REO to Rental -- how do you do it?
Yesterday the Center for American Progress hosted a forum to discuss the possibility of turning large numbers of REO properties into scattered site rentals. It has a certain win-win elegance to it -- banks get the properties off their books while the increased demand for (ahem, affordable) rental housing is met. Not to mention the fact that neighborhoods benefit from having actual neighbors in these homes.
Why has it taken 3 years to come up with this plan? Because it turns out scattered site rental management is incredibly difficult to do well (and profitably). HUD, FHFA and Treasury have made a request for information on the subject (closing today) and it would not be surprising to see some sort of policy proposal emerge in the next few months.
From what I understand, the real heart of the matter is how to make this seemingly great solution work in real life -- that is, on the ground -- and not just in the heads of Washington wonks.
So, property managers: what would it take -- in your experience -- to make scattered site rental (on a potentially large scale) work? Or is limiting the scale (to those Mom & Pop businesses out there) the way to go? If so, how? And what resources would you need to get such a scheme off the ground quickly?
Tags: REO, foreclosure, neighborhood, rental, response, stabilization
Views: 150
Replies to This Discussion
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Permalink Reply by David Danenfelzer on -
In Texas we have permitted our NSP land banked properties to be leased out on a temporary basis (up to 5 years) by LMI households. Several of our local partners are skilled at maintaining smaller scattered site rental or lease to own properties. With the benefit of not have any debt service during the land bank hold period, many are able to use lines of credit to rehab properties and then lease, while generating some cash flow to cover the higher maintenance and management costs that come along with scatter site rentals.
This model may not work everywhere, and we'd be able to go longer-term for extremely low-income populations, if not for the fact that our state requires us to pay back 100% of the purchase price before the 10 year NSP land bank deadline.
If you'd like more information about this program check out our website: Affordable Communities of Texas
Best regards,
Dave Danenfelzer
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