Investors are buying foreclosed single-family homes and renting them out — often to families who have lost their home to foreclosure.
"Families that have gotten used to single-family-property living typically prefer renting a home as opposed to an apartment," says Evan Gentry, president and CEO of G8 Capital, a Ladera Ranch, Calif., private equity fund that has bought 3,000 homes, leasing many to renters.
Investors — individuals and large-scale funds — are buying with the aim of offering the houses for rent because selling at a quick profit isn't possible.
Families who have been through foreclosure are not alone in preferring a backyard to an apartment courtyard, says Claire Williams, president of the Michigan Association of Realtors. "Transferees are looking to rent the home they've left and rent another where they're relocating. They don't want to sell because of the decline in values," Williams says.
Finding properties
Neighborhoods that have been hit hard by foreclosure or big price drops are especially likely to have single-family homes for rent, says Mike Bowman, owner of Century 21 Mike Bowman, in Dallas.
Moreover, there could be an increase in single-family houses for rent. In August, the Obama administration called for studying how homes owned by Fannie Mae and Freddie Mac could be rented.
ne idea being studied, says Josh Fuhrman, senior vice president of the nonprofit Homeownership Preservation Foundation, is for banks to acquire a property and quickly sell to an investor who could then rent it out — possibly to the family who never left the house, even after foreclosure proceedings began.
Many of the current homes for rent are managed and listed by real-estate firms, Bowman says. Additionally, the same channels that list apartments, such as Craigslist.com, are likely to advertise homes for rent, says Aaron Murray, vice president of G8 Capital.
Meeting landlords' requirements
Investors buying vacant properties often know families recovering from foreclosure are a significant force in the market, and many have adjusted their requirements for eligible tenants. "A careful review of someone's credit history can often help landlords determine the difference between someone caught upside down on a home or who had a temporary job loss versus someone who has a long history of late or nonpayments," Murray says.
Bowman says he advises renters to prepare a letter explaining the circumstances that led to foreclosure and how they have recovered financially.
Some landlords "still insist on a credit score of 720," Williams says. But in some areas, she says, landlords realize the market demands more flexible standards.
To read the article in full visit: http://realestate.msn.com/for-rent-foreclosed-owners-welcome
Comments(0)