Zombie Titles: You Need to Know About These!

Zombie Titles-You Need to Know About These- 150x150Many Americans ended up having their homes foreclosed by lenders after the recent recession. Losing a home is a painful experience for the owners and an expensive one for lenders. That’s why sometimes lenders would send out a foreclosure notice, but don’t actually go through with the foreclosure. Normally, when home owners receive the foreclosure notice, they pack up and move out, thinking that the bank will take their home from them. This is not always the case, as sometimes banks don’t follow through with the foreclosure and the title ends up remaining in the name of the home owner who just abandoned his home, thinking the bank was going to take it as it happens in the foreclosure process.

Lenders are not legally required to foreclose on a property when the home owner defaults, and are also not obligated to notify the home owner that they have decided to dismiss the foreclosure, even after the foreclosure notice has been sent out. Lenders choose to sometimes dismiss foreclosures because of the high cost associated with a foreclosure or if they have a surplus of inventory.

You Own the Home Until It is Sold

Just because you choose to leave a home doesn’t mean that your name won’t be on the title anymore and you won’t be responsible for the home anymore. In this case, even if the lender sends out a foreclosure notice, you will still own the home until it is sold at a foreclosure auction by the bank.

Walking away from your home once you have been notified of the foreclosure is not enough to stop being the legal owner of the home. It is your responsibility to see the foreclosure process through, and make sure that your lender didn’t just dismiss the foreclosure and you left the home while still owning it.

A Zombie Title Can Be a Big Financial Burden

After receiving the foreclosure notice, you may have chosen to abandon the home, and move on. Foreclosure will negatively affect your credit score and ability to buy a new home, so renting will probably be your best option. But, if you haven’t made sure that the foreclosure process is finished, you might end up finding out that you still own a home. This can happen months after you thought that you have lost your home for good.

An unoccupied home can become a target for thieves and fall into disrepair. Besides still being responsible for paying taxes on your property, you will also be held liable by the municipality or local government for repairs and maintenance on the property. You will most likely have to pay penalties and fees for leaving the home to fall into disrepair and ruining the overall atmosphere of the neighborhood, even potentially facing legal action.

How Can You Protect Yourself Against Zombie Titles?

The easiest way to make sure that you don’t end up with a zombie title that can make your life even more difficult than a foreclosure would is to make sure that the foreclosure process is completed. Leaving your home once you receive the foreclosure notice is a bad idea. You can still live in the home until your lender sells it, while having the opportunity of making sure that your lender actually goes through with the foreclosure.

Foreclosure is hard on anyone, and it is followed by having to find a new home and years of working on repairing your credit score. But before you start to rebuild your credit and find a new place to live, you should make sure that your home is actually foreclosed on. Having a zombie title on your hands will only attract more financial losses and headaches. So start researching what the foreclosure process entails and avoid a messier situation than the one that you are in already.

How to Attract and Keep Great Tenants without Hassle

How to Attract and Keep Great Tenants without Hassle- 150x150Attracting and keeping great tenants is paramount to long term success in real estate investing. Vacant property means lost revenue, so you want to keep tenants with hopefully long-term potential; having tenants in and out constantly will be stressful and time consuming for you. Your bank account will be thankful if mortgage repayments on the property are made by tenants and not you!

In most cases, managing your own property becomes a bit easier than managing your tenants. As careful as you may be in choosing tenants, you are still susceptible to getting bad ones. Paired with a solid lease agreement, following a few other guidelines will ensure that you have the best tenants in your property.

Guidelines for Rental Success with Tenants

1.    Develop or Buy Property in an Ideal Location
You may have the best property in town, but is it located in a place where people want to live? People may be turned off if your property is located too far from schools, shopping centers, work, gas stations or public transport. The property must meet the lifestyle requirements of potential tenants.

Focus on areas that are equipped with social amenities, entertainment hubs, employment opportunities, education centers, retail centers, and a vibrant neighborhood. Even though not all of these are critical, many tenants will consider at least some of these factors in the surrounding area when deciding on a rental.

2.    Maintain an Updated, Quality Home
The general rule of thumb is that the better a home is, the better the tenant(s) it will manage to attract. A well-maintained home with curb appeal is likely to attract a better tenant. The more updated the house and its amenities, the better. Other than attracting and retaining great tenants, this will also help you command a higher rent price.

3.    Make a Killer First Impression
The first impression is always critical. You can turn off a potentially great tenant if the initial impression doesn’t meet their standards. If the potential tenant sees a well-maintained home, they will more than likely want to take care of the property as if it were their own. Not only does your property need to impress them, but you need to impress them with your professional manner and dress. If you are hiring an agent to handle your property, be sure they exude the professionalism you expect.

4.    Screen Tenants
Screening a potential tenant may not seem to be a very friendly tactic but you can present yourself as a serious and motivated landlord. It’s important that you do this so you don’t waste your time with tenants who aren’t serious. During the screening process, the potential tenant may reveal some red flags that will give you the tip-off that they may not be the best fit for you and your property.

Scrutinize all of the tenant applications very carefully. Any inconsistencies in providing information should hint to the type of tenant they have been before. Through a background check, confirm whether the client has a criminal record and also call to confirm previous addresses. You may also consider checking their business and personal references to give you a valuable insight about their conduct.

5.    Target Families
Families traditionally stay longer in one place than single tenants. Generally, families with school-age children will want to stay at the same school and avoid moving too often for the children’s sake at least. Families have more of a tendency to maintain a cared-for home because they take pride in making the home a clean and enjoyable place to live.

6.    Take Care of Your Tenants
A good tenant is an asset that adds to your net worth. If you find a suitable and responsible tenant, you should strive to look after them and the property so they hopefully stay as long as possible. If they always pay their rent in on-time, then you should ensure that you promptly attend to any problems with the home. You should also consider locking-in the rent price so the tenants can plan their budgets accordingly. If you do want to raise the rent price, be prepared to explain why and give the tenants plenty of notice to decide if they are ok with this price or want to move out.

7.    Market a Fair Rent Price
When deciding how much to charge tenants for rent, you should be very realistic. You should take into account current market prices, condition of the property and the location, among other factors. If you have taken all these factors into account and still have no renter possibilities, consider revising the price again. A slight difference between your rent price and what other similar, nearby properties are asking for may cost you a potential tenant. It’s better to lower the price a little and make a smaller profit than incur huge losses by leaving the property idle.

8.    Hire a Property Manager
This applies if you are not the one managing your property. Before you decide to hire a property manager, check their reputation from reviews and do online research. Since they are representing you, they should have your best interests in dealing with your tenants. Asking friends, acquaintances and family members can help you find a good property manager.

9.    Be Real Estate Market Savvy
As a good leasing agent, you should know where potential tenants are going to get information about the best properties in an area. They may be using newspapers, trade publications, websites, brokers, local periodicals, among other resources. Once you discover what mediums are being used the most by potential tenants, you can invest in advertising your services there.

10. Develop and Maintain a Real Estate Network
Securing and keeping exceptional tenants needs more than just advertising; you need a network for the real estate industry. Advertising will attract some potential clients, but referrals from other clients are typically going to be your best source of finding clients. If you treat your tenants professionally and respectfully, then they are likely to refer others to you. You can develop this network in part by your online activity, especially with blogs, fan pages, and other social media networking.

Real estate, like any other industry, has its ups and downs. Investing in real estate is a tough industry but has a multitude of opportunities and options for you to become a landlord, flip properties for profit, or even invest in your own home. However, finding and keeping great tenants typically presents the greatest challenge. Follow these steps to help attract and maintain ideal tenants in your properties for financial stability and stress-free business.

Refinancing a Rental Property – A Quick Guide

free-refinancing-advice-150x150The prospect of refinancing a rental property can be a scary one. If you’re in over your head, strapped for cash or perhaps you’re even afraid of losing the value within your home. No matter what your reason, something as big as the decision to refinance should be considered with great care. The housing market has changed, and with that, so have considerations in refinancing and the impact such a decision could make on your life. Here are steps to take in order to make refinancing your rental home a more welcomed process.

Refinancing May Be The Wise Choice

Refinancing can be a great thing in allowing you to pay off your mortgage sooner and providing smaller payments made month to month depending on your lender. Refinancing can also allow you to avoid bad credit and build up good credit for future investments. The same can be true for refinancing rental properties. As long as the amount that you save over the lifetime of your loan, is less than your closing costs you have made a wise decision! If you have multiple rental properties, your savings can be even more profound.

Choosing a Mortgage Refinance Lender

Choosing a lender can be a little intimidating, but in order to reach your goal of refinancing you need to be able and willing to explore more than one option.

  • Get a copy of your credit score and credit report. You are entitled to one free copy per year, so head over to AnnualCreditReport.com and get one. This is a government approved resource and should be used before buying a report from a credit bureau. Make  two copies, one for your lender and one for your personal records as your lender will need this information for your application and proof of documentation is always good in the event that something were to happen.
  • Call your original lender. If you don’t have a lender, talk to those lenders within your bank or credit union and see what they have to offer in terms of refinancing options. It is vital that you write their offers down so you can shop around and compare more effectively.  Ask questions about how exactly this could affect your personal credit, how they could work with your income and ask about a loan estimate based on the value of your home. If they hit you with anything you do not understand, request that things be explained in simpler terms. This allows you to really know what it is you’re getting into. Do a pros and cons list to refer to later with each lender you explore the possibility of refinancing with.
  • Get copies of applicable documents. Monthly mortgage statements, pay stubs and monthly bills will paint an accurate picture for those that are looking to assist you in the decision to refinance. In other words, have the ability to prove your monthly income, any assets you may have as well as your expenditures.
  • Do not be afraid to explore federal refinance programs In the event that you owe more than your home is worth, programs such as The Federal Home Refinance Program are designed to help. Remember, you owe it to yourself to look for a lender that meets your needs. If you are unsure of the options available to you, do not ever hesitate to ask questions in order to have your financial needs recognized, and more importantly, met.

Before You Apply for a Rental Refinance Loan

  • Tell your lender that you wish to refinance your rental property. A few mortgages require the homeowner or renter, as in this case, to live on that property for a set amount of time. Make sure you once again that you state that you are interested in refinancing a rental property to insure that the contract is worded correctly and therefore, valid.
  • Review your credit report.  Make sure all the documentation is accurate.  You will need to demonstrate good credit in order to qualify for a refinance in the first place. If there are any outdated, negative accounts file a dispute with the bureau. Higher credit scores equal lower interest rates! If you have any doubts or questions, remember to call your bank; that’s what they’re there for.
  • Know whether or not you have enough equity within the home. For investment properties, lenders typically give out a loan-to-value ratio at a minimum of 75%. You really want to be sure that your time and effort spent on  your home is well worth it.
  • Be able to show that you have money set aside. Lenders want to see that you are reliable and being able to cover six months (if not more) of interest, principal, as well as taxes and homeowner’s insurance.

The more prepared you are when it comes to refinancing your rental property, the better off you’ll be. Now that you know what it is to be expected, you can go forth and make a sound financial decision.