http://www.trulia.com/voices/Rent_vs_Buy/Why_don_t_banks_rent_their_REO_s_while_the_houses_-145136en-ushttp://www.trulia.com/voices/profile/Real_Estate_Pro-Ontario_CA-847873/http://www.trulia.com/voices/profile/Real_Estate_Pro-Ontario_CA-847873/That's a great question! And actually, many banks are looking into this option more and more. My company, Renttoday.us specializes in residential asset management and we deal with many banks and large investors who are looking into holding thier REO portfolios until the values recover. Leaving these homes vacant becomes a bigger liability than leasing them out since they become targets for squatters and lack of care turns them into neighborhood eyesoars. Also, banks do not have to deal with the tenant at all, that is was an experienced property management firm is for. Once the bank decides which properties they wish to retain as rentals, they hand it off to us and we handle the rent ready, marketing, leasing, and day to day operations. This turns their non-performing, losing asset into a performing part of thier portfolio. Not only that, they are providing affordable housing which is in much demand in most areas.Sun, 16 Aug 2009 21:12:19 -0700http://www.trulia.com/voices/profile/Real_Estate_Pro-Hunt_Valley_MD-839613/http://www.trulia.com/voices/profile/Real_Estate_Pro-Hunt_Valley_MD-839613/One big contributing factor is the added expenses that this would require. Just to take one issue that I deal with daily, Liability Insurance. Having a renter in these properties would expotentially increase the liability insurance costs. Add to this the costs of managing the properties and the repair costs for wear and tear and I doubt very seriously that there is any money left from the rent to make this more appealing than just letting the property sit vacant. I am seeing an increasing trend of banks investigating this option, but I am not sure the trend will catch like wildfire.Fri, 07 Aug 2009 07:23:38 -0700http://www.trulia.com/voices/profile/Real_Estate_Pro-Orange_County_CA-703102/http://www.trulia.com/voices/profile/Real_Estate_Pro-Orange_County_CA-703102/I had answered this question before but I just got some new info from Carrington Morgage Services (CMS). I was looking at a home that they had previously listed on the market with ReMax. They cancelled the contract however and so I called CMS directly for more info. Here's what I found out from them... When speaking with the rep on the phone he noticed that the home was placed in the HFR program. He didn't even know what that was so he looked into it. He found out that HFR stands for Hold For Rent. Apparently, many of the homes they have listed are not going to be placed on the market for sale. Instead they are going to rent them out until the values of the homes recover. I found this interesting and this is the first that I have heard of it so I wanted you to know!Sun, 19 Jul 2009 13:40:44 -0700http://www.trulia.com/voices/profile/Real_Estate_Pro-Orange_County_CA-68858/http://www.trulia.com/voices/profile/Real_Estate_Pro-Orange_County_CA-68858/Daisy, What others have said are totally true, but this might change. As mentioned earlier, banks are not in the business to rent. Also, the homes sell too quickly. We receive REOs from 4 different lenders, and all get multiple offers and are off the market within days. This is partly due to availability. REOs are always available for show, no calling before and asking the tenant when one might show. Now what is changing, is that the government is trying to dig their hands deeper into the private sector and make banks rent back homes to the owners. Now this may be ok on a case-by-case basis, but on a grand scale, this will prohibit the market from correcting itself as quickly. Now I don't know about you, but my wife and I are in the market as she is expecting and we need more space. I'm not in the market to buy a home someone else will live in and rent back from me after I buy it off the bank. I am buying for the soon-to-be 3 of us. Many of these homes will be priced in the first time home buyer range, yet this plan is more investor friendly, defeating the point of first time home buyer programs and aid. Long story short, let's hope the banks and lenders minimize the property management aspect and focus on lending and liquidating not liquid assets such as homes. Lars Nordstrom Seven Gables Real Estate Foreclosure DivisionSun, 19 Jul 2009 08:37:46 -0700http://www.trulia.com/voices/profile/Real_Estate_Pro-Mission_Viejo_CA-642332/http://www.trulia.com/voices/profile/Real_Estate_Pro-Mission_Viejo_CA-642332/In most cases the properties aren't in the hands of the banks very long, once they own them. REOs right now in my area are only for sale for a week with multiple offers on them, so why would the bank rent them to someone.Wed, 15 Jul 2009 19:50:05 -0700http://www.trulia.com/voices/profile/Real_Estate_Pro-Orange_County_CA-703102/http://www.trulia.com/voices/profile/Real_Estate_Pro-Orange_County_CA-703102/Banks are not great Landlords. Property Management is a people business and they are in the money business. Can you imagine calling Wells Fargo and asking them to repair a broken sink? They just aren't set up for that kind of thing; they are in the loan business. Make sense? -azWed, 15 Jul 2009 08:07:43 -0700http://www.trulia.com/voices/profile/Real_Estate_Pro-Yorba_Linda_CA-306879/http://www.trulia.com/voices/profile/Real_Estate_Pro-Yorba_Linda_CA-306879/Hello Daisy: Banks are really in the business of loans and they are not set up to act as property managers. Additionally, most properties would need repairs and maintenance. They rather sell today and make money lending money. Take care, Victoria Always, REALTORMon, 13 Jul 2009 13:18:13 -0700http://www.trulia.com/voices/profile/Real_Estate_Pro-Maple_Grove_MN-779817/http://www.trulia.com/voices/profile/Real_Estate_Pro-Maple_Grove_MN-779817/Just to add that many REO's are not habitable and would require $ to make it livable for tenant. Also, any renter would want to sign lease, usually 1 year minimal. Banks want to sell today.Mon, 13 Jul 2009 09:47:09 -0700http://www.trulia.com/voices/profile/Real_Estate_Pro-Brea_CA-810069/http://www.trulia.com/voices/profile/Real_Estate_Pro-Brea_CA-810069/Both of these are good answers and all I would add is the fact that banks are not in the business of owning homes. Their focus is lending money, and home ownership opens a can of worms that not many banks would be willing. This is a logical question since it would appear that they could soften the blow to their losses, but when all is said and done, they want the past behind them quickly so they can start lending money again. AaronMon, 13 Jul 2009 09:42:38 -0700http://www.trulia.com/voices/profile/Real_Estate_Pro-Placentia_CA-811003/http://www.trulia.com/voices/profile/Real_Estate_Pro-Placentia_CA-811003/Hi Daisey, There are a number of reasons. You cannot believe the process and paperwork there is involved with a bank property. A tenant would only add the to mix. The bank has just gone through the process of getting the property from the owner. A tenant who refused to show the home or worse not move out when it was sold would only create more problems. I have seen tenants in bank properties when they were existing tenants when the home was forclosed on, but that is rare. Conie Bramble Prudential CA Realty 714-337-8718Mon, 13 Jul 2009 09:36:52 -0700http://www.trulia.com/voices/profile/Real_Estate_Pro-California-235079/http://www.trulia.com/voices/profile/Real_Estate_Pro-California-235079/Hi Daisy - There's really no need for the bank / owners to do so. The problems associated with qualifying renters, utilities liabilities, repair issues, condition of property, liability insurance etc. would cause more issues for the bank / owners than it's worth. They can list the properties at aggressive prices (vacant) and get offers quickly which will close faster vacant than occupied. Eviction is another problem in California where it takes much longer to evict someone here in CA than it does anywhere else in the USA - and - if it's the City of Los Angeles for example, the property is subject to "rent control immediately-upon-foreclosure". A tenant with all good intentions to move out upon notice, typically does not do so which causes closing issues and more liabilities. It's a great thought, just not practical especially here in CA. Best of luck ! Thom Colby Broker / REALTOR Orange County, CAMon, 13 Jul 2009 09:36:32 -0700http://www.trulia.com/voices/profile/Real_Estate_Pro-48170-308929/http://www.trulia.com/voices/profile/Real_Estate_Pro-48170-308929/hi...many reasons....condition might not pass c of o..the risk and liablility of having tenants ...dealing with tenant occupied homes and trying to show and sell houses would not work.also, when they are sold.....the tenants would have to move.what if they become uncooperative?......it could cause bigger problems than it would ever solve trying to bring in a small amount of revenue through rents, upkeep, utilities, etc, etc...........bob mcclure- success mortgage partners- plymouth, michigan....Mon, 13 Jul 2009 08:53:29 -0700http://www.trulia.com/voices/profile/Other-Bergen_County_NJ-652082/http://www.trulia.com/voices/profile/Other-Bergen_County_NJ-652082/Too many Headaches. Tenants may not be flexible when it comes to showing the property. Plus in most states it is difficult and expensive to evict tenants.Mon, 13 Jul 2009 08:53:10 -0700