All Forum Posts by: H. Jack Miller

@H. Jack Miller

I have not had any tenants not pay rent, but I have seen rents soften for multi family and condo rentals (roughly 5-10% decrease in rental rates). This is because so much new multi family supply has come online. I own and manage mostly class B and B+ single family homes and condos, but I have heard that evictions have ticked up in class C, that’s one of the problems with chasing cash flow is getting into class C and dealing with a tenants that are not as well qualified and higher risk of default to begin with. I think the long term fundamentals here are solid with job growth and population growth, it’s just a matter of the new supply getting absorbed which will take 2-3 years. There is much less new supply of single family homes, so the rental rates are flat to up a little; this does depend on the neighborhood though, in some of the fringe areas where there is a lot of new single family home construction the rents are a little softer. From what I see and hear the less qualified tenants are being affected the most by the economy because they were in a weaker position to begin with.

Form what we are seeing and experiencing, nationwide rents are decreasing and evictions are increasing. Our evictions have held fairly steady over the past 3 years.

Our law firm is seeing an increase in eviction filings this year. Our average eviction turn around is 20 days from filing to writ of possession. Rents are either stabilizing or lowering in Florida, in general.

 thanks so much 

@H. Jack Miller

Here's a previous discussion on this site on sub-2's: Sub-2 Discussion   .....

Here is my short list

1. Due-on-Sale Clause: Most mortgages have a due-on-sale clause, meaning the lender could demand full repayment of the loan if the property is transferred to someone else without their approval. While it's not common for lenders to enforce this, it's still a risk.
2. Lender Discomfort: Since the loan stays in the seller's name, if the lender becomes aware of the transfer, they may become uncomfortable with the arrangement, potentially complicating the process.
3. Seller Risk: The seller is still legally responsible for the mortgage. If the investor fails to make payments, it could damage the seller’s credit, even if they've relinquished control of the property.
4. Insurance Issues: A change in ownership might affect the property’s insurance policy. If the policy lapses or is canceled due to ownership changes, the property could be left uninsured, exposing both parties to risks.

Here is what can go wrong.  Just a short list its like 50 ways to leave your lover there are 50 gothcas in sub to.

1. the easiest for everyone to understand the sub to violated the Alienation clause in the mortgage or deed of trust and holder of the mortgage DT / Note decides to call the note due and payable and starts a foreclosure.

2. foreclosure started and the person who bought sub to has no means to pay it off or refinance it and the original sellers credit get trashed and if its a deficiency judgement state even on an owner occ like Texas lender sues original seller for the deficiency.

3. this kind of investing or acquiring assets tends to attract those with limited resources so they have no ability to fix things they decide to scale up and then it goes out of control and sellers are really harmed

4. deal goes south and original seller sues or files complaint with AG.

5. Financial predators who realize up front that they are not on the note and have no risk to their credit  rip rents with no intention of fulfilling the contracts and original seller gets wiped out.

AS a HML I have seen this play out with investors that drink the sub too coolaid and are simply not financially capable to handle issues when things go sideways.

I have also personally bought over 100 sub to deals in my career.. I did mine as fix and flip or when foreclosure rescue was legal in Or and Wa.. So for us these properties were all sold within 18 months thereby paying off the original mortgage.  I did have two called and we paid them off upon receipt of notice from the mortgage servicer/ credit union in one case.

And there are many more gotchas bottom line if you have deep pockets this is fine if an investor thinks this is a no money down I dont need any money this is a disaster waiting to happen.