Renting in Portland – Why are the rents so damn high?

Renting in Portland

One of the big problems people are complaining about right now are the cost of renting in the Portland Oregon Area. Portland has been on a huge number of “best of lists,” the climate is mild year round, and let’s face it, the nature nearby is awesome. Economically Portland is also growing as major tech companies move operations from the Bay Area, or local startups start hitting the big time.

All of this is leading to historically low vacancy rates in Portland’s rental market! The last time we saw vacancy rates this low, was soon after the second wagon train on the Oregon trail reached it’s destination.

Why are the rents so damn high?

Rent is too damn high
Jimmy McMillan of the The Rent is Too Damn High Party

So lets examine this in detail by “purchasing” a new property and working out the numbers. Currently, 4149 NE 82ND AVE is on the market for $1,095,000. It has 13 units, 12 of which are 2 bed, 1 bath. The last unit is 1 bed, 1 bath and is probably the property manager’s unit. For sake of argument, lets assume we are renting this one out too.

Since this is commercial real estate you have to have 20% down to purchase. That is $219k, leaving us to finance $860089. Commercial real estate comes in at about a point higher then residential so let us assume at today’s rates an optimistically low 5.25% interest for a 30 year loan. The reality is that it may be higher and for a shorter loan time.

That comes out to monthly payments of $5873.49. But we don’t have insurance or taxes in that. I’m going to ball park about $12000/year in insurance because it is a nice round number, but it is probably on the low side. The listing says that taxes are $14624.29 a year.

So with these two costs the owner’s monthly debt is now $8292.18 a month. Divided by 13 units, rent is $637.86. Sounds great doesn’t it?

Wait. I forgot management fees that typically run about 8% a month per a unit, assuming we don’t have onsite management who lives in that small unit for free. So we are now at $688.88/month.

But that totally ignores other factors. A rule of thumb is to have 4 months operating costs on hand. That is $33168.72 total, and lets generously say we’ll save that over a year. That is an additional $212.62/month bringing our rent to $901.51 a month.

Now, we still have another factor, the original $219k down. Since this is an investment property we need to recoup this cost. Typically we want these to be paid in 5-8 years, but lets assume ten years. That comes out to $140.38 per an apartment per a month. So our monthly is now $1041.89 per an apartment.

Another cost we haven’t thought about is maintenance. It costs about $500 to rehab an apartment for the next tenant. New paint, patch holes in wall, cleaning, etc. We also have about $200 in legal and advertising fees to rent an apartment out. That is comes to another $58.33 a month bringing us to $1100.22 a month assuming we are doing 12 month leases.

I happen to know that this property has been on the market for some time though, so I can safely surmise that in this market it must have a large number of problems that will add at least another 20% to the purchase cost. Otherwise it would have been purchased months ago.These are typically roof and foundation issues. A roof on a building that size is going to cost about $30k. Foundation issues can be $20k to $100k depending on the issues. We probably also need major renovations in each unit which typically come in at about $8k per a unit. Those include new carpet, appliances, and basic kitchen/bathroom remodeling. I would not be surprised to find it also needs major electrical and plumbing. Lets just say renovations to this property is going to cost $200k total which needs to come out of pocket up front or be financed.

That brings our original price back up to the $1million dollar range and is going to add another $93 month per a unit over 30 years. So our total is now $1193/month, per a unit just to break even on all the costs. Don’t forget that we are putting $33168.72 per year into our emergency fund. Lets assume we only spend about half of it for emergency, basic maintenance and to cover months without tenants. We could probably drop rents $106.31 per a unit after the second year to account for this. Either way, under this scenario we are not making money until year 11 of ownership.

Now, that all being said there are landlords who are skimping on maintenance and gouging on fees and rent. We could also probably talk the price down $100k or so but that is only going to change the monthly cost per a unit by $50 or so. Interestingly, Zillow.com estimates the rent on this property to be $1191 per a month so I’m pretty much in the ballpark.

James Bond Analysis

Over the past two weeks I’ve watched all the James Bond movies in order of release. Here are a few observations and analysis of the movies.

Sean Connery as James Bond
Sean Connery as James Bond

– Sean Connery is the most authentic James Bond to the original books by Ian Fleming, at least until his wife is killed.
– Sean Connery’s movies are the least interesting when compared actor by actor.
– The Villain, Blofeld, is the most annoying one of the bunch. Merely because he was played by five different actors, Donald Pleasence, Telly Savalas, Max von Sydow, Charles Grey and Anthony Dawson. It’s hard to keep up who he is.
– Aston Martin DB5 is by far the best Bond Car still. So much so that Daniel Craig’s Bond still “owns” it.

George Lazenby as James Bond
George Lazenby as James Bond

– Poor George Lazenby didn’t get much of a chance to really work out. I would have really liked to have seen the other six movies he was signed up for.
– “On Her Majesty’s Secret Service” had one of the single most important episodes in James Bond’s life, that of his romance and marriage to Contessa Teresa di Vicenzo, or Tracy Bond. Blofeld’s agents kill her, and Bond is supposedly a broken man. But this is only alluded to four times in the future.

Roger Moore as James Bond
Roger Moore as James Bond

– Roger Moore’s movies are among my least favorite. They all seem over the top for my tastes.
– The Lotus Espirit S1 is a good example of this, from automobile to submarine?
Egypt, as portrayed in “The Spy Who Loved Me” from 1977 is my favorite location in all the movies. This movie makes me want to go there every time I watch it.
– Grace Jones as May Day in “A View to Kill,” is the worst Bond Girl of them all. The writers should have kept her as a villain, her conversion was hackneyed and unconvincing.
– Roger Moore had some of the best jokes and one lines by far.
– Some of Q’s best lines are from this time also. As are some of the most innovative inventions displayed in the franchise. Most of the inventions used later all come back to this period.
– “The Spy Who Loved Me” was a much more interesting book then a movie. The plots of the two are nothing alike, but the book (a short story really,) would have been hard to make into a movie since it’s essentially James Bond shacking up for the night with a girl in trouble with gangsters. And then he takes care of them in typical James Bond fashion.
– The Villain “Jaws” used to frighten the heck out of me. Now he’s just a comical gag that adds to the cheesiness of the Moore films.

Timothy Dalton as James Bond
Timothy Dalton as James Bond

– Timothy Dalton did a great job bringing back the intensity and broodiness of James Bond. He did an excellent job of going back to the James Bond from the books.
– This leaves “The Living Daylights” one of the best films in the series.
– Dalton also failed to really bring Bond to life in “Live and Let Die.” It was merely an OK film for the time but didn’t live up to “The Living Daylights.”

Pierce Bronson as James Bond
Pierce Bronson as James Bond

– Overall Bronson’s films are among my favorite.
– Judi Dench makes an excellent “M”. She brought some great, no nonsense intensity to the franchise. I was disappointed to see “Skyfall” be her last film.
– Michelle Yeoh as Wai Lin in “Tomorrow Never Dies” is the best Bond Girl simply because she is one of the few who could keep up and in some ways surpass Bond. All the other “female spy” Bond Girls still needed saving by Bond, but she could hold up her end by herself quite easily.

Daniel Craig as James Bond
Daniel Craig as James Bond

– Like a lot of people I resisted Casino Royale for quite some time, in my case because of the disastrous history behind that name.
– But, Daniel Craig brings back a very good intensity to the Bond character that was solely lacking. He’s brooding, efficient, and frankly has a death wish. Just like Bond from the books. Connery is the best Bond through nostalgia, Craig is the best Bond through acting.
– The movies are a break from the normal Bond film pacing. The high intensity action through the movies makes them something to sit and watch instead of leave in the back ground.
– We get to see the Aston Martin DB5 again. Not that the rest of Bond’s Aston’s aren’t great too. But that was the original and best by far.
– I’m happy that Craig is a “new” Bond, with the same name and designation and how he “grew” into the “007 role.”
– Since I saw Skyfall, I’m looking forward to seeing new Bond films.

Generally

– I have to wonder what the stories behind all the peons are in the movies. A few disgruntled terrorist types or trusted employees is understandable as shown in the later films by Bronson and Craig. But in the Roger Moore movies especially, the bad guys had vast armies of fanatics willing to die for them.
– I enjoy how all the films attempted to keep things believable to a certain point by immersing the action in real life events. From smuggling Blood Diamonds, and child soldiers, to the feel of the Cold War it’s all there adding a sense of realism to the movies.

So, what is your favorite Bond Movie? Who is your favorite Bond? Bond Girl? And most importantly, which is your Favorite Bond Car?

Unintentionally Scary Song by They Might Be Giants

Unintentionally Scary Song

I have been a fan of They Might Be Giants for quite some time, actually since before college. But until today, for some reason, the actual words to this song titled “Sleepwalkers,” on their “No!” album have escaped me.

If you listen to the original version, which was only available on the original “Dial-A-Song” not the “new” Internet enabled version (which is also down!)

Compare this to some of their more lighthearted songs such as “Particle Man” from “Flood” which is still one of my most favorite albums.

or Birdhouse in your Soul, from the same album.

If you really listen to the lyrics of this song, it’s actually very comforting.

Even for fans of TMBG like myself, I still find surprises. Like this even MORE scary song they did for ABC’s Nightline.

Yeah… I’m not going to be sleeping tonight.

Sleepwalker Lyrics:
See them over there
See them moving down the road
Their arms held out ahead
And their eyes, their eyes are closed

Don’t make any noise
Cry out loud or stamp your feet
You’ll wake the girls and boys
Who are walking in their sleep

Every night they throw aside their blankets
Swing their feet down, stand up and move out to the street
Like they’re under a spell and together
They roam across the country and they’re walking in their sleep

You’ll recognize them when you see
Their rumpled hair and stocking feet
It seems like they want something
But we don’t know what it is
But here they come again
Yes, here they come again

Move aside and let the people go by
They don’t see you thinking that they’re home in their beds
They must not be disturbed when they’re wandering
All across the country and they’re walking in their sleep

Perhaps when they awake
They’ll remember everything
They’ll think it was a dream
It will be forgotten then

But don’t make any noise
Cry out loud or stamp your feet
You’ll wake the girls and boys
Who are walking in their sleep

Particle Man Lyrics:
Particle man, particle man
Doin’ the things a particle can
What’s he like, it’s not important
Particle man

Is he a dot, or is he a speck?
When he’s underwater does he get wet?
Or does the water get him instead?
Nobody knows, particle man

Triangle man, triangle man
Triangle man hates particle man
They have a fight, triangle wins
Triangle man

Universe man, universe man
Size of the entire universe man
Usually kind to smaller man
Universe man

He’s got a watch with a minute hand
Millennium hand and an eon hand
When they meet it’s a happy land
[Inaudible] man, universe man

Person man, person man
Hit on the head with a frying pan
Lives his life in a garbage can
Person man

Is he depressed or is he a mess?
Does he feel totally worthless?
Who came up with person man?
Degraded man, person man

Triangle man, triangle man
Triangle man hates person man
They have a fight, triangle wins
Triangle man

Birdhouse in Your Soul Lyrics:
I’m your only friend
I’m not your only friend
But I’m a little glowing friend
But really I’m not actually your friend, but I am

Blue canary in the outlet by the light switch
Who watches over you?
Make a little birdhouse in your soul
Not to put too fine a point on it
Say I’m the only bee in your bonnet
Make a little birdhouse in your soul

I have a secret to tell from my electrical well
It’s a simple message and I’m leaving out the whistles and bells
So the room must listen to me filibuster vigilantly
My name is Blue Canary one note spelled L I T E
My story’s infinite like the Longines Symphonette it doesn’t rest

Blue canary in the outlet by the light switch
Who watches over you?
Make a little birdhouse in your soul
Not to put too fine a point on it
Say I’m the only bee in your bonnet
Make a little birdhouse in your soul

I’m your only friend
I’m not your only friend
But I’m a little glowing friend
But really I’m not actually your friend, but I am

There’s a picture opposite me of my primitive ancestry
Which stood on rocky shores and kept the beaches shipwreck free
Though I respect that a lot I’d be fired if that were my job
After killing Jason off and countless screaming Argonauts
Bluebird of friendliness like guardian Angels its always near

Blue canary in the outlet by the light switch
Who watches over you?
Make a little birdhouse in your soul
Not to put too fine a point on it
Say I’m the only bee in your bonnet
Make a little birdhouse in your soul

While you’re at it
Keep the nightlight on inside
The birdhouse in your soul

Not to put too fine a point on it
Say I’m the only bee in your bonnet
Make a little birdhouse in your soul

Blue canary in the outlet by the light switch
(And while you’re at it)
Who watches over you?
(Keep the nightlight on inside the)
(Birdhouse in your soul)
Make a little birdhouse in your soul

Not to put too fine a point on it
Say I’m the only bee in your bonnet
Make a little birdhouse in your soul

Blue canary in the outlet by the light switch
(And while you’re at it)
Who watches over you?
(Keep the nightlight on inside the)
(Birdhouse in your soul)
Make a little birdhouse in your soul

Not to put too fine a point on it
Say I’m the only bee in your bonnet
Make a little birdhouse in your soul

Oregon Friendly to Business?

Oregon Friendly to Business?

One of the common statements I read constantly is “Oregon is business unfriendly.” And people say that large companies are “fleeing” the State due to the environmental protections and high taxes here.

Well, Forbes Magazine disagrees with that. They say:

“Our ranking measures six vital categories for businesses: costs, labor supply, regulatory environment, current economic climate, growth prospects and quality of life. We factor in 37 points of data to determine the ranks in the six main areas. Business costs, which include labor, energy and taxes, are weighted the most heavily. We relied on 11 data sources, with research firm Moody’s Analytics as the most-utilized resource”

They peg Oregon in the #9 spot, behind Washington (#7) and Nebraska (#8). Utah comes in at #1 on their list, while interestingly, North Dakota is at #4.

The Small Business & Entrepreneur Site, doesn’t agree quite that much. Based on just tax information and only regarding Small Businesses, Oregon is firmly middle of the road.

“SBE Council’s “Business Tax Index 2012″ pulls together 18 different tax measures, and combines those into one tax score that allows the 50 states and District of Columbia to be compared. Among the taxes included are income, capital gains, property, death/inheritance, unemployment, and various consumption-based taxes, including state gas and diesel levies.”

The Tax Foundation puts Oregon at #13, only four places behind Texas (#9) which seems to be constantly touted as “the best” for Business.

Thumbtack.com Small Business Survey, in partnership withKauffman Foundation has an interactive map that puts Oregon at #20 overall. Their map measures a variety of figures, Ease of Starting a business, Tax Codes, Environmental Regulations, Zoning, Training Programs, and several others.

By any definition of the word, at least from those who get paid to think about it, Oregon seems to be decidedly business friendly.