It was only a matter of time before banks wised up to a solution for all of the houses they were reclaiming due to foreclosure. Really, it’s quite obvious once you think about it. Lenders have started creating their own property management companies in order to rent out homes they have foreclosed on until the market improves.
An article in the Copenhagen Post Online mentions four or five banks in Denmark that have already started management companies or intend to in the near future. Their reasoning? They don’t want to lose more money selling the properties they’ve regained in a failing market, nor do they want to put run down houses up for sale.
Is this the direction that American banks should be going as well? Hanging on to foreclosed properties and utilizing them as rentals instead of flooding the market with properties offered at bargain prices?
If this trend did pick up in the U.S., it could potentially mean a huge boost for the property management industry. Property management agents across the country would have the opportunity to capitalize if banks decide to create property management divisions in their companies.
Even better, if you are a property manager, why not be proactive and present a management package to local banks in your area? At the very least, you’ll get them started thinking about the opportunities holding on to properties can provide, as well as marketing yourself as the best manager for the job.
Categories: property management
Tagged: foreclosure, lenders, rent
With the huge kerfuffle in the housing market of late, the time has come for creative solutions.
In order to combat the rising foreclosures and housing vacancies, officials are looking at potentially allowing homeowners who have fallen behind on their mortgage payments to stay in their homes by becoming long term rental tenants.
First, let’s outline the positives:
- It would cut down on vacant homes
- Allow homeowners to stay in their houses
- Give banks a chance to recoup some of the loss on the mortgage
- Provide a new type of investment
Here are some issues that come to mind:
- How long would a homeowner have to rent his old house before being able to think about purchasing a house or even moving again?
- How can the transfer from mortgage to rental agreement be made without disrupting the mortgage markets?
- If a homeowner defaults on his mortgage on account of being jobless, why would it be any easier for him to pay a “fair rental amount” on his home than his current mortgage payment?
In addition, this scenario brings up another interesting possibility; if a solution like this were to be put in place, would professional property managers have a new niche to fill?
Think about it, if banks become the primary owners of homes, but the former owners have signed a long term lease to stay on as tenants, doesn’t this then revert to a traditional rental scenario? Homeowners would no longer be responsible for things like repairs, updating, or even some types of regular maintenance, and banks would need to hire professionals to ensure their assets are being well cared for.
Does this seem like a viable solution for a foreclosure market driven by both the housing crisis and rising unemployment? What other creative solutions might work to get the housing market back on track?
Categories: food for thought · property management
Tagged: foreclosure, real estate services, rent
