As many as half a million people are hunting for homes, condos and apartments to rent because of foreclosure prevention failure.
The wave of real estate foreclosure is not expected to end soon, so those looking to turn lemons into lemonade should begin to pay attention. Foreclosure investing could be a bright spot in an otherwise dismal real estate market.
Oh sure, the US congress made noises like they were working on a foreclosure bailout that will help struggling homes owners. But, as usual, when you read the legislation’s fine print darn free people can count on getting help of any kind. It is definitely a case of to little to late.
Here’s where foreclosure investors should be focusing their attention. Banks are flooded with home foreclosures and in an effort the slash their foreclosure property inventory they are willing to deal with investors who know what they’re doing.
One of the secrets of business success is to find a need and fill it. When you can see a growing demand for rental property your goal should be to get in front of that demand as quickly as possible. One way to do that is to buy deeply discounted homes from banks and lenders. Those deep discounts mean that you can offer to rent those homes at the reasonable rates required by a new population of financial stressed renters.
The whole foreclosure crisis developed not because people could not afford to own homes. But rather they bought more home than they could afford. Now you have an army of renters with bad credit, but good paying jobs. They can afford to pay rent of they can find landlords willing to rent to them.
The investor’s key to prosperity in this market is to be willing to accept individuals, couples or families who have bad credit, but a reliable income. You will have to ignore those low credit scores and the foreclosure you find in their credit history. Many of these are hard working, responsible people who are digging in and trying to get a new start.
As part of your landlord responsibility under these conditions your going to have to create new landlord checklist when screening tenants. You must scrutinize a potential tenant’s income, expenses and job security and forget about many credit history black marks.
Normal sources of information will be of little help. You are going to have to make the calls that assure you that your tenant is actually earning what he or she says they are earning. Don’t take their word for it. Call their employer.
The employer probably won’t give you an exact salary figure. You must telephone your applicant’s supervisor and ask for the information this way: “Bob Jones has submitted an application to rent a house I own. He has listed ____________________ as his occupation and $ ___________ as his salary. Does that sound about right to you?”
You can also ask that same supervisor if they are aware of anything that could affect their employer’s business or work force in the next few months. For more information about the stability of the employer you might try calling the local Chamber of Commerce and asking a few questions.
Finally, it is very important that you personally interview the potential tenant and find out details about their financial obligations. Do they have car payments, alimony, child support, credit card bills? You can be sure they have some of those, but you must determine whether or not they will have enough money available every month to pay the rent after meeting those obligations.
There is a wave of rental demand rolling your way. Get a bucket of rentals available to catch as much as you can.