Bank Forced Maintenance

A recent report in a multi family newsletter commented on lenders and insurance companies forcing maintenance on units that are slipping into disrepair.  Things like railings, roofing, and parking lot maintenance were specifically mentioned. These type of repairs have often been required when an owner refinances, but the recent foreclosure rates have focused much more attention on annual  lender inspections. The article also commented about lenders on refinance asking for the economic life of components of the buildings.  For example if the windows are old single pane windows, they may need to be upgraded before financing or refinancing can be complete.  I wonder how long it will be before these type of repairs are also forced on single family owners.  These types of issues often have a tendency to become industry standards.

This came from a Kidder Mathews multi-family report found on line.

Trust account management

 Are you an owner of rental properties in other areas of Washington State where the broker only collects the rent and passes it on to you?  Where you manage the repairs, tenant complaints, neighbor complaints, difficult tenant requests, periodic visits to the property, evictions, etc?

I found this interesting article regarding 'managers' who only provide minimal services to an owner.

The source is the Washington Realtors Assoc.  Attorney.



Question:
Broker provides property management services for clients. Broker receives rent checks from tenant, made payable to the landlord, and transfers the checks directly to the landlord.


Broker does not deposit the checks or handle the funds in any way except to act as the delivery system from tenant to landlord. Is this lawful?

Answer:
No. This handling of rental checks made payable directly to the landlord was acceptable prior to the Licensing Law and WAC revisions of July 2010. However, the revised Licensing Law provides “If any licensee exercises control over real estate transaction funds, those funds are considered trust funds.” RCW 18.85.285(2). Once a broker accepts a check from a tenant, even though the check is made payable to the landlord, the broker exercises control over the check.

The supporting WAC provision states that all funds received by broker on behalf of a client are deemed to be trust funds and must be handled in accordance with WAC 308-124E-105. The WAC requires that all funds or moneys received for any reason pertaining to the renting or leasing of real estate must be deposited in the firm's trust account. WAC 308-124E-105(6). If broker/property manager receives a rent check from the tenant, the funds must be deposited in the firm's trust account. If the firm does not have a trust account or if the parties do not wish for the funds to be deposited in the firm's trust account, then tenant will have to send the rent check directly to landlord.

Find a mentor

Sometimes I have a problem that I can not solve with my property management business.  When that happens I try to find someone who has experience that can or will assist.  This is one of the main reasons I belong to the professional organization, NARPM (National Association of Residential Property Managers).  If you have the opportunity join a group like this.  If you can not, ask your lender, insurance agent, vendor's or friends if they know anyone who is managing a property like yours.  See if you can get an introduction, or use their name and call that person.  They might just appreciate being consulted as an expert in the area. You might also watch for rental signs around your property to see who knows the area.  Sometimes you can call a licensed property manager and they might assist.  Especially if they know that your question will be a quick one, that does not require them spending too much time out of a busy day.

Time to change tenants?

“You can’t turn back the clock.  But you can wind it up again.”  Bonnie Prudden , rock climber, dancer, gymnast, swimmer, diver, and horseback rider.

Sometimes the wrong tenant was chosen for a rental.  It is tempting to just let things be.  Often this is the wrong decision.  A short term vacancy may be better than coping with a continual nagging problem.  Many times the decision to ask someone to move is postponed, thinking that the situation will get better.  Numerous times we have had to take over a property that has been misused, abused or neglected.  It almost always cost much more to repair the property, than if the decision to change tenants had been made earlier.

So, is it time to rewind the clock, - start over again with new players?

Rental Screening and Fair Housing

When I do a screening for rental homes,  I generally want to get as much information from the prospective tenant as possible.  Still, there are some areas that are risky to inquire about. You can ask about their income.  You can ask about their employment.  You can ask about their past rental history.  Disability questions pose a potential problem. Fair housing rules do not allow you to ask about disability causes, what a service animal does for the tenant, medications, or rehab programs the tenant may have attended.

One other danger area is telling a prospective tenant what unit or home is best suited for the tenant.  It is their choice to make.

One safe practice is to use routine policies the same with every applicant.  Tell them what the requirements are before they apply.  Be consistent with everyone.

Fair Housing Center ow Washington has an excellent brochure titled: Top 100 frequently asked questions and answers for Property owners and managers.  Get a copy and actually read it!

HUD regulations May severely restrict seller financing

I just received this notification of proposed rule making by HUD that would  Severely restrict the ability of sellers to offer seller financing.  The apparent justification is a limitation on events that might threaten the banking system.  If you ever buy a home where seller financing may be necessary, a Fixer or other, you need to read the regulation and comment immediately.
I have posted a comment.  Unfortunately the deadline is 2/16/10.  I will post additional info if I get it.
John Parker
 This is the web site to leave a comment for HUD
 http://www.regulations.gov/search/Regs/home.html#submitComment?R=0900006480a6b033

Date: 2.14.10
From: Steve Zehala, Columbus REIA Exec Director, Entrepreneur
Re: Onerous HUD proposal to Take more of our rights AKA "FR-5271-P-01
Safe Mortgage Licensing Act"

If you own Real Estate or even aspire to this could change things for
the worse.....forever. Even if you don't own real estate please help
us. Your industry could be next! We must stand together to stop the
insanity in Washington!
URGENT CALL TO ACTION:
HUD tries to Outlaw Owner Financing for Landlords!!!
The following information is extremely important!
HUD Issues Dramatic Anti-Landlord Rules Interpreting SAFE Mortgage
Licensing ACT
HUD has proposed to eliminate ALL seller financing unless the seller
lives in the home or becomes a licensed mortgage originator. The
proposed HUD Rules interpreting the federal SAFE mortgage act can be
viewed at www.regulations.gov & use the search parameter "HUD" and
the keyword "safe" OR Use this link:
HUD Safe Mortgage Act

For those of you who would rather poke your eyeballs out than read
this here is the problem in a nutshell: "HUD's proposed rules in
Section II F mention the sales of owner occupied residences as an
exception to their proposed licensing law; however, there is no
exception mentioned for non-owner occupied residential property. This
would make it illegal to sell any non owner occupied property that you
have With owner Financing, Land Contract, and maybe even Lease
Options!

So any of you out there who own rental property, inherit property or
want to sell any kind of property that you don't live in cannot do it
unless you get a mortgage license. YES YOU READ THAT RIGHT, YOU WILL
NEED A LICENSE TO SELL YOUR OWN PROPERTY! What's next a license to
breath?

This is not a false alarm! We have researched and vetted this
regulation in detail and have had our law staff investigate it well
and they they have confirmed just how bad this regulation is. Please
confirm this for yourself, google "FR-5271-P-01 Safe Mortgage
Licensing Act" and you can see the alarm has been sounded.

History:
Also, as you may recall, Investors's around the country lobbied hard
last year to maintain the right for individuals to make up to five
seller financed transactions per year before being subject to mortgage
originator licensing, etc... However, LIKE EVERYONE IN WASHINGTON
THEY ARE IGNORING US SO WE MUST SHOUT LOUDER. In a nutshell, seller
financing would no longer be allowed for non-owner occupied homes.
Ouch!

How YOU can help:
We Just learned about the publishing of the rules very late in the
process... and the deadline for comment is upon us on February 16, as
usual they did this last minute to plow it through. So we desperately
need for as many citizens who don't want to lose their right to sell
their own property across the country to go on record with HUD on this
issue. We will be working to try to affect this law in other
legislative ways, but cannot hope to gain traction unless our members
have clearly communicated that they are opposed to this portion of the
rules. This is your chance to be counted on this issue. IF IT PASSES I
MIGHT TAKE A CONSTITUTIONAL CHALLENGE TO BEAT IT WHICH COULD TAKE
YEARS!

STEP-1 PLEASE SUBMIT YOUR COMMENTS TO HUD AGAINST THIS & TO STOP
THIS! We have less than 2 DAYS to flood this system to try stop this!
Thank GOD for email!

Follow these simple steps:
1. Go to HUD Safe Mortgage Act
2. On the right of the screen, click on "submit comment".
3. Complete the form providing required information and VOICE your
comments and then submit.

But Steve, what should I say?
Say what you feel, but say it politely! The message should include
that you would like the definitions in the proposed rules to be
changed so that private individuals can originate and service loans on
properties they personally own. Some ideas from others:
* bank loans are not available on some types of properties

* the tight lending climate has made bank financing "out of reach" for
many
* seller financing is an "age old" tradition based on private property
rights
* these rules would prohibit even partial seller financing - i.e. a
"seller second"
* according to HUD's "Residential Finance Survey" in 2001, roughly 40%
of all non-farm residential properties in the US are owned free and
clear
* an estimated 6 million Americans own a property other than their own
primary residence
* an estimated 4.5% of Americans own three or more properties, many
purchased solely as investment properties
* 40% of non-owner occupied residences are mobile homes which are more
difficult to sell with bank financing
* approximately 5% of homes in US are for sale or for lease... seller
financing may be key to liquidating this inventory
STEP-2 Forward this to everyone you can! Ask them to help. We have
power in numbers!

STEP-3 Contact your Federal Legislators and tell them to stop this!
Find them here:
Find your Senator Here
Find your Congressman Here (put the zip code in)

Email, Call, or Write them but remember we don't have much time! We
need to do it Now!

The continued success of Real Estate as we know it is threatened by
these proposed regulatory changes. Not to mention your property rights
are evaporating. Please do not hesitate to follow the steps above and
make your voice heard.

We Must Take Action or we will lose our Rights! Please help!

Thanks!


Steve Zehala
Exec Dir
1800PayCash.com | Expert Home Buyers Ltd.
Real Estate Investors Assoc of Columbus | Real Estate Investments
Offc: 614-258-1000 | Fax : 614-737-5304 | 458 N. Cassady Ave. Bexley
Oh 43209 (2nd Floor)

Rental Repair Big Trouble

Yesterday I visited a home that I was told needed some minor repairs before it was ready for lease to a new tenant.  It was a home we were considering managing.

The same tenant had been in it for the last 10 years.  They were asked to move after they got behind in rent for another time.

While in the home they never called for repairs.  The owner was pleased because the tenant was very handy and could take care of minor fixes, thus saving expensive repair costs with contractors.

We found leaky faucets, torn carpet, damaged sinks, broken light fixtures, appliances with missing handles and parts, and doors with holes in them.

By saving the cost of minor repairs along the way, by not insisting that the tenant report items needing repair, this owner incurred major expenses.

If we do not hear from an occupant for a long time in a home that may have problems over time from ordinary wear and tear, we start to worry what may be waiting for us when we do our next inspection.  We do an annual walk through.  Sometimes tenants want to know why we are looking. They often will not report problems because they do not want the rent to increase.  That is not the reason we are there.  Owners should expect periodic expenses to keep their property in good operating condition.  Homes need and oil change every so often too.

NARPM manager since 1996
Property Manager since 1973