Tag: buying multi-family property

Navigating Real Estate with Tenants? Here’s Why You Need to Know About Estoppels

Posted on by Will Sing

What Is an Estoppel?

If you’re involved in real estate transactions, especially those with multi-family properties or tenants, you’ve likely heard the term “estoppel.” But what exactly is an estoppel, and why is it important in real estate?

An estoppel is a legal document provided by a tenant during a real estate transaction. It outlines key details about the lease agreements, including the tenant’s rights and responsibilities, as well as other relevant information. Think of it as a written confirmation from the tenant that details the terms of the lease, which can be crucial in preventing future disputes.

Key Details Included in an Estoppel

Some key details typically included in an estoppel are:

  • Names of all tenants and occupants in the unit
  • Lease term, including start and end dates
  • Rental payment amount and due dates
  • Security deposit details
  • Responsibility for utilities
  • Ownership of appliances
  • Information about pets
  • Any problems or repairs needed
  • Other agreements made with the landlord

Why Are Estoppels Important?

Estoppels are voluntary, meaning a tenant isn’t required to fill one out. However, they are in the tenant’s best interest because they bring any unwritten rules or expectations to light. This can be particularly important if there are verbal agreements between the tenant and the landlord that aren’t documented in the lease.

For instance, if a tenant has a verbal agreement with the landlord that the landlord will handle lawn maintenance, but the lease doesn’t reflect this, the estoppel provides an opportunity to clarify such arrangements. This helps both the buyer and tenant understand the full scope of their obligations and rights.

The Pros of Using an Estoppel

One of the biggest advantages of using an estoppel is that it helps eliminate potential disputes down the road. By having everything documented, both the buyer and tenant are protected. For the buyer, it’s an added layer of security, ensuring there are no surprises after the deal is closed. It also helps in understanding the tenant’s expectations, which is crucial for maintaining a good landlord-tenant relationship.

Additionally, an estoppel can serve as a defense if a tenant later claims that certain agreements were in place with the previous landlord. With an estoppel in hand, you have written proof of what was agreed upon at the time of purchase.

The Cons of Using an Estoppel

While estoppels offer significant benefits, there are a few potential downsides to consider. First, because they are voluntary, tenants may refuse to fill them out or may delay doing so until after the inspection period. This can be frustrating, especially if you’re trying to finalize the details of your purchase.

Another potential downside is that an estoppel might reveal unfavorable terms or conditions that you weren’t aware of before. While this can be disheartening, it’s better to know these details upfront rather than being blindsided later.

Final Thoughts

In real estate, especially when dealing with properties that have tenants, an estoppel is a valuable tool that can help clarify lease terms and protect both buyers and tenants. While there are some limitations to what an estoppel can accomplish, its ability to document and confirm lease details makes it a crucial element in many transactions.

If you’ve encountered estoppels in your own transactions or have any tips to share, I’d love to hear about your experiences in the comments below. If you found this post helpful, be sure to check out the full video on my YouTube channel: Avoid These Real Estate Mistakes: The Truth About Estoppel. And, of course, don’t forget to like, subscribe, and share this content if you think it could help others navigate their real estate journeys!

Connect with me on YouTube, Instagram, or Facebook for more insights into real estate. If you’re looking for personalized advice, feel free to schedule a free strategy session here. Don’t forget to grab your free Homebuyer’s Guide here to make your real estate journey even smoother!

Disclaimer: Please note, I am not a lawyer. The information provided in this blog post is based on my experience as a real estate professional and is intended for educational purposes only. For legal advice, please consult a qualified attorney.

How Accessory Dwelling Units (ADUs) Impact Home Values in Portland, Oregon

Posted on by Sofia Gallamore

What is an ADU?

You probably have heard the word “ADU” thrown around but not entirely sure what the heck it is. Let’s start by clarifying what this arbitrary acronym is first.

An Accessory Dwelling Unit, or ADU, is a secondary housing unit located on the same property as a primary residence. These units can take various forms—a converted basement, a detached structure in the backyard, or even an above-garage apartment. To qualify as a true ADU, the unit must meet specific criteria: it should have its own separate entrance, kitchen, and bathroom, making it a fully functional living space.

However, not every additional living space qualifies as an ADU. For example, a finished basement with a couch and a TV isn’t enough to meet the definition unless it also includes a kitchen and bathroom. Similarly, unpermitted structures or makeshift conversions, such as a garage half bath and a portable heater, do not meet the requirements and can actually harm a property’s value.

 

The Growing Popularity of ADUs

In recent years, ADUs have gained significant traction in the housing market. Portland is no exception to this! I truly believe that ADUs are a key representation of Portlanders and our ability to get creative, problem-solve, and combat challenges in our community. This lady in the Boise-Eliot neighborhood even converted a Tuff Shed into an ADU (when I saw the headline I was very skeptical, but it’s actually pretty rad). This rise in popularity can largely be attributed to affordability challenges in the housing market. As home prices continue to climb, buyers and homeowners alike are seeking creative solutions to offset their mortgage costs. ADUs provide a fantastic opportunity to do just that by renting out the secondary unit, either to long-term tenants or as a short-term rental.

For buyers, the idea of purchasing a property with an existing ADU or ADU potential is incredibly appealing. Not only can it generate extra income, but it also offers flexibility for multi-generational living or even a private workspace. I’ve personally worked with many buyers who prioritize finding properties with ADUs or room to add one, and I’ve seen firsthand how competitive these properties can be. In many cases, homes with ADUs come on the market and disappear just as quickly due to high demand (and often sell for a premium.)

The growing demand for ADUs has also created a niche market for contractors who specialize in ADU plans and construction. Many credible contractors in the Portland and Vancouver areas now offer streamlined processes to help homeowners bring their ADU vision to life. From pre-designed plans to full customization, these professionals simplify the process, making it more accessible for homeowners. This specialized market ensures that homeowners can navigate zoning regulations, permitting, and design with greater ease, ultimately resulting in higher-quality ADUs that add substantial value to their properties.

 

The Pitfalls of Poorly Executed ADUs

While ADUs can significantly enhance a property’s value, this only holds true when they are executed correctly. Poorly constructed or unpermitted ADUs often create more problems than benefits. Adding a heater and sheetrock to a garage may look like a cheap way to create additional living space, but without following the necessary steps this setup becomes a liability rather than an asset.

Portland, like most cities, requires permitting for ADUs. This process ensures that the unit meets safety and building codes, as well as zoning regulations. Permits are mandatory not only for the construction of an ADU but also for many home renovations, additions, or structural changes. If you’re curious, here is Portland’s full explanation of their requirements in regards to permitting and ADU’s. Skipping the permitting process can lead to fines, legal issues, and expensive retrofitting down the road. Furthermore, significant unpermitted work for an ADU may impact the marketability of your home in the future when you go to sell. Homeowners who try to cut corners often find that their efforts backfire, as this work diminishes the property’s value and deters future buyers.

Nonconforming ADUs can deter potential buyers who recognize the time and cost involved in bringing the space up to code. Most buyers would rather avoid the headache of removing and redoing work to meet legal and safety standards. As a result, these subpar ADUs can actually harm the marketability of a property, making it less appealing to prospective buyers.

At the end of the day, when ADUs are thoughtfully designed and fully permitted, they can be a major selling point. Buyers appreciate knowing that an ADU was built to code and with long-term functionality in mind. Properly executed ADUs not only increase the property’s value but also provide peace of mind to both the current homeowner and future buyers.

 

Why Does This Excite Me?

Helping my clients explore creative ways to offset their housing costs is one of the most rewarding aspects of my job. ADUs are a fantastic opportunity for homeowners interested in becoming landlords and dipping their toes into real estate investing. I’ve seen how a well-designed and permitted ADU can transform a property, providing not only financial relief but also a sense of empowerment for homeowners.

I’m passionate about ADU’s because they align with my belief in making real estate work smarter, not harder. Exploring the possibilities these spaces can open doors to increased financial freedom, creative property use, and even stronger connections with the community through thoughtful rentals.

 

So What Do You Think?

If you have any questions about this topic or the nuances of Portland’s housing market in general, I’m your gal (and always down to talk real estate).

Your friend & realtor, 

Sofi