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Banks Getting Into the Landlord Business

I have noted that some banks are now contacting property managers about fixing up and renting some of their Real Estate Owned (REO) property. I had previously thought that banks could not do this but I am finding out that it may have been that they did not want to do it, but could.

Real Estate values in Sacramento have taken such a beating that it is no wonder banks are wanting to hold off selling for the time being. By renting out their holdings they can get a return on their investment, better preserve the asset, and sell in a few years.

HomePointe is happy to have banks as clients and will provide the services necessary to make their new business plan a success.

www.HomePointe.com

Posted by Robert Machado, CPM MPM Sacramento Area Property Manager and Property Management on 10/21/2008 01:00 PM

Comments (4)

Banks in the ActiveRain Channel

banks being landlords

Originally posted at: Property Management and Investor Information: Banks Getting Into the Landlord Business

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4 Comments on Banks Getting Into the Landlord Business

OCT

Robert,

This is a very interesting action banks are taking. Do you think this will spread? If so, what do you think the public reaction will be? I wonder if this is a good or bad thing. Hopefully this will increase the pool of money banks will use to lend.

-Michael

http://blog.buildium.com

Robert - You hit on a critical point. Rather than selling property at outrageously low prices, just to get it off the books, banks COULD rent out properties instead.

On one of the local channels yesterday, they featured a woman, who cleaned up REO properties, to make them presentable. She was basically responsible for getting rid of the trash (old furniture, etc.), which was left behind, and cleaning them up.

I can see property management as being a valuable asset to banks! I also think that having banks consider leasing properties, rather than dumping price, would help stabilize home values, which have been heavily affected by the foreclosure rates.

OCT

I do not know if this practice will spread, but it sure would make sense as Myrl pointed out. The problem is that many REO's need a lot of work so the banks will have to go further into debt in the short run. Still, it has to be better than giving the houses away.

DEC

Hmm I had no idea about that. It is such an interesting thing that the banks are doing.

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