POLL: What Will We Do?

[Aldo]

Foreclosures are on the rise everywhere and today's forclosure rates are but tht tip of the iceberg. Huge numbers of former homeowners will soon be applying for our rentals. Will we accept applicants with a forclosure on their credit report? Will we charge additional deposit? Will we charge a higher rental fee? Will we require a co-signer? Will we buy their home in pre-foreclosure and allow them to remain as tenants? Will we do that and include a Lease/Option for ones who believe they will get it right next time?

[Dan Auito]

Foreclosures are on the rise everywhere and today's forclosure rates are but tht tip of the iceberg. Huge numbers of former homeowners will soon be applying for our rentals. Will we accept applicants with a forclosure on their credit report? Will we charge additional deposit? Will we charge a higher rental fee? Will we require a co-signer? Will we buy their home in pre-foreclosure and allow them to remain as tenants? Will we do that and include a Lease/Option for ones who believe they will get it right next time?

Great question Aldo, I'm inclined to believe that we'll still be looking for the same folks we always have which would be people that can often qualify for a place of their own but have a reason for renting instead, three yr relocations, want to wait etc...

If I were to rent to a foreclosure victom there would be a hefty security deposit and a strict lease explaining some further detail to be adheared to.
We may pick up a short sale property as well!

[Aldo]

If it was such a great question, why has it been ignored?

Since I posed the question, I suppose you wonder where I stand on the issue.
I remember when I bought my first home. I was both excited and scared, but I believed in the American Way and had no reason to believe that anyone involved in the transaction would mislead me. And they didn't because they placed integrity above money. They play by different rules nowadays. Money is everything and 'what in %^#* is integrity'?

Homebuyers today are being sucked in by every imaginable ploy and are rarely warned of what could happen when their ARM adjusts, taxes rise, insurance goes up, utilities skyrocket, and costs in general increase.

With that said, yes, I'll rent to a forclosure "victim", but will subject them to close scrutiny and pay above average attention to indications of near-future problems.

[Dan Auito]

Just because no one spoke up doesn't mean it's not a great question so there! It's a great question and that is that!

I agree with what you're saying and there is going to be some opportunity for the investor as people are going to default for the reasons you mentioned.

Picking these properties up via the short sale method is probably going to be a very viable way to go. (also some sub2 deals)

Let us know when you get wind of the events beginning to occur, I'll bet once the rates go above 7% in late 2005 we'll begin seeing the repercussions of these aggregious lending practices.

[Jim FL]

Aldo,
I was just relaxing in my office and doing some surfing of the web this evening, when I noticed this thread.
I too think this is a good question, and would have responded sooner if I would have read it.
When I come here, and other forums, I generally give them a quick look-over and read/post to threads that catch my eye, and are posted that day.
Hence the reason I missed this one.

Anyway, perhaps a little too much Chevis this evening as well, pardon my rambling.......

So, on to your questions:
Foreclosures are on the rise everywhere and today's forclosure rates are but the tip of the iceberg. Huge numbers of former homeowners will soon be applying for our rentals.?
REPLY:
Agreed, and frankly, I've seen this already some with my L/O houses and T/B'ers who lost homes previously.

Will we accept applicants with a forclosure on their credit report?
REPLY:
Well, by my response already, you might be able to tell, YES, I've placed people who have been through a foreclosure into a home of mine. Not all, and in fact, most don't 'qualify' with me and get in when they've lost a home.......but, some do.


Will we charge additional deposit?

REPLY:
I don't do too many rentals, and the ones I have, I like long term tenants, so sure, I'll allow a previously foreclosed homeowner in as a tenant, BUT, I must see some time passed before they came to me, where the action, or circumstance that led them to F/C has been fixed, like layoffs, divorce etc, and some steady income and history elsewhere that shows their housing bills are now top priority. and yes, a HEFTY deposit is in order, but I charge that anyway, so I'm not discriminating. ALL tenants pay a nice security deposit and rent in advance of getting keys.


Will we charge a higher rental fee?

REPLY:
Somewhat addressed above. I don't think you can charge HIGHER rent to someone who has been thru foreclosure, versus someone who has not, because it just seems discriminatory on its face. MUCH different when charing interest on a loan in my opinion, where higher rates are justified by credit history.
Then again, EVERYTHING is negotiable......
'Hey Mr./Mrs. JustlostmyHouse2F/C, and want to rent my place......see, I have two families interested in the place, you and one other. Frankly, both seem nice, and make the same money, have the same debt ratios roughly etc, BUT, your foreclosure does scare me a bit. See, we need to be sure that your housing bill is TOP priority, because, to us, it is. What? You'll pay me $150 more per month to get in? Sure, we can do that? Welcome home!.
That would be different, right? :-)


Will we require a co-signer?

REPLY:
That is always an option, but frankly, in an eviction case, all that really does as you know, is give someone else the responsibility for the monetary judgement, and won't help get them out any faster. Perhaps a little skeptical view there, but one based in reality, in my opinion. I'm sure you see my point, being a landlord as well, for YEARS more than me in fact.


Will we buy their home in pre-foreclosure and allow them to remain as tenants?

REPLY:
Absolutely not. I never have, never will practice this. To me, if someone has lost their way, they are allowed a chance, if the behavior that led to their downfall has changed, and the situation rectified.
However, not in a home where they are emotionally attached. What happens if two years from now, they have the option to buy, for market value then, or even slightly less, and go to some slick RE lawyer to help close the deal.
This lawyer says, "Wow, look at the profit this guy is making on YOUR HOUSE!".
Then the fight begins, did you make a loan, or buy the house and rent it back, with an option?
Sure, paperwork can be as tight as Fort Knox, and the law on your side, but one batch of burned eggs and toast for the judge that morning, and you lose big time.
Not a risk I'll take, thanks.
Oh, and even if it was ruled a loan, you'd not get a return, because as a good investor, you would have made a few bucks, making the interest rate on that so called loan, VERY HIGH, and non-enforceable.....again, you lose.
I say, buy them, get them out, and sure, I'll rent to you, when you come back a few months later showing me you have your stuff together. Good luck, I sincerely hope me solving your problem with this house helps get you started with that. :-)


Will we do that and include a Lease/Option for ones who believe they will get it right next time?


REPLY:
Same thing as above. Nope, I'll solve the problem, and dispose of the house as I see fit, here's some moving money for you Mr./Mrs. Seller, IF the deal warrants it, and most don't. (I like to buy and either get paid to do so, or not pay a thing other than payments.)

Anyway, there's my take.
Frankly, I don't see the way I do things changing much at all, except perhaps more volume, due to the higher rate of foreclosures that are going on.
Also, I see as rates go up, the people I sell houses to on terms, whether that be a lease option or agreement for deed, will be a larger buyers pool than we've had, with perhaps more cash to put down. I think this will happen toward the end of the year.

Just my two cents, keep the change,
Jim FL

[Dan Auito]

See I told you it was a good question Aldo, just look at all the time spent by Big Jim in replying. If anyone else feels this is a good question please say so that way Aldo will know he asks quality questions and we appreciate it! :smiley1:

[Aldo]

Jim, you gotta let me know what brand of Chevis prompted such a superior reply.
I agree with most of your reply except where you refuse to allow the 'victim' to remain as a tenant if the foreclosure was their only real problem. As a tenant, their day-to-day expenses would be reduced, especially if the property is a duplex or larger. Maintenance, of course, would be the major consideration. We, as owners, also have access to lower priced materials and services. Our $ for $ insurance rates are lower, our debt service is probably lower, and we are better prepared to deal with the problems common to property ownership. Note that I don't do L/O's, but can see that as being very profitable in view of the impending R.E. price crash. That's only a consideration for a very few 'victims'.

Your thoughts?

[REIaddicted]

Great poll Aldo :praise:

I have not entered the arena of landlording YET.... I have flipped a forclosure,However, I would buy the house and allow the " victim to stay with a lease opt.

I would first need to understand why they went in to forclosure, how the problem was fixed and keep a close eye and a detailed contract.
Just my 2 cents :SM007:

Lisa

[Debbie]

Hey guys, this caught my eyes....I really think we need to revisit this thread. It'd really apply to this day (and age).....

[Aldo]

Debbie, IMHO, it might be better to start a new thread. A thread as old as this is often passed over by readers who: 1) think it's out-dated and no longer relevant, 2) can't or won't take the time to read all that has been said, 3) feels their post to a previous reply won't be seen by the author because s/he hasn't posted to the thread for a long time, or 4) who knows? Many of us usually only look at New Posts. That includes members who have joined the family after the last post to an older thread.


Just my thoughts

[Debbie]

Point well taken, Aldo!

Hmmm, I could start a brand new thread and plaguarize the thread....that's an idea....:SM134: