Jeanne Gavish's Blog

Would you rent to someone with a recent foreclosure on their credit report?  It appears that this is not a major concern to many landlords today. The National Association of Independent Landlords recently reported that 82% of Landlords said they would rent to someone who had lost their home to foreclosure.

Property Managers have prospective tenants fill out an application that gives permission for the PM to pull a credit and background check.  Our job as Property Managers is to report these findings to our Landlord/Clients and give them our recommmendations based on their overall record of making timely payments.

We routinely come across worthy prospects who have gone through difficult times.  Some have had medical issues that have destroyed their credit.  Others have lost their jobs for a period of time.  Some have chosen "Strategic Default' and allowed their homes to go back to the lender or filed bankruptcy to clear the slate.

Our job as Property Managers is not to pass judgement on prospective tenants.  Our job is to assess the risk for our Landlords in accepting prospective tenants.  These are unusual times and today's tenant was yesterday's homeowner.  I wrote a blog post outlining this factor and how landlords may have to change their criteria for renting to meet today's tenant. 

Despite recent credit problems, applicants with a foreclosure can prove good risks, chiefly because they did once own their own home. "These people are used to taking pride in where they live" says Tracey Benson, president of The National Association of Independent Landlords.

A thorough background check reveals whether todays prospective tenants are victims of recent hardships as a result of today's recession, or have a long term history of credit problems and poor pay history.

Jeanne M. Gavish, SRES, CIPS, SFR, GRI
Keller Williams Realty Elite Partners
* 352-650-1029 *
Serving Florida’s Nature Coast * Hernando, Pasco & Citrus Counties

 

Jeanne M. Gavish , Keller Williams Realty Elite Partners - Jeanne’s Blog

I received a call from a potential real estate investor this week.  She had researched local Realtors and liked my bio and background.  She asked if we could meet to discuss how she could increase her monthly cash flow.  She had cash to invest and was looking at the great prices of houses, but confused and nervous about how to best invest in today's real estate market.

Should she buy, hold and rent the properties?  Or buy, rehab, and resell with owner finance?  My answer?

It depends on her end goal.  I remembered myself as a novice investor fifteen years earlier, asking myself the same questions. 

If I sold and held a mortgage, I would have the cash flow but not have to pay the real estate taxes and insurance.  I would have no calls if the air conditioner broke, or the appliances stopped working.  I would have monthly cash flow  without the hassles.  However, at the end of thirty years, I would have nothing.  For me, the fact that I would reach retirement at the same time my mortgage payments received would end helped me decide that was not the best option for me.

I decided that buying and renting afforded me the cash flow I needed, and when my retirement years arrived, my mortgage would be paid off, allowing me extra income when my working years were ended.  The down side?  I would be responsible for maintenance, taxes, insurance, vacancies and all of the responsibilities of property management.

For me, the decision to be a landlord worked out very well and property management has become an integral part of my real estate career.

  That is not to say that this decision if best for every investor.  I am well aware that having the nightmare tenant can sour an investor to being a landlord ever again, and I respect their decision.

Investing in real estate has risks like any other investment, and is a very subjective experience.  It was an educational experience for my novice investor, and she left with much to digest.  I look forward to helping her, whichever route she chooses.

Jeanne M. Gavish, SRES, CIPS, SFR, GRI
Keller Williams Realty Elite Partners
* 352-650-1029 *
Serving Florida’s Nature Coast * Hernando, Pasco & Citrus Counties

 

Jeanne M. Gavish , Keller Williams Realty Elite Partners - Jeanne’s Blog