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Landlording is No Joke

I started a class on property management recently with a question to the attendees: “What do Landlords and Tenants have in common?”

I was surprised that most of the group thought I was about to tell a joke. “They both blame the property manager” they said. “Lawyers.” “They both eventually die…”

Really?

It struck me that if my posing a sincere question sounded more like a set-up to a punch line, then it may be time to review a few basic housing principals.

Here it is: What Landlords and Tenants have in common is that both parties want – and expect – to have safe, stable and affordable rental properties.

This expectation does not seem to be overly-idealist or unattainable. In fact, in my 30 years as a rental property owner/manager, this pretty much describes my overall experience.

Does it mean that I have never had a bad tenant? No. Does it mean that I have never worked with a problematic landlord? No.

What it does mean is that when things go sideways, like a repair that hasn’t been done, or a tenancy that spirals out of control, or demands that seem out of the ordinary, I know there are remedies available and procedures to follow to get through the issues.

If things go completely upside down and either party over-reacts, digs-in or behaves in bad faith – there are still remedies, but they tend to get more costly. By the time the string gets too wound around the axel, it may just be too knotted up to do anything except replace the axel!

So, how do we avoid the worst-case scenarios? Simple. Don’t allow them to happen. Minimize risks and maximize incentives. Like the old axiom says, the best defense is a good offense.

Landlords should maintain the property and budget for repairs and improvements – replace that old appliance with something nice. Landlords need to maintain their professional and legal boundaries and allow the Tenants’ right to habitability and privacy.

Tenants should respect their home and communicate their needs courteously. And of course, they should stay current on their rent. Rather than focus solely on their rights, both parties should spend some time taking stock of their duties, and observe the Golden Rule.

Like many issues today, it’s the extreme stories that get the most coverage.  We see Landlords and Tenants in the news when there is some outrageous conduct or bitter protest.  Yet is that really a fair depiction of our industry? I don’t think so.

The Rental Housing Alliance Oregon has been a resource for property owners for 90 years. Have Landlord  / Tenant relations deteriorated in that time? Or have they improved?

I can attest that if we traveled back in time to visit the rental conditions form either side, it would be easy to see just how much better we all have it now.

A couple weeks ago, I spent a day on a bus tour with the Fair Housing Council of Oregon to view Portland’s history of discrimination. It was eye opening and heart wrenching.

While we may all agree there is a lot more to do – it is quickly evident how much we have all improved our housing conditions, along with the legal infra-structure to continue to work for improvement.

The Oregon Residential Landlord and Tenant Act can be intimidating to both sides. But these protections are the foundation of our business that support safe and stable housing. Still, it is not uncommon for either landlords or tenants to feel like they got the short side of the stick.

Consider this story:

A housewife called up a pet store and said, “Send me thirty-thousand cockroaches at once.” “What in the world do you want with thirty-thousand cockroaches?” asked the astonished clerk. “Well,” replied the woman, “I am moving today and my lease says I must leave the premises in exactly the same condition I found them…”

Ha! Ha! (It’s a joke.)

What I Wanted to Say in My 2 Minutes to Our Oregon Legislatures

My name is Ron Garcia. I am a rental property owner – I bought my first duplex in 1980 when I was 26 years old. My wife and I own a property management company in Portland called The Garcia Group – we represent about 230 owners with about 550 residential units.

I am also the current President of The Rental Housing Alliance Oregon with nearly 2000 members of which, 80% own 10 units or less.

We are the people who for years have spent our free time after work and on weekends working on our rental properties to get them ready for the next tenant. We are the Blazer fans and Timbers fans and Beavers and Ducks (and even Cougar fans) who listen to the games every night and on weekends – while we’re on a ladder painting ceilings, on our back fixing P-traps, on our knees cleaning ovens – while having our sons and daughters and spouses toting buckets of paint and cleaning supplies and hanging blinds and mowing lawns and ripping out blackberries.. We listen to the games and have our tailgate parties on sawhorses in the living room with space heaters, plywood and 5 gallon buckets for seats.

We’re the folks who have, quite literally, bought into to the American Dream of property ownership with our disciplined credit ratings and savings accounts, in order to build what is commonly known as “sweat equity”. We have always felt great about our plan because we believe that we provide the worthy product of a rental home; we create safe and affordable living environments where people can live; and at the same time – because we hope and pray that our properties will appreciate in value – we will not have to rely on the government or other people or programs to provide for our future well being.

We are hard working tax payers, and we have always looked at ourselves as part of the solution, not part of the problem.

I came here to oppose the legislation being considered today not only because of the hardship it would create for Rental Housing Providers like me and those whom I represent, but even more importantly because of the harm it does for both property owners and tenants…

There is a quote from a Taylor Swift song that says “It’s hard to fight a fight that ain’t fair”.  Yet as I considered what to say today, I realized that maybe the biggest problem we have right now is that we are in a fight at all. Vacant properties do nothing but become derelict without occupants. Tenants without a roof over their heads are homeless. Renters and landlords need each other in every way… yet –

Small landlords are now being villanized in the press; labeled as “white racists” who don’t abide by fair housing laws and resort to retaliation tactics of no cause terminations to get rid of tenants who’ve done nothing wrong except to complain about mold or lack of heat.  This is bogus.  It is no truer than labeling all tenants as irresponsible deadbeats who trash their units, or all homeless families as criminal druggies.

While the state of Oregon celebrates every time a company like Facebook or Intel brings in new jobs and we relish in fact that we are the fastest growing state in America due to our incredible vitality and natural resources – Landlords have suddenly become identified as the cause of homelessness, and are being required to subsidize a housing crisis brought on by the very social prosperity we have worked all of our lives hoping to bring about and to one day be a part of..

May I respectfully ask this panel assembled here today that, knowing that you have spent your careers fighting for legitimate social causes which you strongly believe in, would you still think it “fair” if you were suddenly required to cap your personal retirement income plus write a check for say, $4,000 a year, and then be forced to give all of those personal profits to the very organizations you have helped support, even at the expense of your own families’ personal well being?

I think you’d suddenly be on the defensive, and wonder why you got “called out” as a cause and then ordered to sacrifice to the same institution you have long worked for and supported.

If landlords and tenants – or “housing providers and renters” – really want to regain a serious dialogue to attack the issues being addressed here today – we need to get back to the table. But that can’t be done while we are being held hostage with threatening legislation. Let’s stop, look and listen for solutions to supplying new housing and making our state user-ready for the great prosperity we are enjoying!

Last session you succeeded in giving Oregon communities the right to create Inclusionary Zoning that would require developers of new housing stock to set aside percentages for affordable housing. What if that same type of agenda could be used to encourage (or mandate) communities to create “emergency review committees” to oversee and reconsider city zoning, code and planning bureaus in order to on-board literally thousands of housing units already in existence?  I am talking about the thousands of property owners who would gladly convert their daylight basement home, granny quarters, in-law units, garage apartments or add on an ADU but can’t get through the long and expensive and prohibitive processes imposed by the cities and counties.

In closing I submit that if we need emergency action to solve a critical social problems, we need to look for our civic leaders to step out and step up  – instead of levying prohibitive fines and labeling them fancy names like “stabilization efforts” on the people best suited to help the cause and  that, as testimony here today shall bear out, will thwart the very efforts they propose to resolve.

Can We Solve Our Housing Crisis?

As a professional Property Manager, I often describe my job akin to a ‘PCB transformer”; my process is to act like an adaptor between the power struggles of Owners and Tenants.  It’s not uncommon to have sparks fly between the 2 parties. And like PCB chemicals, the mixture of emotions can occasionally get toxic. Over time however, my antidote has always been that ultimately – like AC and DC currents – we are all going in the same direction: We all desire to maintain a quality living unit at a reasonable rate in a safe community.

These days it’s getting more difficult –  and in the rancor that has substituted for communication over the cures to Portland’s housing crisis –  I fear we may have hit a power-grid failure; a meltdown that could have negative consequences for everyone involved.

Portland is one of the world’s 10 most desirable cities according to a recent list in Metropolis Magazine, along with Helsinki, Copenhagen, Sydney and Singapore. Oregon is the fastest growing state in America. There is no question we need to come together to address our housing needs. Yet –

Landlords are livid that the city of Portland is forcing them to pay for the relocation of tenants whom they just want out of their properties. Sometimes tenants are not safe and sometimes they are pushing good tenants out. Landlords are stunned that the government would interfere with contractual clauses that allow for the simple termination of an agreement. They are outraged that their income could be arbitrarily capped with no regard to the free market, at less than 10% per year (no matter how low they’ve been voluntarily kept for years). Mostly, they are heartbroken that they are not believed to be human beings with sensitivities (and budgets) of their own – but instead have been characterized as unfeeling, greedy and purely self-serving entities.

Tenants are also in conflict. Those that live in comfortable and affordable homes may not want to rock the boat – yet they live with the anxiety that it could all come to an end with a single notice. Maybe their landlord decides this is all too much and decides to sell. Other tenants personally feel the hardships of the rising economy around them, and have been forced to find substitute housing; to become roommates; move to less desirable locations. For them, that rental house is the center of their life, and not just their business.

And for those renters seeking new living quarters? They find a brutal and disorganized process with no similar representation such as they’d have if they were home-buyers instead of prospective tenants.

Meanwhile, tenant / landlord court cases are rife with accusations from both sides for unwonted damage and neglect left by the ravages and lack of care of that other party.

So I ask myself: What’s a professional Property Manager to do?

Without owners willing and able to invest in properties, I have no clients. And without tenants willing and able to pay rent I have no income. Has my job devolved into nothing more than a crisis center trying to ward off complaints, collections and lawsuits?

I often rely on basic rules to solve problems. One such rule is what I call the ‘zipper theory of life”.  When a zipper disconnects, the solution is to move the clasp back to the point of separation and start again.

So how far back do landlords and tenants need to go in order to re-group? I’m not sure. But let’s consider the term “landlord”.  This is a title stuck in the past. Who wants to be “lorded” over by a profiteer? We should re-brand property owners as “Rental Property Providers”  and encourage them to re-consider the needs of their clientele.

Tenants need to consider their obligations as well.  They should want to thrive in their abodes and respect the property they live in. Normal wear and tear shouldn’t be an excuse to allow mold to grow, grease to build up, yards to grow out of control or smoke detector batteries that save lives to expire.

As I move the housing-crisis zipper back even further, I find the most direct connection from the oldest book in print, the Bible: “Put away from you all bitterness and wrath and anger and wrangling and slander, together with all malice, and be kind to one another”. (Ephesians 4:31-32)

So, from my adaptive point of view, I am encouraged with the fact that while conflicts like ours have been sparking long before the discovery of electricity, there has always been hope that we can overcome them with decency and dignity in place of disrespect and drama. And I for one, would welcome the opportunity to be part of that process.

 

Owners Information “Frequently Asked Questions”

 

Below are answers to some of the most commonly asked questions, and information needed to make this process go as smoothly as possible for new owner-clients.

CLEANING – Tenants are entitled to a clean home upon taking occupancy. Oregon law states that when the carpets are professionally cleaned upon a move-in the tenant’s security deposit can be charged for cleaning upon the move-out. We ask that our owners please have the home and carpets professionally cleaned when vacated and hiring us. We can arrange to have the work done, as long as we have funds in the account to pay the bills as they arrive.

EVICTIONS – One of Owner’s biggest fears can be facing a contentious eviction process. While there are a few “nightmare” cases, the majority of the time a For Cause termination is simply due to a change in the Tenants’ fortunes, and they can no longer afford the rent. Through our Eviction Protection program, we contract with specialized attorneys to handle the process of filing the proper notice, the court appearance and the final settlement.  

FEES – In 2010 Oregon law changed so that owners can no longer charge non-refundable fees to tenants, with very specific and limited exception which are for: smoke detector tampering, application to rent, pet waste and trash clean-up, parking infractions, and return checks and pet infractions. Additionally, the maximum amount for these fees is set by law. Non-refundable cleaning fees are not allowed. One exception that recently passed through our lobbying efforts in 2014 is that condominium owners with HOA’s that require “move-in/move-out” fees may now be passed on to the tenants.

KEYS – We will need one key for our office to show the home, and two keys for a new tenant. Please leave the tenant’s keys and any garage door openers in a kitchen drawer upon vacating. If extra keys can’t be made before vacating, we will send a locksmith to the home and charge the account. To provide security, we will send a locksmith to re-key the locks after the first tenant vacates and between subsequent tenants. If there are any deadbolts requiring a key on the interior side of the door, we would like to have these replaced with the single-key type of deadbolt so tenants can escape in a fire without having to locate the keys in an emergency exit.

HOW OWNERS GET PAID – We require, initially, $500 to deposit into the Client Trust Account. If owners request paid advertising (i.e. Oregonian, or high-end search engine services), we will pay those charges when received in our office out of the funds in the account. Paid advertising is rarely necessary, and may only be required for one weekend, or several, depending on how fast the home rents. Once an applicant is approved to rent the home, we require a “Deposit to Hold” security deposit from the applicant within 24 hours to hold the home until they move in. The security deposit is held in our Security Deposit Trust Account until the tenant vacates.

On-Or-Before 20th of each month, we will direct deposit the balance in the Owner’s account with The Garcia Group after retaining a minimum $500 balance. Also, we will provide access to the Owner Portal, which will give access to the Monthly Owner Statements by sending out a secured email link.

Please remember, expenses are paid out of the Owner’s account when incurred. We do not charge against a tenant’s security deposit until 30 days after the tenant has vacated if the charge is an non-reimbursed tenant responsibility.

LANDSCAPING -With regards to the care of landscaping, we HIGHLY recommend using a yard maintenance service that is paid for by the homeowner. Even though the tenant agrees in the rental agreement to mow, weed and water the landscaping, our experience has been the courts routinely throw out claims against tenants for yard care. Neighbors appreciate the look of a clean yard. Also, hiring a professional yard care maintenance service limits the risk of liability claims. Offering a “break in rent” to tenants to do the yard can have negative consequences, including Workman’s Comp violations if there is an accident. Thus, we suggest not to have tenants attempting to maintain the nice shrubbery and trees, (except to water).

LEAVING PERSONAL ITEMS – It is best if all of personal items are removed upon vacating, as we cannot be responsible for these. If the tenants leave items behind as well, and it becomes impossible to tell which items belong to the owner of the home and which belong to the tenant, or if there are damages, when and how they occurred.

MAINTENANCE AND REPAIRS – Our company does employ a part time maintenance coordinator internally who does misc handyman jobs. However, the vast majority of all work is contracted out. With all of the properties under our care, it is not practical to use different contractors for different homes. We work very closely with many companies on a daily basis, and although we do not shop for the cheapest price, we understand what we should be paying for on the scope of work performed. Our vendors are licensed and bonded and carry liability insurance naming us as additionally insured.

The Garcia Group also employs a professional 24/7 tenant maintenance hotline staffed by operators who are trained to listen to repair requests and trouble shoot issues before submitting any work orders. This has greatly reduced the incidents of needless trade calls.

We prefer to limit our maintenance and repair service to solving problems that occur while the home is under our care (as opposed to work done for general remodeling). As such, The Garcia Group bills a 10% oversight charge for repairs and maintenance work contracted through our office when exceeding $1,500 in a calendar month.

PRO-RATED RENTS – When a new tenant moves in on a date that is mid-month, we still require them to pay a full month’s rent. Then, in the following month, they pay for “pro-rated days of occupancy” from that prior month. We do this is to seek their higher level of commitment at the move-in, and (more practically) so that as the rental fee is charged to the Owner’s account, it still allows the Owner to receive partial income for that first month’s tenancy. Be advised, however, that the “net affect” of this policy is that the Owner has 2 months of less than full rental income, which is finally balanced out on the 3rd month once the commissions and pro-rations have run out their course.

SCREENING TENANTS Our experience has shown that many landlords are simply not familiar or up-to-date with local, state and federal guidelines on screening applicants to rent. HUD requirements are straight forward when applied universally across the board. Trouble occurs when random (even well intentioned) exceptions are imposed. Each adult is screened for income, credit, rental history and criminal background to the degree law allows. The Garcia Group screens all applications for rent under pre-established guidelines that are found on our website.

SECURITY SYSTEMS – A growing number of security companies are not allowing tenants to hold contracts for security systems, but instead, the contract must be in the homeowner’s name. Many owners have chosen to disconnect the security system completely and not offer its use with the rental of the home. NOTE: Any adjustments made retroactively should be in accordance with the local fire district codes. We do not have the expertise or knowledge to give advice on particular ordinances and regulations.

SMOKE ALARMS CARBON MONOXIDE (C0) ALARMS All smoke alarms must have a hush feature, and if battery operated, the battery must be a ten year lithium ion battery. CO detectors are required in residences with fire places, gas heat or attached garages. Both types of detectors must be on all levels of a house, including unfinished basements. If they are not currently in place, we will need to install them before we move the first tenant in to protect all parties, including the homeowner.

UTILITIES Electricity, natural gas, garbage, water and sewer stay in the Owner’s name and ON until the home is rented and cancel cable and telephone service upon vacating. Please provide us with the names and telephone numbers of all the utility companies serving the home. After the first tenant vacates, we can have the billings BETWEEN tenants come to The Garcia Group. If the home is located in Multnomah County, there is an ordinance stating the first 32 gallons of trash pickup is the responsibility of the owner of the rental.  Please advise the utility companies to begin mailing the bills to us. They should remain in the Owner’s name and addressed as follows:

OWNER Name c/o The Garcia Group P.O. Box 668 West Linn, OR 97068

Please feel free to contact us at anytime regarding these issues or any other concerns that arise in the course of our management contract.