IIf you’re considering getting into the rental real estate investment game, you might be discouraged by what you’re seeing in the housing market. And it’s certainly understandable that the current environment of low supply, high prices, and rising interest rates isn’t exactly lighting a fire under you.

But it’s these less than ideal conditions that are pushing more and more potential buyers to become tenants, and this increased demand is driving up rental prices. So if you find a property you want invest in but think it’s too expensive, it might still be worth seeing what similar properties are renting at and working out the numbers.

But while it’s true that rental properties are incredibly hot in most of the country right now, here’s an important caveat: make sure you familiarize yourself with rental regulations in whatever area you’re in. find. consider investing. Let’s take a look at a few cities where these laws could easily make rental investing harder than it’s worth.

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1. Portland, Oregon

A recent study by ECONorthwest found that Portland lost nearly 4,000 rental units between 2017 and 2020. While it’s impossible to definitively prove the cause of these losses, many fingers point to rent control laws passed by Portland in 2017, combined with statewide rent control laws. which went into effect in Oregon in 2019.

You may think of New York when you hear the term “rent control,” but there are several other cities like Portland where you might come across it. Even if the rent you would currently be allowed to charge works for you, that might change in the future. When your operating costs rise, rent caps may not keep up. Thus, landlords can avoid some potential future difficulties by avoiding cities with rent control.

Additionally, if you decide not to renew a tenant’s lease or make material changes to the terms of the agreement at the time of renewal, Portland requires you to pay a tenant relocation fee of thousands of dollars. This could obviously be a huge hindrance to owners browsing.

New York City skyline with clouds above.

Image source: Getty Images.

2. New York

And speaking of New York, yes, it makes an appearance here too. The Big Apple is known for having one of the most complex rent control systems in the country, and like Portland, it could easily make managing a rental property here more difficult than it’s worth for. the average mother and pop. owner.

And to add insult to injury, New York also limits late fees to the point where they might as well not be allowed at all. So even if you’re fine with the amount of rent you can charge (for now), you can still end up with an unscrupulous tenant.

The key: Knowing what to look for

This very short list is far from exhaustive. The idea is to highlight the existence of these rental property laws that can potentially negate anything that might make a city an attractive place to own rental property. If you have your eye on other cities, familiarize yourself with this list potentially inconvenient rental property laws to watch out for should put you in a good position to buy in a city where you can enjoy owning while avoiding several potential pitfalls.

And if you live in or near a city with these kinds of restrictive landlord laws, you might want to consider looking to the surrounding suburbs for rental property instead. Just be sure to check the laws you would be subject to as well.

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