Bluestone & Hockley | Portland Property Management https://www.bluestonehockley.com Portland Property Management Fri, 10 Aug 2018 23:05:59 +0000 en-US hourly 1 https://wordpress.org/?v=4.9.8 QuickFacts: How to get the best loan on your next real estate purchase or refinance. https://www.bluestonehockley.com/quickfacts-how-to-get-the-best-loan-on-your-next-real-estate-purchase-or-refinance/ https://www.bluestonehockley.com/quickfacts-how-to-get-the-best-loan-on-your-next-real-estate-purchase-or-refinance/#respond Fri, 10 Aug 2018 18:35:07 +0000 https://www.bluestonehockley.com/?p=25140   As you shop around for a real estate loan to should consider that there are many financial institutions vying for your business. You may have a relationship with a bank or a credit union that have your checking accounts, but there are many other options out there you should be considering before you make... Read more ›

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As you shop around for a real estate loan to should consider that there are many financial institutions vying for your business. You may have a relationship with a bank or a credit union that have your checking accounts, but there are many other options out there you should be considering before you make a final decision.

First, you must decide what your objective is for obtaining your loan.

Are you trying to:

a. Have the lowest monthly payments
b. Shortest time to pay off the loan
c. Find a long-term fixed loan for at least 10 years
d. Get the largest amount financed possible
e. Get the lowest loan fees
f. Find a financial institution who will give you a loan because no one else will
g. Lock the current interest rate for 60 days because rates are climbing
h. Have the smallest prepayment possible
i. Find a lender that will finance your partnership

Maybe you need to blend some of these goals.

Obtaining a loan is not a simple affair, especially because bank and credit union credit officers are being watched by the federal government and need to be thoughtful with their loan allocations to diversify their risk.

As a borrower, you have only one thought in mind, which financial institution will get me the best deal to meet my objectives. It makes sense to meet with bankers and mortgage brokers to get a feel for the marketplace. A good mortgage broker will be able to give you a presentation of a variety of financial institutions (Banks, Credit Unions, Insurance Companies), to help you find the best fit. The following comparison chart is an example of what a mortgage broker can do for you.

Mortgage Comparison Chart
Description Commercial, Office, Medical & Retail Multifamily
Loan Size $1,000,000+ $1,000,000+
Term/Amortization 10 year term/25 year amortization 10 – 30 year term/30 year amortization
Interest Rate 5 year from 4.650% 5 year from 4.560%
quoted 7-23-18 7 year from 4.680% 7 year from 4.550%
  10 year from 4.860% 10 year from 4.780%
Property Location Some programs limit properties to major geographical population centers and I-5 corridor.  Higher rates, different lenders for other regions are available. Some programs limit properties to major geographical population centers and I-5 corridor.  Higher rates, different lenders for other regions are available.
Loan Fee 1% 1%
Loan to Value & DCR Lesser of 75% loan to value, purchase price, or underwritten debt coverage ratio.  DCR has a minimum 130 with possible stress calculations at a higher rate. Lesser of 75% loan to value, purchase price, or underwritten debt coverage ratio.  DCR has a minimum 125 with possible stress calculations at a higher rate.
Impounds (tax & ins) Negotiable Negotiable
Capex Reserves Not applicable Not applicable
Recourse Required Required
Rate Lock Typically available, varies by lender Typically available, varies by lender
Prepayment Penalty Step down % varies with fixed rate loan term Step down % varies with fixed rate loan term
3rd Party Reports MAI Appraisal & Environmental MAI Appraisal & Environmental
Other Stabilized properties, operating results, lease terms and sponsorship must meet lender underwriting criteria. Stabilized properties, operating results, and sponsorship must meet lender underwriting criteria.

 

A loan broker will also help you get your financial information assembled and help those with weak credit find ways to improve their credit as well as find an institution that is comfortable with the risk or the property of the borrower. Loan brokers have leverage with lenders and due to the volume of deals they deliver they sometimes can negotiate improved terms for strong borrowers.

Getting the best loan terms

The best loan terms are reserved for easy, low-risk situations. If you plan to borrow money to fund your real estate deals, you can plan ahead to smooth the way.
• Make your next purchase an easy deal that is not very risky, (if you can).
• Plan on putting more equity into the deal
• Make sure your financials, your chart of real estate owned, and tax returns are up to date
• Pay your bills on time and focus on an exemplary credit score
• Avoid litigation
• Don’t be a slum lord
• Meet bankers and real estate brokers and build solid relationships
• Be realistic about the marketplace, stay abreast of the Federal Reserve, interest rates and the state of the economy.

Tough deals can be funded, but it is an art and will take a very special loan broker. Don’t be afraid to shop around but bear in mind that loan brokers protect their relationships and two different brokers will not be able to get your information from the same financial institutions. They have limited resources and will want a commitment from you before they work hard on your behalf.
A successful loan starts with a borrower taking the time to build the important lending relationships before they get into a deal.

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July 2018 – Economic Indicators for Portland Metro https://www.bluestonehockley.com/july-2018-economic-indicators-for-portland-metro/ https://www.bluestonehockley.com/july-2018-economic-indicators-for-portland-metro/#respond Thu, 09 Aug 2018 23:08:30 +0000 https://www.bluestonehockley.com/?p=25126 Continuing good economic news this month- close to 29 thousand new jobs created in the last 12 months in the Portland region all with an unemployment rate below 4 percent! Portland Economic Indicators July 2018The vast majority of Portland’s job growth over the last 12 months has been in just three major industries: Healthcare, Manufacturing,... Read more ›

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Continuing good economic news this month- close to 29 thousand new jobs created in the last 12 months in the Portland region all with an unemployment rate below 4 percent!

Portland Economic Indicators July 2018The vast majority of Portland’s job growth over the last 12 months has been in just three major industries: Healthcare, Manufacturing, and of course: Construction.

The construction industry is responsible for about 1 in 5 of the new jobs in the region. Over the last 12 months, construction added 5,600 new jobs. That’s down slightly from the previous 12 month period, but it’s still growing about twice the jobs it was in late 2012 and early 2013.

For the first half of 2018, developers filed permits for 101 large residential projects (any building with 5 or more units) in the Portland region. That adds up to 7,296 units (single family project, plus the total number of units in the multifamily projects). Still, that’s only the 23rd largest number in the United States among the Metro regions. Superstars like the Dallas, Houston, New York and Atlanta regions each have three to four times more residential capacity in the pipeline. On the other hand, Portland’s total numbers are comparable to Chicago, Boston and Las Vegas, and significantly stronger than many major US Metropolitan regions.

Looking at residential building permits as a leading economic indicator is popular among forecasters. After peaking in 2005, these permits dropped rapidly in 2006 and 2007 a year or two before the recession began in late 2008. Looking at the trend for the first half of 2018, we do see the beginnings of a decline. However, that’s coming off of a record year and it’s certainly too early to call it a real trend. Interestingly, the decline is entirely in multifamily projects and single family projects have been essentially flat since 2015, never reaching the levels they enjoyed in the last economic growth cycle. If we look at the data trend quarterly, we can see that most of the decline in permit applications came in the second quarter of 2018.

Information provided by:

Christian Kaylor, Multnomah County Economist

Oregon Employment Department

 

Portland Economic Indicators July 2018

 

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Portland will require all landlords to register their apartments – by late 2020 – Oregonlive https://www.bluestonehockley.com/portland-will-require-all-landlords-to-register-their-apartments-by-late-2020-oregonlive/ https://www.bluestonehockley.com/portland-will-require-all-landlords-to-register-their-apartments-by-late-2020-oregonlive/#respond Fri, 27 Jul 2018 16:57:51 +0000 https://www.bluestonehockley.com/?p=25020 The Portland City Council unanimously enacted new rules this week to require landlords to register the addresses of all rental units in the city each year. The idea, city officials said, is to create an accurate citywide census of apartments and homes for rent and also make it easy to send communications to all renters... Read more ›

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The Portland City Council unanimously enacted new rules this week to require landlords to register the addresses of all rental units in the city each year.

The idea, city officials said, is to create an accurate citywide census of apartments and homes for rent and also make it easy to send communications to all renters and landlords. Landlords will submit the addresses along with their yearly city business tax filings.

That will require an estimated 10,000 or more landlords who haven’t been required to file business taxes, because they gross less than $50,000 a year from their rentals, to begin filing.

The rules requiring landlords to submit the addresses of all their units kicks in for tax year 2018, meaning the vast majority of owners would need to send theirs in by April 15, 2019. But they can automatically get a six-month extension, officials said.

To read the full article click here

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Portland City Council delays seismic retrofit requirements https://www.bluestonehockley.com/portland-city-council-delays-seismic-retrofit-requirements/ https://www.bluestonehockley.com/portland-city-council-delays-seismic-retrofit-requirements/#respond Thu, 19 Jul 2018 22:04:09 +0000 https://www.bluestonehockley.com/?p=24989             Owners of unreinforced masonry buildings may be required to place placards on their properties warning tenants and visitors of seismic risk after the Portland City Council on Wednesday directed staff to come up with a notification policy. The policy will return before the council in three months for a vote. The notification requirement... Read more ›

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Owners of unreinforced masonry buildings may be required to place placards on their properties warning tenants and visitors of seismic risk after the Portland City Council on Wednesday directed staff to come up with a notification policy.

The policy will return before the council in three months for a vote. The notification requirement appears to be the most likely seismic measure to be adopted after years of committee meetings yielded little agreement on whether to mandate expensive seismic retrofits of hundreds of aging brick buildings.

The City Council delayed enacting any seismic retrofit mandates for a year when a newly formed working group will report back to commissioners. Even then, a draft of seismic retrofit requirements would give building owners 20 years to complete the upgrades.

Commissioner Dan Saltzman said the council was giving property owners too much leeway to complete safety improvements.

Read the full article here

The Daily Journal of Commerce

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Risk Management for Owners of investment Real Estate https://www.bluestonehockley.com/risk-management-for-owners-of-investment-real-estate/ https://www.bluestonehockley.com/risk-management-for-owners-of-investment-real-estate/#respond Thu, 12 Jul 2018 16:25:02 +0000 https://www.bluestonehockley.com/?p=24953 336 – Risk Management for Owners of investment Real Estate George is a successful real estate investor with over 400 apartment units and four commercial buildings (totaling approximately 100,000 sq. ft.). He is very proud of his investment portfolio, but he has a problem. George is frequently in court, fending off one law suit after... Read more ›

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336 – Risk Management for Owners of investment Real Estate

George is a successful real estate investor with over 400 apartment units and four commercial buildings (totaling approximately 100,000 sq. ft.). He is very proud of his investment portfolio, but he has a problem. George is frequently in court, fending off one law suit after another.  If it is not a trip and fall, then he is fighting a habitability issue or a discrimination allegation.  In addition, the city is continuously inspecting his properties and issuing citations. All of these issues are a serious drain on his time and cash flow.

Developing a Risk Management Strategy

George finally decided to meet with his attorney, Leah. He complained to her that he needed help dealing with these issues.

She suggested the implementation of a risk management strategy, telling George, “You need to put policies in place that your employees can follow to avoid these issues.

You and your employees need to be trained.  They need to take classes on local, state and federal habitability standards and /tenant laws.  They also need to understand how to take care of your property, because being a slumlord only opens you up to more claims.”

George countered, “The tenants destroy everything. If I give them a new unit, they just destroy it and I will need to rebuild it from scratch.  It’s better if I just give them the unit the way the last tenant returned it to me.”

Leah, responded, “If you treat the tenants with respect, screen well, set high standards, inspect regularly and complete maintenance quickly, you will have a better chance of getting your property back in good condition and significantly reduce your risk of litigation from a dissatisfied tenant.”

She continued “ organizations like Rental Housing Northwest, Rental Housing Alliance Oregon, Oregon Rental Housing Association, and Building Owners and Managers Association (BOMA), for commercial properties, all help investment property owners understand changes in the market place and develop training and risk management classes.”

Screening

Leah also pointed out that thorough tenant screening was critical.  Tenants need to have the money to pay their rent.  At minimum, tenants should earn three times the rent in order not to be too financially stressed.  The U.S. Housing and Urban Development (HUD) defines ‘cost-burdened’ families as those who pay more than 30% of their income for housing and may have difficulty affording necessities such as food, clothing, transportation and medical care. When tenants pay more than 50% of their income toward housing they are considered ‘severely rent burdened’ and are at the extreme edge economic survivability. History has shown that economically stressed tenants struggle to keep rental units in good condition. Therefore, it is important to screen tenants carefully and obtain previous owner references.

Rule setting

Leah continued, “Rule-setting is important.  Using a thorough rental agreement with clear rules makes it easier for both the owner and the tenant to be accountable.  Being a “nice guy” Owner does not pay off for either the tenants or the Owner. Shaking hands on the rental agreement leaves too much ambiguity.  Rental rates, deposits, clearly specified move in and move out dates, maintenance, and rule-setting are critical for a successful rental agreement.  Use a rental housing association form for your state and augment it by having an attorney experienced in Owner Tenant issues review and modify the rules section.  Don’t just print out a form you found online to save money. Pay for one and have it reviewed by an attorney.  You can be a “nice” owner but be sure to implement rules and policies that protect the tenant, the owner and the property.”

Site and property inspections

Don’t forget, you get what you inspect, not what you expect.  Leah reminded George that his property managers need to regularly inspect the exteriors of properties, including laundry rooms, trash enclosures and car ports, as well as the inside of the apartment units.  Properties need to be monitored and pet waste needs to be picked up regularly.

Leah explained her “Oasis” theory.

“I have an owner who has a property in a dangerous part of town.  Shootings, drug dealing, and burglary occur frequently around the property.  This owner fights back with constant care and attention.  Nicely landscaped grounds, well maintained buildings, regular inspections and thorough tenant screening have kept poor quality tenants out and created a relatively safe haven for the tenants that live there. It’s an oasis in the desert and the existing tenants want to keep it that way.  His commitment to the property is reflected by the high tenant retention and lowered crime rate.  One rule that helps this and all of his properties, is that weapons are not tolerated onsite.”

Accounting

Leah also explained, “Keep track of your rents and make sure your money does not get lost.  In other words, have strict cash management procedures and audit your on–site managers. (Set a policy of not accepting cash for rent). Good rent collection policies and rigorous employment screening for bookkeepers and on-site managers is important.  Additionally, consider redundancy and double checking to make sure rents get collected and posted correctly. It’s all part of limiting risk.”

Insurance

“At the same time, you are training yourself and your staff, consider your insurance coverage.  Take the time to meet with more than one insurance agent to really understand coverage options – it is very complicated.

Possible Insurance coverage options include

  1. Liability insurance
  2. Business Owners policy
  3. Errors and omissions insurance
  4. Employee liability insurance
  5. Tenant discrimination insurance
  6. Flood insurance
  7. Earthquake insurance

You may not be able to afford all of these coverages. However, having good procedures in place can limit risk exposure.

Legal Entities

Leah told George, “It may pay to place your assets into separate legal entities, such as a Limited Liability Company or a Subchapter S Corporation. If structured correctly, personal assets may be protected by the corporate veil.  Entities may be established for individual properties or investments may be grouped together.”

She detailed, “Combining multiple assets into a single corporate entity may result in enhanced exposure.  Protecting properties individually is often the best way to protect a portfolio in the event of a lawsuit.  For example, if Fair Oaks Apartments LLC is sued and the LLC only ‘owns’ Fair Oaks Apartments, it often prevents other assets from becoming entangled in the lawsuit.  If you package two or three or more properties into an LLC they can all get linked in a lawsuit.  If you only have one property in an LLC, then only that property can be sued. In other words, when you get sued at Fair Oaks Apartments (aka Fair Oaks Apartments LLC) they can only sue that property and not any of the other properties in your portfolio.   Reading the following citation might help clarify. https://markjkohler.com/are-single-member-llcs-worth-it/

Summary

George thanked Leah for all of her advice and sat down to think. He was overwhelmed with all this information.  He had so much to do.  So many policies to write and implement.  Maybe it would be better if he hired a property manager who had these systems in place?  But first, he had to get organized and Leah was kind enough to send a summary letter, so he could start the process.

Risk management is an important part of being a successful real estate investor.  All owners need to set policies and procedures for themselves and their team.  Policies and procedures need to be reviewed and updated every year, as laws change and as the portfolio changes. Developing and implementing a risk management policy will help shrink risk exposure and contribute to success as an investor.

 

 

 

 

 

 

 

 

 

 

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Luxury Condos: Making A Comeback In PDX https://www.bluestonehockley.com/luxury-condos-making-a-comeback-in-pdx/ https://www.bluestonehockley.com/luxury-condos-making-a-comeback-in-pdx/#respond Thu, 12 Jul 2018 15:50:50 +0000 https://www.bluestonehockley.com/?p=24949 Luxury condos, once regarded by developers as a dead end, are making a comeback. The latest example: the ambitious proposal from Portland developer Walt Bowen for a 35-story tower on a full block in downtown. The Block 216 project would have approximately 148 high-end residential condominiums. The skyscraper would also include a 250-room luxury hotel... Read more ›

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Luxury condos, once regarded by developers as a dead end, are making a comeback. The latest example: the ambitious proposal from Portland developer Walt Bowen for a 35-story tower on a full block in downtown.

The Block 216 project would have approximately 148 high-end residential condominiums. The skyscraper would also include a 250-room luxury hotel and 175,000 square feet of office space.

A few other major projects now under construction in Portland include condos, including Vista Condominiums, a 153-unit building in the north Pearl District from Hoyt Street Properties, and TwentyTwenty, a 162-unit project in the Sullivan’s Gulch area, from PHK Development. Also, The Waterfront Vancouver will have 40 condos adjacent to a luxury hotel. That project, from Gramor Development, is expected to be completed in 2020.

The move to build luxury condos represents a modest comeback for the product type. After the economy tanked in 2009, condo development all but halted in the Portland area.

At the same time, a flood of apartment construction in recent years has resulted in a softer market for luxury apartments. Rents in Portland were down 2.2 percent in May compared to a year earlier, according to Apartment List.

To read the full article, click here 

Daily Journal of Commerce, June 27, 2018

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B&H Community Leadership Seminar https://www.bluestonehockley.com/bh-community-leadership-seminar/ https://www.bluestonehockley.com/bh-community-leadership-seminar/#respond Fri, 29 Jun 2018 23:50:48 +0000 https://www.bluestonehockley.com/?p=24909 July 26th : Planning Reserve Studies feat. Morrison Hershfield Register Here Bluestone & Hockley welcomes all Board Members to join us for this interactive lunch and learn workshop on planning Reserve Studies, with industry experts from Morrison Hershfield.

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July 26th : Planning Reserve Studies feat. Morrison Hershfield

Register Here

Bluestone & Hockley welcomes all Board Members to join us for this interactive lunch and learn workshop on planning Reserve Studies, with industry experts from Morrison Hershfield.

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B&H Common Ground Coffee Hour https://www.bluestonehockley.com/bh-common-ground-coffee-hour/ https://www.bluestonehockley.com/bh-common-ground-coffee-hour/#respond Fri, 29 Jun 2018 23:47:33 +0000 https://www.bluestonehockley.com/?p=24904 July 19th  : “Talking Trash: Recycling, Waste Management, and your Community!” Register Here

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July 19th  : “Talking Trash: Recycling, Waste Management, and your Community!”

Register Here

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Condominium & HOA Management Newsletter https://www.bluestonehockley.com/condominium-hoa-management-newsletter/ https://www.bluestonehockley.com/condominium-hoa-management-newsletter/#respond Wed, 27 Jun 2018 20:50:17 +0000 https://www.bluestonehockley.com/?p=24885     Your Place & Ours B&H Community Association Management Newsletter – July/August 2018 Click here for the full newsletter -> CAM July & August Newsletter

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Your Place & Ours

B&H Community Association Management Newsletter – July/August 2018

Click here for the full newsletter -> CAM July & August Newsletter

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