Columbus Realtors grab your tool belts. It looks like the new job in town for REO professionals is called Rehab. I'm not talking board ups and trashouts here folks. We are talking new roofs and all. I'm talking about Realtor = General Contractor. Lucky for me I have been a GC, done rehabs and built houses from the ground up. So have some of the agents working for our brokerage division.
According to Business First Newspaper this week, "Several small banks have decided to repair and rent out the homes to boost their value." As a full service asset management firm in central Ohio, this brings a whole new level of work to the area.
Actually, this discussion has been going on for some time with our clients. My first reaction was "You are kidding, right?" The answer was no.
I guess I just see a lot of liability here. Most rehabbers will do a lot of the work themselves or hire out to non-licensed people. They do a good job most of the time, but the words permit and insurance are not in the vocabulary. Licensed companies are higher cost. Higher cost is not what my clients want to hear, or so they tell me. I can't see that this approach is going to be a good idea for community banks.
Now let's think about the tenants for a minute. I have been an owner, asset manager, broker and property manager in multiple locations including Columbus Ohio. Tenant and property management is not easy. Low income management is tougher. All of the properties contemplated in the article are, you guess it, in low income areas. Some of the problems include increased repairs, slow pay or no pay on rent and, my favorite, suing the landlord. You know who gets sued? People with money. What do banks have?
The banks see this approach as giving something back to the community and trying to solve the problem, at least on their properties. It is commendable. If you ask me though, it is a very slippery slope and the deck is stacked. A bank can't use unlicensed contractors. A bank can't skip the permit. A bank can't say no to a repair. After all, this is as much about good PR as it is about loss mitigation. If you turn one screw Mr. Bank, be prepared to turn them all.
So the die has been cast. Now that it is in the newspaper, my current client base is going to call to discuss it. Every time I think I am out, they drag me back in!!!!
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"Realtor = General Contractor"God help us! Very few have your experience.
Lets hope the fed stops this non-sense. Banks aren't supose to own non-business property, REOs are a no-no to be disposed of in a timely manner. More to the point do we really want Banks owning and controlling large tracks?
Better would be a plan to offer financing to potential home owners including supervised release of rehab money. A similar program for investors, could make rentals available.
It must be nice to have clients dragging you to business! It's a tough life!
Bill