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

Know more: Reo foreclosure homes

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

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 Florida:

• In Florida, landlords don’t need to give a reason to evict, but they do need to provide notice. As a landlord in Florida, you will have to comply with local building, housing, and health codes and return your tenant’s security deposit or transfer it to the new owner.

• You should learn about any exceptions to the landlord/tenant rights and restrictions in Florida. For example, tenants in the military or tenants who are victims of domestic violence are allowed to break their leases, as long as they go through the proper legal channels. Learn more about the details of tenant laws protecting victims of domestic violence in Florida.

• As the new owner of an REO property in Florida, you and your tenants have a right to utility services, and under Florida law, you nor your tenants can be charged for unpaid utilities from a previous owner or tenant.

• If you have problems with a tenant paying the rent, you’ll have to file suit in the county court in order to begin the eviction process. The tenant has five days to respond to the suit, and if he doesn’t or if the judge rules in favor of you, the landlord, then the county court clerk will issue a “Writ of Possession” to the sheriff. At this point, the tenant will be forced to vacate the premises within 24 hours.

• 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 Florida.

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.

Links to More Information about Federal and Florida Rental Laws:

Summary of Landlord/Tenant Laws

National Low Income Housing Coalitions’ Renters in Foreclosure Toolkit

Article about Tenants Rights in Residential Foreclosures in Florida

Local Tenant Rights, Laws, and Protections in Florida 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 California:

• As the new owner of the property, you have to keep the utilities on for your tenants. If you don’t, you could face legal issues.

• In California, it’s illegal to change your tenants’ locks without a court order. To obtain a court order, you’ll have to evict the tenants, which involves providing the renter with a written notice, filing a Summons and Complaint with the court, and giving a copy to the renter. The renter has about five days (or more) to file a response with the court. Tenants do have the right to a trial, if they choose, so make sure you have all of your ducks in a row.

• 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 this overview of California Residential Landlord/Tenant Law.

An important California state law to keep in mind when buying a foreclosure home in California 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.

If you’re new to renting a home in California—whether you purchased that home through a foreclosure sale or through more traditional means—you should be aware that some cities have rent control laws, which you’ll need to consider in your investment calculations. California communities that limit or prohibit rent increases (or that may limit the circumstances in which you can evict a tenant) include:

Berkeley
Beverly Hills
Campbell
East Palo Alto
Fremont
Hayward
Los Angeles
Los Gatos
Oakland
Palm Springs
San Francisco
San Jose
Santa Monica
Thousand Oaks
West Hollywood
Westlake Village

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 California Rental Laws:

http://www.dca.ca.gov/publications/landlordbook/appendix2.shtml
http://www.dca.ca.gov/publications/landlordbook/when-rent.shtml
http://foreclosureinfoca.org/RTF1.cfm?pagename=Evictions
http://homebuying.about.com/od/foreclosures/a/101008_tenants.htm
http://www.hud.gov/local/ca/renting/tenantrights.cfm

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 .

Know more on: Reo foreclosure homes

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).

Know more on:foreclosure listings

• Pay your bills on time.  The longer your history of paying your bills on time, the better your score.
• Keep balances on your revolving credit (credit cards) below 50% of your available credit.
• Pay down as much revolving debt as possible.
• Don’t apply for new credit cards, and don’t bother to cancel unused cards; either of these actions may actually lower your score.
• Don’t increase your debt; for example, if you are shopping for a property, do not decide to buy a new car at the same time.

There is a significant amount of documentation required when you apply for a loan. This checklist should help you to collect some of the items you will need to accurately fill out your loan application. To save time and frustration during the loan process, start gathering the documentation listed below as soon as possible.

Residence History:

• Your addresses for the last two years, and length of time at each address
• If you currently rent, your landlord’s name and address for the last twelve-month period

Employment History:

• The names and addresses for each of your employers over the last two-year period
• The dates you worked at each place of employment
• A letter explaining any gaps in your employment in the last two years
• Original pay stubs for the last thirty days
• Last two years’ W-2 and/or 1099 forms
• Last two years’ tax returns
• If self employed, year to date profit and loss statement and current balance sheet
• Transcript of diploma if you were a student in the last two years
• If retired, a retirement, social security or disability-award letter and a copy of your most recent check

For All Savings, Checking Or Investment Accounts:

• The names and addresses of each financial institution and account numbers
• The current balance or value
• Three months’ bank statements on all accounts
• If applicable, three months’ statements for IRA’s, Keoghs, 401K’s or profit sharing

Personal Property That You Own:

• The net cash value of your life insurance
• The make, year and value of your automobile
• The value of your furniture or other personal property

Real Estate That You Own:

• The property address(es); The estimated market value, outstanding loan balance and the amount of your monthly payment
• If applicable, the amount of your monthly rental income

For All Outstanding Loans And Credit Cards:

• Coupon Book or most recent statement for every account you have open

There are literally hundreds of loan programs available specific to the type of property you intend to buy, from fixed rate loans to adjustable, interest only, and balloon payments.  Then there is commercial lending; loans specific to apartment buildings or retail space.  I could go on and on; plus, rates and loan programs change daily.  That is why finding the right lender is extremely important to your investing success.  A lender who knows your needs and financial situation will be able to find the best loan products to get you into the property you want.

Know more on:foreclosure listings and foreclosed homes

Qualification and Designation

Not all real estate sales agents are Realtors. A Realtor is member of the NAR (National Association of Realtors) and agrees to abide by its strict code of ethics. Additionally, he may hold designations such as CRS (Certified Residential Specialist); ABR (Accredited Buyer’s Representative); GRI (Graduate, Realtors Institute); and SRES (Seniors Real Estate Specialist).

While both real estate agents and Realtors are licensed to conduct real estate transactions, there is no guarantee that all Realtors are morally and ethically better than unaffiliated independent real estate agents. Becoming a Realtor, however, shows a certain amount of commitment towards the profession and on-going education.

Experience and Track Record

Experience counts. A good real estate agent or Realtor should have been in business for a number of years, and it is important that the agent you pick knows the neighborhood you are interested in. He needs to know about schools and businesses in the area, recent sales, upcoming projects, current listings, etc. He will need to select homes that meet your needs. If you are selling your home, he will need to find buyers who are looking for a home similar to yours. Your options, as a seller or a buyer, will improve if your agent has good reputation because his inventory will more likely increase over time.

Ask the agent to provide you a list of homes sold or bought in the last year within the area of town in which he does business. This will give you an idea about the price range of homes in which he normally lists or sells and his overall experience and success as a real estate agent.

Commitment

Ask them up front about their current availability to attend to your needs. A full-time real estate agent is your best bet. If you select a part-time agent, make sure you set time expectations up front and determine the specific hours and days he will be available to you. A busy or part-time agent may not have time to accommodate your needs, which may lead to unreturned phone calls and/or late appointments resulting in unnecessary delays.

Hiring an agent from a big company has its advantages as there is a good chance someone is always there to answer the phone. Big realty companies have large advertising budgets and may market your property more aggressively. It is not as important which company brand you choose, but which agent you choose. You may have to interview a lot of them before you find an agent that is a good fit for you.

References

Buying or selling a house involves a lot of money, so trustworthiness is one of the essential qualities to look for in a real estate agent. An agent may be qualified and experienced, but it does not mean that he enjoys a good reputation among his customers. So ask for references and perform a quick online search to see what feedback comes up.  Researching the references will also give you an idea of how good they are in negotiating offers and ensuring that your interests are protected in the real estate transaction.

A good agent should always put your best interests ahead of their profit. He should show you as many properties ad you would like to see and allow you enough time to decide. Many agents will try to convince you to make your decision fast or push you to purchase their listings. So it is important to find an agent that is honest and does not shy away from hard work.

Know more on:Reo Properties and buying foreclosed homes