Renting a house I can't sell

ATN_Pilot said:
While what you say is technically true, in practice, it is irrelevant, because the banks don't actually enforce it. We deal in REO properties for banks all the time. Banks hate REO inventory. Absolutely despise it. The less of it they have, the happier they are. So if someone is making payments, they aren't taking on more REO inventory just to enforce a document. Because the reality is, even during the peak of the market in 2007/2008, REO properties always sold for a huge discount. If your house is worth $200k under normal marketing conditions, the bank will be incredibly lucky to get $150k for it as an REO property. Because every agent knows that the bank is absolutely desperate to get that house off of their inventory, so nobody offers them a fair price. And then there is costs involved in paying agent commissions, attorneys' fees, REO department staff, etc. They just don't want to deal with it.

But you're absolutely right on insurance. We put in our management agreements that the owner is required to get an insurance plan for leasing the property, as well as naming our firm on the policy as an additional insured. Most of the time, these policies are of similar pricing to resident policies.
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Are you flipping REO properties as well?
 
Cessnaflyer said:
Are you flipping REO properties as well?
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We do broker price opinions for a number of banks and bank contractors, we sell REO properties for a number of banks, and we also work with investors to buy REO properties. Very few of our clients are actually flipping properties nowadays, though. They're buying to hold as rental properties. Flipping isn't nearly as profitable as it was pre-2008, and when dealing with REO and HUD properties with all of the additional paperwork, it's usually more time and effort than it's worth.
 
ATN_Pilot said:
We do broker price opinions for a number of banks and bank contractors, we sell REO properties for a number of banks, and we also work with investors to buy REO properties. Very few of our clients are actually flipping properties nowadays, though. They're buying to hold as rental properties. Flipping isn't nearly as profitable as it was pre-2008, and when dealing with REO and HUD properties with all of the additional paperwork, it's usually more time and effort than it's worth.
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Yeah it is a tighter budget trying to flip now. With more diligence we have found some good properties to flip.
 
ATN_Pilot said:
Banks don't decide what fraud is. The law does. Your bank can have whatever "policy" it wants, but fraud has a legal definition, and that definition involves intent. That's what you don't seem to be getting.
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Even what is described (taking a primary residence loan intentionally and intending to rent it out later) isn't really called fraud by the banks, because the word 'fraud' has a lot of hooks in it. Saying something is fraud is the same as accusing someone of fraud, which is a crime. Banks don't usually like to do that if it is a minor case and especially not when it is almost impossible to prove. They call it material misrepresentation (which they can but probably won't call your note due for) but isn't actually criminally culpable conduct.
 
Have to say... With my retirement coming up and the plan to move back to Tennessee to do flight training at MTSU, I'm on the fence about renting/selling our home. This thread has had some good reading. Thinking I'm going to be contacting a couple management companies as well as a realtor to figure out how much I can get either way.

Since the tornado came through earlier this year, we wound up with a completely remodeled home, so should be interesting answers.
 
Have to agree that this thread has some awesome information even though I am necro-posting a bit. My wife and I bought our home about 4 years ago and just moved 400 miles away for her work. We had the home on the market for a few months with a realtor and ended up mutually canceling the listing contract. Faced with the prospect of either starting over with a new realtor in the start of winter or getting a property manager to rent it out, I've been debating this very topic for a few weeks now.

As far as whether the bank holding the mortgage will allow you to rent, I had no trouble. Having read all of the mortgage paperwork, I found no stipulations that the home could not be rented. Just to cover my behind, I sent the bank a secure message through their online portal asking if they'd have any issue with us renting the property and I got a response within 24 hours saying, "Go ahead, just remember you are still responsible for the mortgage payments and original terms and conditions. "

Quite frankly, I'm terrified that someone will destroy the house and leave me holding the bucket.
 
exneophyte said:
Have to agree that this thread has some awesome information even though I am necro-posting a bit. My wife and I bought our home about 4 years ago and just moved 400 miles away for her work. We had the home on the market for a few months with a realtor and ended up mutually canceling the listing contract. Faced with the prospect of either starting over with a new realtor in the start of winter or getting a property manager to rent it out, I've been debating this very topic for a few weeks now.

As far as whether the bank holding the mortgage will allow you to rent, I had no trouble. Having read all of the mortgage paperwork, I found no stipulations that the home could not be rented. Just to cover my behind, I sent the bank a secure message through their online portal asking if they'd have any issue with us renting the property and I got a response within 24 hours saying, "Go ahead, just remember you are still responsible for the mortgage payments and original terms and conditions. "

Quite frankly, I'm terrified that someone will destroy the house and leave me holding the bucket.
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Sounds like you made a good decision. I too have worried about this but trust the manager I hired to oversee all of my tenants and properties. You pay for what you get. If you are looking to make a lot of money by renting your place out then don't hire a manager. If you are looking at it as a long term investment hire someone you can trust. Don't hire some big management firm like @ATN_Pilot. :)
 
amorris311 said:
Sounds like you made a good decision. I too have worried about this but trust the manager I hired to oversee all of my tenants and properties. You pay for what you get. If you are looking to make a lot of money by renting your place out then don't hire a manager. If you are looking at it as a long term investment hire someone you can trust. Don't hire some big management firm like @ATN_Pilot. :)
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Appreciate the feedback. I'm not looking to make a quick buck out of it. In fact, I doubt I'll cash flow on the property (though it will be close). I'd love to hire a property manager that I can trust, now I just gotta find one! I'm happy to pay for service, but unfortunately in this day and age so many promise great service and then once you've signed a contract that service just disappears!

The house is about 3 miles from the MSP airport, but not on the flight path. It's a shame you pilots are so cheap or I'd turn it into a nice giant crash pad! :)
 
exneophyte said:
Appreciate the feedback. I'm not looking to make a quick buck out of it. In fact, I doubt I'll cash flow on the property (though it will be close). I'd love to hire a property manager that I can trust, now I just gotta find one! I'm happy to pay for service, but unfortunately in this day and age so many promise great service and then once you've signed a contract that service just disappears!

The house is about 3 miles from the MSP airport, but not on the flight path. It's a shame you pilots are so cheap or I'd turn it into a nice giant crash pad! :)
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Do you know anyone who owns property in the area that uses a property manager? I would not do the Crashpad thing. People who don't have any skin in the game usually treat things with less care then if they have some sense of responsibility. New and young families sans pets are great but hard to find. This is also a hard time of year in the colder climates to have people looking to rent. I would start with pricing insurance and figure what a property manager would cost. Start at your opinion of what the end state is and work realistically backwards. It seems daunting but it has a way of working itself out. Any more questions or want to bounce ideas around feel free to ask or pm.
 
amorris311 said:
Do you know anyone who owns property in the area that uses a property manager? I would not do the Crashpad thing. People who don't have any skin in the game usually treat things with less care then if they have some sense of responsibility. New and young families sans pets are great but hard to find. This is also a hard time of year in the colder climates to have people looking to rent. I would start with pricing insurance and figure what a property manager would cost. Start at your opinion of what the end state is and work realistically backwards. It seems daunting but it has a way of working itself out. Any more questions or want to bounce ideas around feel free to ask or pm.
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I appreciate the feedback everybody. I'm a numbers guy so I'm going gather all the key numbers to make an informed decision or at least know what other questions I need to ask. I'm such a nerd, I'll probably create at the least a spreadsheet to show me my options and might go as far as a computer application.
 
ATN_Pilot said:
How'd you find the tenants?
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I knew someone who has a baby on the way and didn't want to stay in an apartment anymore. Not a friend, more of an acquaintance. They just wanted to do a 6 month lease, which was perfect for me to get my feet wet. Once they give me the 30 day notice, I am probably going to a property management company. My real estate agent has one the he recommends, and their rates and services seem reasonable.
 
I've had a rental property for about 9 years, professionally managed for the entirety. I've never had a problem with tenants or rent.

I did have to fire my first management company though. There was an unusual amount of time between tenants one time and it turned out the company straight up forgot to advertise or even list the property for rent. Oops! Fired.
 
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