Rental Properties - Residential

This week I had a conversation with our residential property rental person. She is a licensed real estate agent who only handles annual residential rentals. I was surprised to hear that her property portfolio has dropped from 80 homes to about 50 homes. Rentals here have been abundant. Many residential properties were purchased for the sole purpose of investment with the grand plan of being flipped, and then, when that failed, turned into rentals. Also, homeowners who couldn’t sell their homes resorted to renting them out to subsidize mortgage payments on the home. Multiple property ownership isn’t uncommon here.

So, why the drop in inventory?
I seems home owners are giving their properties to the banks and walking away from the properties.

Does this affect you? You bet it does…
First off, If you are a renter, you may be served with a bank notice of foreclosure advising you that you must vacate your rental property. Think about this carefully. The scenario is as follows: You rent a home for a year, you pay one month rent up front, and a security deposit for damages. Mean while, the property owner, who is accepting your monies hasn’t made a mortgage payment for a few months, but he takes your rent. Seven months into your rental you get the notice of foreclosure and advisement to vacate the property. When the bank takes the property they also take title to the property. Will you ever see that security deposit or that one month in advance payment? I don’t have the answer to that. I don’t know how your rental was managed. However, I will advise this… You as a renter, or property owner, should use a reputable real estate company who specializes in property rentals. They will use a properly written lease, provide a tenant background check (always paid for by all adult renters on the lease prior to moving in), properly escrow monies, collect rents, serve notices, etc.

Does it affect the rest of us? Again, yes.
Where are those foreclosed properties going to?
They’re going to the auction block, or into the MLS as REO (bank owned) properties. They are sold cheap. Banks aren’t in the business of holding properties. And these properties all drive down all real estate price statistics through out the region.
On the up side, It’s a good time to be a buyer – A Ready, Willing, and Able buyer.