the people that rent out single family homes.

This is easy stuff to figure out.

And then quality degrades above the habit habitability floor.

So if you think about it, and this is why, if you go to places like New York City and places like that, where there's thousands of places that aren't rented, if you have a building that needs to spend 40 to 60 thousand dollars to get it into a nicer place and they can't charge higher rates, that unit is sometimes cheaper to sit there empty than to spend 40 or 60 thousand dollars and lose that money over the years.

So some landlords are going, I'm going to wait until this changes.

And those units are not going to get rented out.

It's cheaper to take the loss.

And so that's really interesting how that changes things.

And so we're seeing this and of course we have out here on the west coast, we've talked about this in shows before, that construction has just absolutely stopped in so many different areas around.

And we're seeing that.

I mean I think there's an 80% reduction in new housing starts in Seattle.

I just saw that in on social media today from a, it was a Puget Sound journal.

That's a big number.

Yeah.

So the more we're seeing these rules, the more that we're seeing of people not renting, which also reduces supply.

So this is where it gets interesting.

So now there is this new cap that they've got out there.

It's not binding yet here in Portland and so that's not bad.

So we're not going to sit here and tell you that the 9.5% ceiling is driving rents up.

But here's the thing, damage is showing up in the investment decision, not in this year's rent roll.

And what we're going to see is more and more of those homes going on the marketplace to be sold for single family homes.

And this is the thing, there are plenty of areas in the country and they're usually the bigger cities.

It's the New Yorks, it's the Philadelphia's, it's the on the west coast out here, the Seattle, the Portlands, the San Franciscos, the Los Angeles's were this now new construction.

On the rules in Portland, you're exempt for 15 years.

So rent control is not the cause of permit collapse.

But I tell you what, why would you want to invest in housing if you know there's a really good chance you're going to lose your butt with rent controls?

So instead of that company coming in and saying we could put some apartments on this block here downtown and put a 15 story building in, they're going, how's Boise look?

Now multifamily permits fell 23% nationally since the pandemic boom, with western metro areas leading in the decline.

Now, I have a theory on this as well with rental homes especially and apartments.

If we're deporting, and we're not going to get into this political thing, but we're just going to talk about pure math here, guys.

If you're deporting a couple million people, that's a couple million people's worth of rentals that are going out.

Most of these people are not buying homes here the United States, because it's pretty hard.

If you are working under the table, you don't have a W2 form, that kind of stuff as an independent contractor, whether you're working for a lawn care or a contractor or you're working in the fields or what, working in a restaurant, whatever you're doing, if you're working under the table, you're not out buying a house.

So most of these people are living in rental units.

So are we going to see if we deport some record amount of illegal aliens here in the United States?

Yeah, that could make a small dent in that number out there.

No one's really talking about that, but that can make a huge effect.

Now culturally you could see 2, 3, 4, 6, 8 people living in a household.

So it's not going to have that big of a direct response because they are a very family oriented society that I think is pretty awesome.

But really in Oregon or Washington state where I'm at, or many of these other cities, what I recommend that you as a single family homeowner, get a house and make it into a rental.

Depends where you're at.

Short term rentals can be a headache as well when you look at short term rentals and you'll hear me complain about this on this show all the time here where I've got one out in Cannon Beach, Oregon with my brother.

Now here's the problem with that.

Those guys out there at Canna beach, they do not like the short term rental people because the city council is mostly hotel owners.

So they are trying to change that rule.

I can't use a fire pit at the house unless it's gas out in the front yard.

Even as a building owner I can't, but my neighbor across the street can because we rent out a few times a year for short term rentals.

So you can really on the short term rental game in some areas limit your rights to use your own property that are different than your neighbors.

That's not doing it.

So there's a lot of things to consider here.

But I would sure take a look and see what's happening in your marketplace before you make that decision, before you dive in head deep.

Is it going to be favorable?

Do you have the cost controls?

And if that place is empty for six months or nine months as you have to do work on or anything, do you have the money to carry the costs because you could buy the place?

What happens if somebody gets in there and destroys it?

So I don't want to talk people away from being landlords and making good investments.

Just be very careful where you're doing it because in plenty of places out there across the country and more the metro area, you can get stuck what's going on and I don't want to see that happening and see you get burned when you're just trying to save retirement for generational income.

So do your research, find out what the rules are in your area and make sure that you can limit your liabilities as best you can.

Hey, if you got a comment on this guys, send me a message over to aroundthehouse online dot com.

I'd love to hear your take on it.

I think many of these overreaching rent controls are bad for the marketplace and they make things more expensive and not less expensive.

What's your take?

I'm always curious.

All right guys, that's my little rant on rent controls and how they can affect single family people out there that are trying to invest.

Real quick from this Consumer Product Safety Commission which is cpsc.gov here in the US Panasonic recalls electric toaster ovens.

Due to shock and fire hazards, consumers should stop using the recalled toaster oven immediately and contact Panasonic for a full refund.

There's about 11,480 of those in the U.S. with 2,184 sold in Canada.

Let's see anything else here that we see.

There's not too much stuff out.

A lot of toys, furniture.

There are a couple step stools you see out there.

But really besides that in the Conair Cuisinart 4 burner 3 in 1 gas grills that we talked about last week, there's 12,660 of those in the US that oven glass can shatter during use.

Got to be careful of that.

Otherwise that in the greenworks recalling 24 volt and 48 volt cobalt yard power tools with USB C batteries.

Those are the last ones here that are big on the list.

If you have one of those products you're worried about that maybe you've got some furniture because there's always a ton of it or kids stuff can always go to cpsc.gov all right everybody have a great rest of the week.

I'm Eric Gave to find out more about us, head over to aroundthehouse online.com and make sure you check out all our videos on both of our YouTube channels.

We'll see you Saturday.

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No one ever talks about the night they went to bed counting them she kitchen teeth getting beauty ribs Acting your age don't make a good story knock one back no buzz, no glory no one ever talks about the shots they didn't take drinks.