“And if I—literally, if I was an investor that was a handy type, which I’m not, and I could buy a couple of them at distressed prices and find renters, I think that’s—and again take a 30-year mortgage, it’s a leveraged way of owning a very cheap asset now and I think that’s probably as an attractive an investment as you can make now.”

“[I]f I had a way of buying a couple hundred thousand single-family homes and had a way of managing—the management is enormous—is really the problem because they’re one by one.  They’re not like apartment houses.   So—but I would load up on them and I would—I would take mortgages out at very, very low rates.”

To Buffett’s point, big-money investors are getting into the landlord business.  Indeed, the Wall Street Journal reported this week that hedge funds, private-equity firms, pension funds and university endowments are dipping into the single-family foreclosure market.

For our part, we’ve been steadily buying foreclosures and other distressed properties in Grand Rapids since 2008, and are in contract to buy 3 more houses—1 duplex and 2 single-family homes—in the next few months.

Click here to view the video on YouTube.

This video shows PadMapper in action:

Click here to view the video on YouTube.

So how can property managers get their apartments and houses listed on PadMapper?

Because PadMapper is an aggregator, meaning it pulls and compiles listings from other rental websites, there’s a good chance your places are already on it.  If you advertise on Apartments.com, Move.com, Postlets.com, or Craigslist.org, for example, your listings are automatically displayed on PadMapper.  (Propertyware.com users:  Recall, Propertyware automatically syndicates listings to Hotpads.com, Trulia.com, and RHPros.com, but not to any website that PadMapper pulls from so you’ve got some work to do).

But there is also a direct way to get listed:  PadLister.com, a free tool from the creator of PadMapper. PadLister is the only direct way to get listed on PadMapper.  And PadLister updates PadMapper in real time, while the syndicated sites have some lag.  Also, and perhaps most importantly, PadLister postings stay active longer on PadMapper. Syndicated listings are displayed on PadMapper for 7 to 21 days, depending on the source and location; PadLister listings, however, stay active for 30 days before asking to renew.

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In a report published by RealtyTrac, an online marketplace for foreclosures, the average foreclosure in Michigan sold for $70,765, a hefty 40% discount off the State average. Bank-owned buyers did even better, getting close to a 46% discount. And pre-foreclosure sales—sales that occur while the property is actively in default, scheduled for foreclosure auction, or short sales—were discounted nearly 14%.

Closer to home, distressed buyers in Kent County paid $66,416, a 41% discount off the County’s average sales price.

Oddly enough, we’re in contract to buy our first non-distressed property in nearly five years.  More on that buy in future posts.

By definition, the lender loses money at a short sale, wherein the lender approves a sale by the borrower for less than the loan amount, with the lender—not the borrower—losing the difference between the sale price and the loan. Thus, in the past, it was generally considered more lucrative for lenders to pursue foreclosures which, at the very least, have an upside potential. Foreclosures today, however, are taking longer, growing more expensive, and fetching less. Thus, “lenders [now] consider short sales as the lesser of two evils when compared to foreclosures,” real estate analytics firm CoreLogic explains.

This presents a unique opportunity for real estate buyers with the skill to negotiate with two parties, the homeowner and the lender. Remember, the bank, not the borrower, is eating the loss. So when negotiating the price of a short sale, the lender most likely has the ultimate say. The homeowner’s only goal, of course, is to secure a minimum price that will not require him or her to bring cash to closing. In a short sale negotiation, therefore, your best offer is the most the lender is willing to lose that, at the same time, doesn’t require the borrower to put in any cash toward the deficiency.

At its peak, Zillow.com was valued at $1.6 billion—not bad for a company barely turning a profit.

Zillow’s $70 million float follows HomeAway.com’s, which raised $216 million in June.

Adding to their troubles, underwater homeowners seeking a short sale—selling a property for less than the value of the outstanding mortgages—have a much harder time doing so when they have a second mortgage, because all the lenders involved must agree to take losses on the sale, and second-in-priority holders take the first losses in such a situation.  For these reasons, and with home prices nationwide continuing to tumble, new home-equity loans are almost nonexistent.
Source:  The Wall Street Journal

Statutory redemption, in general, is the right of a defaulting mortgagor to regain ownership of property after a foreclosure sale by paying what the property fetched at the sale, with interest from the date of the sale at the interest rate provided for by the mortgage agreement, plus costs.

In Michigan, as it is currently written, homeowners in “residential property not exceeding 4 units” have 6 months to redeem their property.  The new law will shorten that period to 3 months.   For commercial, industrial, and multifamily mortgages, the redemption period will remain 6 months.

Legislators say the redemption period is when “many homes deteriorate and lose value,” and that foreclosures issues should be addressed “on the front end,” before the house is sold.  Accordingly, the law sets out a 90-day pre-foreclosure process to allow mortgagors and mortgage holders time to work out a deal.

Digitizing the leasing process speeds up sending, receiving, and executing lease documents.  PDF forms can be emailed as an attachment, eliminating the need to mail or fax.  PDFs can be posted on the web and made available for download, in a format that enables users to fill and save forms, regardless of platform or operating system.  Most importantly, a fillable, editable PDF lease allows you, the property manager or leasing agent, to control what information the user can manipulate.

Before converting your Microsoft Word lease to a PDF, first make sure your Word lease is in template form.  That is, make sure terms and conditions that change from lease to lease are left blank.  Here is a portion of the Microsoft Word lease we use as a template at Short South Management + Development.   (Click to enlarge.)

Fields that change from lease to lease include the leased premises’s address, the commencement date, the monthly rent amount, prorated rent, the security deposit amount, and others.

To ensure you have enough room to type, you should set the line-spacing to 1.5, at a minimum.  Additionally, make sure you underscore (________) the blanks.  These blanks signal which fields are editable.

Next, convert the Word file to a PDF.  There are several ways to create a PDF from a Microsoft Word document, including “Print” to PDF and “Save as” PDF.

After you’ve saved or printed your lease to PDF, open it in Adobe Acrobat Pro (or similar program).  Then, from the Adobe toolbar, click -> Forms -> Start Form Wizard.  A new dialog box will  open.  When asked “What type of document do you want to open as a form?” select “An existing electronic document” and click next.  Select “Use the current document” and click next, again.

If you properly spaced the original Microsoft Word lease, Adobe should automatically detect which fields are editable.  (Click image to see Adobe’s Form Editor.)

Once you confirm that Adobe picked up the correct editable fields, finish by clicking “Close Form Editing”.   Save the document as a PDF and you have successfully created a PDF with editable fields that is otherwise locked to user editing.

*Disclaimer:  We are constantly retooling our lease to comply with business demands, tenant feedback, and Michigan Law.  You should consult with an attorney before adopting any portion of our lease.

This picture is from a property located near Heritage Hill in Grand Rapids that an investor bought to rehabilitate and ultimately rent out as a single-family unit.  The previous tenants had destroyed the property, and the owner later lost it to foreclosure.  The new owner engaged our firm to complete its reconstruction and then manage the property.

This property, like most rehab jobs we see in Grand Rapids, especially those resulting from a foreclosure or eviction, required new carpet.  New carpet is a quick and easy way to get rid of stains and odors.  Old carpet looks outdated, may not have been properly stain guarded, and may be hiding dangerous mold and mildew.

Here, we recommended replacing all the carpet and the padding instead of just having it professionally cleaned.  Generally, carpet cleaners do not reach the pad beneath it.  And once the pad gets wet, whether it’s from flooding, a big spill, or animals, if a large amount of water leaks into the padding, mold and mildew can easily take over.

To replace the carpet, we first looked to our vendors and received quotes ranging from $1250 to $1475, $450 of which was labor, on average.  This labor cost is exactly where agile property managers can do part of the job themselves to save money.  Instead of enlisting the carpet installers to do every task involved, we measured each room ourselves, picked out a neutral commercial-grade carpet and padding from the Home Depot, and had the Home Depot cut and deliver the carpet to the job site.

Although we didn’t save any money on materials, we were able to cut the labor cost from $450 to $150.  Once we had the right-size carpet and pad in each room, the professional installers were able to lay, staple, trim, and glue the carpet in just one afternoon.

The new carpet, coupled with a fresh coat of paint, quickly transformed the house into a livable space and a nice addition to the Heritage Hill neighborhood.