Not quite a declaration of war, but certainly a hostile attack… Oregon and California are the first and second states, respectively, to pass statewide rent-control measures against rental property owners, two-thirds of whom are individual landlords. Not to be out-done by its northern neighbor, in September California met and raised Oregon’s bet, limiting its annual increase to 5% + inflation (Oregon’s rent increase limit is 7% + inflation).

Of course, these limits are not as egregious as those of some individual cities (e.g., Los Angeles rents are subject to a 3% annual limit). Perhaps more impactful than the new rent limits are other recently-enacted restrictions. These include regulations and limitations on applicant screening, security deposits and termination/eviction notices.

Owning investment real estate is challenging enough without the government undermining your livelihood. Going forward, owners will find it more difficult and costly to find good tenants and remove bad ones. And California and Oregon landlords undoubtedly will be re-evaluating their continued ownership of local rental properties.

Fortunately, several states around the country continue to value individual property owners and their importance to the economy. There are even some states (for now) that do not tax rental income! At any given time, there are scores of available properties for West Coast investors conducting 1031 exchanges. Top real estate professionals and advisers will be ready to discuss out-of-state replacement options for clients with prospective listings—and will know who to call for help.

Investors should understand all fees associated with a particular investment and how those fees could affect the overall performance of the investment. Neither 1031 Capital Solutions or its representatives, nor DFPG Investments, Inc. provide tax or legal advice, as such advice can only be provided by a qualified tax or legal professional, who all investors should consult prior to making any investment decision.