All Forum Posts by: Donna Smolinski

:) You probably have alot more info than your competition, so it might work out to be a good one for you. Good luck. Let me know if you get it.

Yikes Ann! That's an entirely different situation than mine, with alot of unknowns. Personally, I wouldn't proceed unless I got some answers from the listing agt or... it would have to be a REALLY GOOD BUY! If list price isn't at deep discount, it may not be worth it.

That's not always the case. If it's truly an arm's length tenant, they are happy to furnish a copy of the existing lease to the foreclosing lender (as what happened in my case with FHLMC). If they say it was an oral lease, or they can't find the lease, then the REO lender might have drawn a new month to month agreement, rather than choosing to evict them. But in most cases, the tenant will have the lease, unless they are actually the previous owners, claiming to be a tenant. You need to be sure the occupants are NOT the previous owners, because that's most likely going to be a hostile occupant.

In regards to not being able to see interior because of tenants in place: This isn't uncommon if it's a REO with tenant in place. You will need to write the offer with a contingency for interior inspection and approval of existing rental agreement or lease. After your offer is accepted, the listing agt or PM should be able to get you inside. With a little luck, you might even get a copy of the rental agreement before writing the offer (but don't count on it). In my case, we didn't get anything until after price/terms were accepted.

[b]

a) Not a good reason for eviction, but you can charge the tenant for the costs to maintain the lawn "IF" the lease doesn't require the LL to maintain the lawn.
b) Being 1 day late isn't going to hold up very well in court. If they pay their rent, even a week late, that won't be fast enough to process eviction. And once the rent is paid, you won't be able to proceed with eviction.
c) You need to get a copy of the lease to see if there are any other breach.

With all that said, if there is a bonafide "arms length" lease in place, you will have to honor the lease, unless they breach some terms. I only purchased one property with a tenant in place. They were very sloppy housekeepers, didn't do much to maintain the landscape, but they were good people who paid their rent. This was a Freddie Mac REO and the tenant was in place when they foreclosed. FHLMC had the property mgmt company draw a new month-to-month rental agreement when their in place lease expired. By the time we purchased and closed, they already had 5 months into the new rental agreement, so we didn't have to give the standard 90 day notice. We gave them a 45 day notice instead of 30. The month to month agreement only required 30 day notice. They appreciated the extra 2 weeks and they are moving out this Thurs. You need to remember, that tenant's are victims and should be handled with care. If they are decent tenants, work with them. In the long run, you will be better off.

One thing to be cautious of: Sometimes the foreclosed owners say they are a tenant and they draw up a phoney lease with a relative's name (different last name than their's). This happened to us once. The relative was residing in the property with the foreclosed owner. They tried to tell me they were all innocent tenants, not the owners, but we knew better. It took some investigative work, but we were able to PROVE the owners and extended family were residing there. We gave them CFK to get em out in 3 weeks instead of dealing with Eviction. They wanted 90 days.... no way!

Hope this gives you a little insight. Sorry it's so lengthy.

We use to own a vacation rental in Solana Beach (San Diego). This is a pretty hot vacation spot since you could walk to the fairgrounds & Del Mar racetrack. We got BIG rents in the summer and then snowbirds rented in winter. Spring and fall was the downtime, which we loved because we enjoyed using it in the off seasons. Even with all the vacancy time, we netted about the same as an unfurnished year round rental, but we got to enjoy it, basically at no cost. Eventually, we decided we wanted to make San Diego our home, so we moved into the unit for two yrs to convert it to primary residence before selling. It was a win, win. After two yrs, we sold it and didn't have to pay any of the gain, but of course we still had to recapture depreciation from past yrs.

Anyway... every area will warrant different demands for rent and the need for vacation rentals. If the demand & rents don't seem to pencil out, then see if there is any furnished corporate housing needs in your area. We've done that too, and that also worked out pretty good (not as good as the Solana Beach home).

Forgot to ask you, where are you thinking of buying?

RE prices in our country are relatively low compared to many other countries. Alot of folks here in the US don't realize that. These prices have attracted alot of foreign investors the past few years.

Good to hear the success story J Gary. Thx for sharing!
Yes, there are alot of good folks here, good info and good contacts too. We never really know where our next deal will come from.

Yes, asume the worst. But also try to determine if it's vacant or occupied. If it looks vacant, chk the elec meter to see if it's running. If it's not, you can be pretty sure it's been vacated. Talk to neighbors to see if they've seen occupants move out recently. I've gotten LOTS of valuable info from neighbors, not only about the occupants, but also about the property itself (however, you can't always depend on this info to be accurate). If it appears to be occupied, we make several attempts at knocking on the door. Are they tenants or owners?? Are they aware it's scheduled for auction the next day?? You'd be surprised how many don't even know, because of all the previous postponements.

I bring up the occupancy issue here, because if it's vacant, you are going to be faced with alot more competition at the auction. Investors love it when they don't have to deal with evictions, so they usually bid higher than if it's occupied. Personally, we always try to avoid eviction and put serious efforts into CFK negotiations. It's a win, win if you can negotiate it. If it's tenant occupied, you will most likely need to honor their lease or give a 90 notice. Some tenants are willing to consider CFK, but usually at a pretty steep price. They have rights (as they should).

One more thing.... chk the websites and MLS. Often you will see an expired listing within the last year with interior photos. This doesn't mean the house is still in the same condition, but depending on how recent the listing is, condition may not have changed too much.

We've not been successful bidding on these for the past 6 months (competition has driven bid prices way too high now). I don't know the TX market. Maybe it's less competitive. If you proceed, pls let us know how it went. Just do as much homework as possible and best of luck to you :)

Welcome to BP!

Keela,
I commend you on your enthusiasm BUT you need to walk before you run. To sucessfully flip a house, it takes time, money and experience. Walk before you run. See if you can find an Investor who flips houses for a living and work for him/her for a while (if your calendar warrants the time needed). There's a whole lot to know in this business and it's not as easy as it may appear to be on the surface. Also, keep watching all the topics here on BP, and you'll learn quite a bit. But there's no better experience than 1st hand, which is why I suggest you try to find someone to work for, at least part time. Good luck.... I hope you can find a good Investor to work with and learn from. :)