Property Management and Investor Information: November 2009

The Electronic Payments Association (NACHA) has just released a Phishing Alert.

Individuals and/or companies may have received an e-mail with the subject title “Rejected ACH Transaction”. The e-mail, which appears to be from NACHA, indicates that there is a problem with an ACH transaction, and contains a link that redirects to a web page that resembles the NACHA web site.

This is not the NACHA web site. DO NOT OPEN THIS EMAIL as it will infect your PC with a malware virus.

If you have questions or need assistance, please call Global Treasury Management Services at (800) 322-2778, Monday through Friday, from 7 a.m. to 6 p.m. Pacific Time, excluding Bank holidays.

The bad guys are out there 24/7.

One of the many nightmares in a property manager's day (yes nightmares are possible during the day of a property manager or property owner) is when the rent does not show up.  It might even happen when a manager has auto draft from their bank since funds have to be in the bank to collect.

When this happens we suggest the following steps:

1.  Call the tenant on the next business day after the rent becomes late.  Note:  The tenant gets the next business day to pay if the due date falls on a weekend or holiday.  Tell the tenant that you have not received the rent and to avoid a 3 Day Notice being served it must be received immediately.  Listen to their story but don't make any deals.

2.  If you cannot get them on the phone or if you can, serve a 3 Day Notice to Pay Rent or Quit (in California) as soon as you can.  See your property manager or attorney if you do not know how to do this.

3.  When the notice expires begin an eviction using a local eviction attorney.  

4.  Drive by the property at least once a week, Monday is a good day, to see if they have vacated.

It is best to be in the drivers seat in this situation.  Do not let the tenant be the driver.  If the tenant wants to stay, let them sign a stipulation and work out a payment plan.  Included in the plan should be a provision for them the pay you back the attorney fees and to admit guilt.  In case they default on the stipulation they would be immediately turned over to the sheriff for lockout. 

Need more tips?  Contact us at www.HomePointe.com

It is always a tough decison where to buy since good properties tend to be priced above what makes sense for cash flow (low rents compared to sales price). I personally like to buy in marginal neighborhoods since they tend to have better cash flow and my company is good at picking tenants like South Sacramento(95820, 95823, 95824, 95828). But some like more middle of the road neighborhoods and pay a little more, with less cash flow Natomas (95834, 95835) or Elk Grove (95624, 95757, 95758) make sense for that middle area. Higher end properties like Folsom (95630) can make sense if the deal is good and the investor can wait out the slow sales market. Of course, there are a lot more choices than that, but most fall in one of those three categories.

Yesterday Fannie Mae announced a new program it has designed to further assist homeowners facing foreclosure.

The Deed-for-Lease Program (D4L) allows qualifying homeowners to remain in their homes by signing a lease in connection with voluntarily transferring the property deed back to the lender. According to a press release from Fannie Mae, “The new program is designed for borrowers who do not qualify for or have not been able to sustain other loan-workout solutions, such as a modification.

Under Deed for Lease, borrowers transfer their property to the lender by completing a deed in lieu of foreclosure, and then lease back the house at a market rate. To participate in the program, borrowers must live in the home as their primary residence and must be released from any subordinate liens on the property. Tenants of borrowers in this circumstance may also be eligible for leases under the program. Borrowers or tenants interested in a lease must be able to document that the new market rental rate is no more than 31% of their gross income. Leases under the new program may be up to 12 months, with the possibility of term renewal or month-to-month extensions after that period. A Deed for Lease property that is subsequently sold includes an assignment of the lease to the buyer.”

To learn more about D4L please visit www.efanniemae.com. There you will find program details, eligibility requirements, and a helpful FAQ document.

The Sacramento rental market is struggling a bit more than usual. There are fewer rentals available and those that are on the market are not seeing a real strong demand.

Our firm rented out an above average amount of rentals in October which has lowered our overall available properties. It appears the winter will be slow and that usually means the spring will see a rebound.

Vacancy rates are holding at around 5% or lower for single family homes, but don't expect rents to rise anytime soon.

You can access our rental survey at our website:  www.HomePointe.com and click on Owner Services.