Now for the million dollar question…considering all the negative economic news and talk of the pending double dip occurring, does the buyer take a chance to buy foreclosed property to rent out or resell in the future? What do you think?

Start with the federal laws. Those will usually trump most state laws, unless the state laws are more in favor of protecting the tenants.  When you buy a foreclosed home that is occupied, make sure you understand how the occupants are protected under The Helping Families Save Their Homes Act of 2009. If the current tenants were not the owners who were foreclosed on (or family members of the owners), you’ll need to give them 90 days notice of eviction if they were renting month-to-month. However, if they signed a lease, then you will have to allow them to stay until the end of their lease. An exception to this is if you are planning to live there yourself, in which case, you just need to give the tenants 90 days notice of eviction.

Once you’ve figured out what to do about the current renters, it’s up to you to decide whether to sign a new lease with those same renters or find new renters. In either case, you will have certain responsibilities as a landlord, and those will vary by state. Here are some things to keep in mind if you’re planning to become a landlord in the state of Nevada:

• Evictions – If you need to evict a tenant in the state of Nevada, expect the process to take 10-180 days. The amount of time it takes depends on the reason for the eviction (including, but not limited to, failure to pay rent and nuisance-related issues), as well as the type of rental (weekly or monthly). If tenants do not remove their personal items from the property before the eviction occurs, you’re required by Nevada rental law to store their items for 30 days. You will also have to inform the evicted tenants in writing by certified mail before the last 14 days that they their belongings will be thrown out after 30 days. However, you can charge a reasonable storage fee. Find out more about the different types of evictions and the process of evicting tenants in Nevada on RentLaw.com.

• Lease Termination – As a landlord in Nevada, you’ll have to give your tenants 45 days notice before canceling a lease. Read more about lease termination in Nevada.

• Security Deposits – Unless you have lawful reason to keep a tenant’s security deposit, you must return the security deposit within 30 days of lease termination. Get more info on Nevada laws related to security deposits.

• Landlord and Tenant Forms – Make life easier by having copies of legal documents for Nevada landlords and renters printed and ready to use when you need them. You can download landlord and tenant forms on www.uslegalforms.com.

• Maintenance and Upkeep – You, as the new property owner, are responsible for the maintenance and upkeep of the property. Be sure to respond within a suitable amount of time and address any legitimate issues appropriately. In fact, be proactive when you first take ownership and ask the tenants if everything is working properly. For more information about maintenance responsibilities and rights to inspect, read about the Landlord Right of Entry Laws in Nevada.

Of course, there is a lot more information out there to be learned about the implications of buying cheap houses to rent. Make sure you are diligent about learning your rights and your tenants’ rights at the federal, state, and local levels. Renting out a property can be a great investment, but you have to know the property and laws before you really know what you’re getting yourself into as a landlord and an investor.

Learn more about Federal and Nevada Rental Laws:

National Low Income Housing Coalitions’ Renters in Foreclosure Toolkit

Nevada’s Local Tenant Rights, Laws, and Protections from HUD.gov

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Start with the federal laws. Those will usually trump most state laws, unless the state laws are more in favor of protecting the tenants.  When you buy a foreclosed home that is occupied, make sure you understand how the occupants are protected under The Helping Families Save Their Homes Act of 2009. If the current tenants were not the owners who were foreclosed on (or family members of the owners), you’ll need to give them 90 days notice of eviction if they were renting month-to-month. However, if they signed a lease, then you will have to allow them to stay until the end of their lease. An exception to this is if you are planning to live there yourself, in which case, you just need to give the tenants 90 days notice of eviction.

Once you’ve figured out what to do about the current renters, it’s up to you to decide whether to sign a new lease with those same renters or find new renters. In either case, you will have certain responsibilities as a landlord, and those will vary by state. Here are some things to keep in mind if you’re planning to become a landlord in the state of Arizona:

• First of all, familiarize yourself with the Arizona Residential Landlord and Tenant Act (ARLTA). This document covers the legal rights and responsibilities of landlords and tenants in Arizona. It also contains information about steps to take when either party does not own up to his/her responsibilities or obligations in the rental relationship. You can get a free copy of the ARLTA on the Secretary of State’s website.

• If you’re faced with a circumstance in which you need to evict a tenant in Arizona, you’ll need to supply an eviction notice in writing.  The amount of time you must give the tenant to move out depends on the reason for eviction. The more serious the infraction, the less notice you have to give. If the tenant doesn’t pay the rent, you must give him/her five days notice and an opportunity to pay the amount due. If the violation is one that affects the health and safety of the tenant or those around him/her, then a five-day written notice is required. For less serious violations, such as unauthorized pets, you’ll have to give ten days notice. In cases of more serious breaches of contract, such as gang activity, firing a weapon or other gun on the property, physically harming other people, etc., you are allowed by law to terminate the rental agreement immediately (still with a written eviction notice). Read more about the process of evicting a tenant in Arizona to make sure you are in compliance with the landlord and tenant laws of that state.

• You should learn about any exceptions to the landlord/tenant rights and restrictions in Arizona. For example, tenants in the military or tenants who are victims of domestic violence are allowed to break their leases under certain situations, as long as they go through the proper legal channels. Learn more about the circumstances in which Arizona tenants who are members of the military and victims of domestic violence are allowed to break their leases.

• You, as the new property owner, are responsible for the maintenance and upkeep of the property. Be sure to respond within a suitable amount of time and address any legitimate issues appropriately. In fact, be proactive when you first take ownership and ask the tenants if everything is working properly. For more information about maintenance responsibilities and rights to inspect, read about the Landlord Right of Entry Laws in Arizona.

Of course, there is a lot more information out there to be learned. Make sure you are diligent about learning your rights and your tenants’ rights at the federal, state, and local levels. Renting out a property can be a great investment, but you have to know the property and laws before you really know what you’re getting yourself into as a landlord and an investor.

Learn more about Federal and Arizona Rental Laws:

National Low Income Housing Coalitions’ Renters in Foreclosure Toolkit

Local Tenant Rights, Laws, and Protections in Arizona from HUD.gov

Start with the federal laws. Those will usually trump most state laws, unless the state laws are more in favor of protecting the tenants.  When you buy a foreclosed home that is occupied, make sure you understand how the occupants are protected under The Helping Families Save Their Homes Act of 2009. If the current tenants were not the owners who were foreclosed on (or family members of the owners), you’ll need to give them 90 days notice of eviction if they were renting month-to-month.  However, if they signed a lease, then you will have to allow them to stay until the end of their lease. An exception to this is if you are planning to live there yourself, in which case, you just need to give the tenants 90 days notice of eviction.

Once you’ve figured out what to do about the current renters, it’s up to you to decide whether to sign a new lease with those same renters or find new renters. In either case, you will have certain responsibilities as a landlord, and those will vary by state. Here are some things to keep in mind if you’re planning to become a landlord in the state of Michigan:

• In Michigan, landlords must start the eviction process by filing a “Notice to Quit”, which will determine the number of days a landlord must give to a tenant to make them aware of eviction prior to filing a complaint and summons. The minimum length of a “Notice to Quit” is seven days for nonpayment of rent. The minimum length of a “ Notice to Quit” for termination of a lease is usually thirty days. The landlord can then file a complaint and deliver a summons to the tenant. After ten days, if the tenant has not vacated the premises, a “writ of restitution” is produced by the court sheriff, which will restore full possession to the landlord.

• If you’re a landlord and fail to notify your tenant with a notice of damages within thirty days after lease termination, you must immediately refund the full security deposit to the tenant, and no damages are due. If you feel that you have a disputed case to claim the security deposit or charges, you have forty-five days after termination of occupancy to file a suit against the tenant. Learn more about security deposit laws in Michigan.

• You, as the new property owner, are responsible for the maintenance and upkeep of the property. Be sure to respond within a suitable amount of time and address any legitimate issues appropriately. In fact, be proactive when you first take ownership and ask the tenants if everything is working properly. For more information about maintenance responsibilities and rights to inspect, read about the Landlord Right of Entry Laws in Michigan.

• In most cases, you can raise rent in Michigan as you choose, but there are some rules, such as you have to give the tenant, you guessed it, written notice. Here are some other rules surrounding raising rent in Michigan.

• An important Michigan state law to keep in mind when buying a foreclosure home in Michigan is one that gives borrowers whose homes are foreclosed on a statutory Right of Redemption. This means that the borrower who lost his or her home to a foreclosure has the legal right to buy back the home within one year if they pay off the full amount owed at the time of foreclosure, as well as any other liens, taxes, interest, and fees incurred by the lender to foreclose on the home.

Of course, there is a lot more information out there to be learned. Make sure you are diligent about learning your rights and your tenants’ rights at the federal, state, and local level. Renting out a property can be a great investment, but you have to know the property and laws before you really know what you’re getting yourself into as a landlord and an investor.

Links to More Information about Federal and Michigan Rental Laws:

Get more info about tenant and landlord laws in Michigan

Read about tenant rights, laws, and protections in Michigan on HUD.gov

Check out the National Low Income Housing Coalitions’ Renters in Foreclosure Toolkit

So what do you do? Do you still purchase the property? Well, that depends on the risk involved and how much of a risk taker you are. An occupied property can still be a great investment. You hear horror stories, but like most things in life, if you know what you’re getting into, you can prepare yourself and make it work. Or, you can make an educated decision to back away from the investment. Here are a few tips to help you minimize the risk involved and maximize your chances to land an awesome deal and bank some good money.

Find out what you can about the current renters.

This involves some investigation and asking many questions. Do the renters know the home is in foreclosure yet? Will the renters allow you and/or your real estate agent to inspect the home? Are you able to see a copy of the lease? If so, when does the lease end? Have they been on time with rent payments? Find out what you can about their situation and whether or not they have a criminal background. If they have no other options for a place to live, are unemployed, etc., they may be desperate enough to do something drastic like steal the appliances or something. Asking these questions will help you make an educated decision on the likelihood that the tenants will be cooperative or not.

A few hours of research and investigation will go a long way.

Before you think about investing in an REO home, learn about your state’s foreclosure laws to avoid, or at least prepare for, headaches along the way. For example, some states have what’s called a Right of Redemption, where the person who defaulted on the home (that was foreclosed on) can buy the home back after the foreclosure process has begun (before or after the sale, depending on the specifics of the state law).

Smart renters will know their rights. Even not so smart, but desperate, renters will know their rights. Smart investors will also know tenants’ rights. You don’t have to be a lawyer. You just need to do a little bit of homework and find a good real estate agent who has experience with REO properties. The U.S. Department of Housing and Urban Development (HUD) has a lot of great information on their website organized by state. For your homework, go to HUD.gov to learn about tenant laws in your state .

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Fortunately, there are people who are focused on helping you through the process of buying bank-owned properties. These are agents who specialize in the ins and outs of REO properties.

When investing in REO properties, look for agents who will:

Explain to you how the foreclosure process works in your area in layman’s terms.

Different states have different laws regarding foreclosure sales. When dealing with REO homes, the best agents will know the basic laws and have contacts in real estate law who are readily available to answer any questions and address any nuances that may arise. Because the process is so different from a standard real estate transaction, not every real estate agent can get access to REO properties to sell them. Agents experienced with bank-owned properties can get their hands on lists of REO homes for sale (or that will soon be for sale) that other real estate agents can’t get.

Arm you with the tools you need to find the best REO properties to suit your needs.

Agents who specialize in bank-owned homes also have access to online REO listings, bidding platforms, and other real estate services to help you find the most listings and the best deals in REO homes. You can see photos and get other detailed information about REO homes for sale without having to drive to each and every property. There are also applications for handheld devices, as well as tools and processes that technology savvy agents will use to provide you with information on REO properties as quickly as possible.

Help you get as much information as possible about the condition of the REO home for sale.

An official inspection might seem like an obvious “must-do,” but quite often, banks will try to sell an REO home as-is and won’t allow an inspection.  A good agent will work to negotiate on this point, or at the very least, allow you to bring an inspector with you during a visit to the home before you sign any paperwork. An inspection is critical when purchasing a property that has been foreclosed on, because the previous homeowners (or renters) may not have had the money or the inclination to keep the home in good condition. If the home is occupied upon foreclosure by the previous homeowners, tenants, or squatters, an inspection may not be in the cards.

Provide information about the history of the REO property for sale, as well as the neighborhood in which the REO property is located.

When it comes to REO investments, the best agents will provide information about the percentage of other homes in the neighborhood that have been foreclosed on or are in pre-foreclosure; data about when homes have sold and for how much; the condition of homes in the area, etc. This may involve reaching out to neighbors and asking questions, and is especially important if you’re unable to obtain an inspection. A good agent will also find out if there are any outstanding taxes, HOA dues (when applicable), or other liens on the property.

Educate you on national and local laws regarding current occupants of the foreclosure property.

One of the challenges of purchasing an REO home is that there’s no guarantee the home will be vacant when you come into ownership of it. Renters who weren’t informed by the previous owner that the house was under foreclosure in time to find a new residence may still live there. Or, a homeless person may be using the property as a shelter, even if the electricity and water is shut off. Whatever the case may be, you’ll want to know your legal rights, as well as the current renters rights, in your area. Keep in mind that they may be different from state to state, and a good ‘agent will understand the laws related to the foreclosure sales process or have a relationship with someone who does.

Assist you during the process of submitting an offer on an REO home.

The paperwork and processes involved in making on offer on an REO property are very different than your standard real estate offer. There are rules and stipulations that can be confusing to most homebuyers and many agents, but that agents who specialize in REO homes know like the backs of their hands. Whether you bid on an REO property online or through some other means, it’s important to find an agent that can make sure you do everything by the book so that your offer is considered (and not thrown out because you unknowingly missed a step or left out some required information).

Of course, no one can eliminate the possibility of hiccups in a real estate deal completely, or in any deal for that matter, but an agent experienced in foreclosure properties will educate you on all the details of the process. That way, you know what to expect and can feel confident in your decision to invest in a particular REO property (or not).

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Is it worth it?

First, consider if your home is worth keeping or fighting for. Perhaps you’re only behind by a payment or two, and it seems like you’ll be able to may payments soon. Then you can delay proceedings by talking to your bank. If it’s not worth it – like if the value is worth less than the mortgage, or perhaps you’ve lost your job or facing illness – then you may consider a short sale or perhaps letting the home go into foreclosure.

Refinancing

You can opt for refinancing with your lender if you have more than 20% equity. This means that you’ll be borrowing against the current equity you have, which will help you keep your payments current.

Modifications on the original loan

If you’ve been delinquent for a few months, but can now make the payments, then you can ask your bank or lender to change your loan terms. You can opt to make a few larger payments to make up for the months you were behind.

Bankruptcy

If you have other debts which you cannot repay, consider filing for Chapter 13 Bankruptcy. This will ruin your credit for a good decade, but foreclosure will be delayed. You’ll have to pay off your debts via a repayment plan, but don’t fall behind again; this can be grounds for foreclosure. Know more on bank foreclosure listings.

Deed in Lieu of Foreclosure

Assuming you have 20% or more equity on your home, you can voluntarily give up your home, so as not to have the foreclosure on your credit report. Instead of being forcibly evicted, you give up the property to the bank and leave on your own.

Refinancing, bankruptcy and modifications are options to slow down the foreclosure process, if you just need some time to make your payments current. Further action should be taken to stop foreclosure, otherwise, a shortsale or giving up your home voluntarily can help save your credit rating.

Know more on:foreclosed homes for sale and Reo foreclosure homes

Are short sales really a good deal? It’s not always a simple matter of finding a homeowner willing to sell you their home on the cheap. Often, there are certain conditions that must be met and a lender does not have to accept your offer.

More often that not, if a home’s value has fallen and owes more on the mortgage, the homeowner will decide that it would be better to let go of the property than keep it. A homeowner does not need to be in foreclosure and is probably still current on his or her payments.

If you wish to purchase a short sale home, you’ll first have to make an offer, often one that is in line with the current value. In this case, it would be a good idea to do your research and find out the current value of the home, then you can give a realistic offer. An owner may give a ridiculously low price to get multiple offers but there is little chance this will be accepted by the bank. Also, it could be that the seller did not have the proper documentation or is not even qualified for a short sale in the first place (sellers have to explain their situation in a hardship letter, which is subject to the lender’s approval.)  And it is also possible that the bank has sold the loan to another lender, sometimes without informing the seller until a few months after the sale.

Ask a real estate agent specializing in short sales to help out. Your agent will also be able to dig up other information, such as the current mortgage balance and if the house has multiple mortgages. This is important because while the first lender may agree to the sale, the second (or third) may not.

Be aware that because of the complication, it takes much longer to close short sale homes. Also, there is a danger of having your short sale canceled.  So, think carefully before you sign the dotted line and begin purchasing your short sale. Do your research so that you don’t get burned in the end. Know more on Bank owned homes.

Know more on:Reo Property Auctions and Reo foreclosure homes

Depending on how you define the shadow inventory, the estimated number of homes that category varies widely between two million and eight million homes. This year, around five and a half million homes are expected to be sold in the U.S., of which around one-third are being sold under conditions of some kind of financial distress such as bank foreclosure properties, short sales, or sellers letting their homes go at a serious loss just because they need to get out from under them. The higher estimates of the shadow inventory include bank owned foreclosures that haven’t hit the market yet as well as homes that have already been declared delinquent and are in the process of moving into the foreclosure process, and homes that are more than two months behind in their mortgage payments. It’s really possible that around seven million homes are floating around out there in some kind of financial limbo, but not all of them will actually reach the market, and it’s likely that they won’t all hit the market at once. However, because of all the foreclosed homes, short sales, and underwater properties out there, it could be as long as 2013 before home values will begin to rise again, and the single family home market will actually begin to recover some of its former value. One thing that’s pretty certain, though, is that home values will probably never reach the exalted peaks that they hit three years ago. Know more on bank foreclosure listings.

One thing to consider about the shadow inventory problem is that these homes are not just more product that will drive down prices; foreclosed homes and short sales are usually in areas that are hard-hit economically and many of these homes have been seriously neglected, or at best have had routine maintenance to things like plumbing, electrical wiring, painting, deferred for far too long. These homes could have the effect of reducing home values and keeping them depressed for many years. That’s a scary prospect for anyone hoping to sell a home, condo, or apartment any time in the near future. Celia Chen, a housing analyst for Moody’s Economy.com thinks that as many as four and a half million homes may be out there in the shadow inventory, and that’s an entire year’s supply of homes. Right now it’s a dark time for homeowners or mortgage holders looking to sell their homes. The upside is that it’s a good time to buy, and the low prices may spur more activity in the country’s various real estate markets in the next few years.

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Some people are simply ceasing to pay their mortgages and are fighting tooth and nail whichever institution holds the mortgage on their home, including hiring lawyers who file legal papers asking the mortgage holder to provide legal proof that do, indeed hold the mortgage. This tactic is proving very effective in forestalling foreclosure since most mortgages are sold by the original issuer to second parties. Another factor working in favor of those fighting home foreclosures by banks is the sheer volume of homes that have been foreclosed on. According to a recent article in The New York Times, more than 1.7 million American homes have had foreclosure proceedings initiated against them. The courts are completely buried in a backlog of foreclosed home cases, the mortgage holders’ collections departments are overwhelmed, and some Americans are taking full advantage of that situation by staying in homes they don’t pay for as long as they possibly can. If you’re facing the prospect of foreclosure, or have already had your home foreclosed upon, here is some food for thought: in 2008, your average homeowner who was delinquent on his or her mortgage had been delinquent for around 251 days before eviction. Right now, given the huge volume of delinquent mortgages, it takes mortgage holders around 438 days to evict you. That’s more than one year, ample time for almost anyone to build up their savings and make other living arrangements. Know more on bank foreclosure listings.

Ultimately, what created this situation was mortgage lenders’ greed, their predatory lending practices, and their inflexibility in dealing with generally honest, honorable homeowners who might have been hit with high medical costs, a personal disaster, or simply losing their jobs and being able to find another one that paid nearly as well. And while people playing the waiting game with their mortgage lenders in the hope of improving their cash flow will pay the price when they are finally the victims of bank foreclosures. Their credit will be ruined and they may be unable to obtain any credit in the future, or if they do, they’ll pay premium rates for any credit cards that they can obtain. Like any situation, there are advantages and benefits to playing this dangerous game. Since most people do need credit, you have to ask yourself: do the advantages outweigh the risks? For most sensible people, the answer is probably a resounding “No”.

Know more on Bank owned home for sale.