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Rental Issue - Just Rented a Foreclosed House

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Rental Issue - Just Rented a Foreclosed House

Old 08-05-10, 11:21 PM
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Rental Issue - Just Rented a Foreclosed House

So I just moved into a new house last Friday and found out today the house was foreclosed and is up for auction on September 24th. I have a 1 year lease with a property management company. They are offering to give back the deposit immediately, give me half of this month's rent back, and allow us to stay here rent free until we're "Forced out" by whoever wins the new auction.


Any suggestions or experience with this type of thing?
Old 08-05-10, 11:38 PM
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Re: Rental Issue - Just Rented a Foreclosed House

Originally Posted by Nesbit View Post
So I just moved into a new house last Friday and found out today the house was foreclosed and is up for auction on September 24th. I have a 1 year lease with a property management company. They are offering to give back the deposit immediately, give me half of this month's rent back, and allow us to stay here rent free until we're "Forced out" by whoever wins the new auction.


Any suggestions or experience with this type of thing?
I'd stay rent free for 2 months and look for another place. Between the money you're getting back from the rental company plus the money you'll save on Sept. rent you'll have plenty for a deposit on a new place and the inconvenience.
Old 08-05-10, 11:42 PM
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Re: Rental Issue - Just Rented a Foreclosed House

Originally Posted by NORML54601 View Post
I'd stay rent free for 2 months and look for another place. Between the money you're getting back from the rental company plus the money you'll save on Sept. rent you'll have plenty for a deposit on a new place and the inconvenience.
Seconded. Live rent free for as long as you can.
Old 08-05-10, 11:45 PM
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Re: Rental Issue - Just Rented a Foreclosed House

I agree with both above. It sucks to have to move your stuff once again so quickly, but at least you'll be rent-free for a little bit while looking for a new place.
Old 08-05-10, 11:49 PM
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Re: Rental Issue - Just Rented a Foreclosed House

was the place owned by the bank when you moved in? maybe one of kvr can shed some light, but do they have authority to charge you any money if the bank owned it and didn't give them permission to rent it?
Old 08-05-10, 11:49 PM
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Re: Rental Issue - Just Rented a Foreclosed House

Originally Posted by EdTheRipper View Post
Seconded. Live rent free for as long as you can.
We're reading the laws and it seems like the new owner cant force us out for 90 days after purchase if theyre planning on using the house as a primary residence. If theyre not using it to live in they have to honor the entire length of the lease.

If our property manager will change the lease to show we pay $0 a month could this mean free rent for a year?

Last edited by Nesbit; 08-05-10 at 11:53 PM.
Old 08-05-10, 11:52 PM
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Re: Rental Issue - Just Rented a Foreclosed House

take all the copper pipes.
Old 08-05-10, 11:52 PM
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Re: Rental Issue - Just Rented a Foreclosed House

Originally Posted by D.Pham00 View Post
was the place owned by the bank when you moved in? maybe one of kvr can shed some light, but do they have authority to charge you any money if the bank owned it and didn't give them permission to rent it?
It was owned by an individual owner who was renting out through a property management company.

The date of the foreclosure was April 29th in case that helps anyone.
Old 08-06-10, 12:59 AM
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Re: Rental Issue - Just Rented a Foreclosed House

Here is how it works. You move in and treat it like any other home. Some day a dude like myself will get a notice from the bank asking them to verify the occupancy status of the home. So they will come over and have a little door hanger deal, and maybe some reading material that says something like "Know Your Rights" or some such new government mandate crap. They'll ask you if you are going to leave, etc. More like when you are going to leave. You need to be very non-committal. Say things like, "Dang, don't know. It's foreclosed? Damn. We just moved in not long ago and it cost a bit to do this move."

Guy will leave and report back to the bank. Dude will call or come back over (he'll need to get all your contact info for the bank, and make sure you give it to them) and offer you money to move, a program called "Cash for Keys." This will probably be $500-$1,500 depending on the area, market, etc. You will sign something saying you will leave the home in "broom swept condition" when you leave. Once you are gone, you hand over the keys and the dude gives you a check. Likely the form will require your SS number, etc. All legit for taxes, etc. and very common. Between the time the dude contacts you and you vacate (usually 2 weeks once they start the Cash for Keys) the bank will likely start an eviction process. Don't worry about that. They don't want to go through with it and that is why they are offering money, but they also don't want you to suddenly not move and they haven't even started the process, so it is generally common practice to start the process anyway.

And that's it. You rent for free for as long as you can until a guy comes and asks when you are leaving. You then mention your expenses, and he leaves and later offers you money to leave.

Congrats, you have stumbled into the hidden world of how to make money on repos.
Old 08-06-10, 01:03 AM
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Re: Rental Issue - Just Rented a Foreclosed House

Oh, and you will likely agree to give the dude access to the home with 24 hour notice. He will only need it once, and that will be to take pictures of the interior and do a Broker's Price Opinion of the home for the bank. That should be the only other pain in the ass. But don't worry about moving until the dude comes over. If the property is in good condition, and it is obvious that you are keeping it in good condition, they may let you stay even longer. Essentially, they leave you there to take care of the property while they do the same described process on other homes that look "at risk" of vandalism, etc. They figure they can get back to you later when their REO inventory is lower and can handle the property to service it correctly.

If you have any questions, let me know.
Old 08-06-10, 01:08 AM
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Re: Rental Issue - Just Rented a Foreclosed House

^^^^ The logic of experience has been heard ^^^^
Old 08-06-10, 01:40 AM
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Re: Rental Issue - Just Rented a Foreclosed House

Is there any chance that you would want to buy the house? You may be able to get a great deal through the foreclosure.
Old 08-06-10, 01:53 AM
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Re: Rental Issue - Just Rented a Foreclosed House

The dude will find out if you are related to the mortgagor at some point and they may ask you if you want to buy it. But don't expect some super steller deal. They'll have the place appraised by a fee appraiser at that point and offer it to you at that price. They may bend a little, but not a lot. If you do want to buy it, there are tips to get them to bend more. Obviously you can't be related to the mortgagor, but obviously you aren't.
Old 08-06-10, 03:13 AM
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Re: Rental Issue - Just Rented a Foreclosed House

We don't want to buy the house. Does the fact that it's being auctioned changed anything? Do we have to sign anything with the property manager to guarantee the free rent? The lease we signed said we couldn't agree to anything verbally outside the lease and above the free rent we want to make sure our credit and upstanding status in the community are not affected by the "Squating".


Thanks in advance Dave and everyone else.
Old 08-06-10, 03:19 AM
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Re: Rental Issue - Just Rented a Foreclosed House

Go to the foreclosure auction and see it you can buy the house!
Some properties are going for little more than a song now.
Old 08-06-10, 03:27 AM
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Re: Rental Issue - Just Rented a Foreclosed House

Originally Posted by Highlander View Post
Go to the foreclosure auction and see it you can buy the house!
Thank you most of all Highlander.
Old 08-06-10, 03:32 AM
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Re: Rental Issue - Just Rented a Foreclosed House

Originally Posted by Nesbit View Post
We don't want to buy the house. Does the fact that it's being auctioned changed anything? Do we have to sign anything with the property manager to guarantee the free rent? The lease we signed said we couldn't agree to anything verbally outside the lease and above the free rent we want to make sure our credit and upstanding status in the community are not affected by the "Squating".


Thanks in advance Dave and everyone else.
The auction is just part of the foreclosure process. The opening bid is what is owed plus all the fees, penalties, etc. The bank has that opening bid and if it were worth more, the mortgagor would have sold it rather than lost it. The foreclosure auction happens before you ever meet the dude that will offer you money, etc. so just go about life, the auction will happen, and then the bank owns the property again.

No point in signing a lease that states the rent is nothing. Won't be enforceable anyway. Simply don't pay any rent. It won't affect your credit provided the management company doesn't do anything, and it sounds like they are just being rid of this, so no worries there. It is possible that the bank will ask you to rent the place at a fair market rent. That has become more popular so that they can sit on the place while they focus on other properties, but even if you don't (and don't pay rent) I have never seen it affect anyone's credit. Anyway, if they offer that, you have a choice to make....rent the place, or let them pay you to leave. But either way, you can stay there rent free at least until they make first contact with you after the foreclosure auction, etc.
Old 08-06-10, 03:36 AM
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Re: Rental Issue - Just Rented a Foreclosed House

Originally Posted by Highlander View Post
Go to the foreclosure auction and see it you can buy the house!
Some properties are going for little more than a song now.
There have been a very few cases of banks allowing the opening bid to be less than what is owed plus fees, but state laws in some places force the opening bid to be that, so you won't get it for a song. Also, in order to buy the place at a foreclosure auction, you will have to have a cashier's check for the amount at the auction. There is no financing, etc. that can happen here. You show up with cash or equivilent, or you don't even get to bid. Currently, the only great deals (and there are some) are people that bought with an 80% mortgage and a 20% second mortgage. The 2nd mortgage never shows up and defends their position by buying out the first position, but once you figure in the penalties, etc. etc., even the first mortgage is generally more than the place is worth. Again, if the place were worth more than the auction price, the owner would have sold it rather than lose it.
Old 08-06-10, 03:38 AM
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Re: Rental Issue - Just Rented a Foreclosed House

Thanks! You were the first person I thought of when we started trying to figure out our options. Knew you'd have the info.
Old 08-06-10, 08:01 AM
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Re: Rental Issue - Just Rented a Foreclosed House

Yea, but let's see how grateful you are when Dave buys the place at auction and evicts you immediately.
Old 08-06-10, 08:20 AM
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Re: Rental Issue - Just Rented a Foreclosed House

See, this is the kind of advice that twikoff simply cannot offer. kvrdave foreva!
Old 08-06-10, 08:49 AM
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Re: Rental Issue - Just Rented a Foreclosed House

A thread started by one of Dave's tenants would have the potential to be the greatest thread ever.
Old 08-06-10, 08:51 AM
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Re: Rental Issue - Just Rented a Foreclosed House

if only he provided his tenants with electricity, or they had the ability to access the internet out there
Old 08-06-10, 08:54 AM
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Re: Rental Issue - Just Rented a Foreclosed House

Originally Posted by twikoff View Post
if only he provided his tenants with electricity, or they had the ability to access the internet out there
You make a valid point.
Old 08-06-10, 09:30 AM
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Re: Rental Issue - Just Rented a Foreclosed House

Man... kvr is like an evil genius at this crap.

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