Rooming Houses

8 Replies

Does anyone have experience buying, managing, or selling rooming houses? I hear that they can be a real pain and are extremely management intensive. I have a friend who is having difficulty making payments on his rooming house right now and it doesn't look like his mortgage company wants to modify for him. I cannot understand what a mortgage company would want with a rooming house on their books. Please share your experiences with rooming houses. I appreciate it.

James,

I can put you in contact with an investor I know (local to our area) who has a rooming house. In fact, it burned down last year, and they are in the midst of the re-build. I'm sure that they could give you feedback.

And whether the lender would want the rooming house as an asset on their books - well, they placed the loan knowing it was a rooming house, and when lenders make loans, they are aware that the property may one day become theirs. And since you work for a lender, you know that already; and you know that they never WANT any of those assets back. If / when they foreclose, it will get sold as REO eventually, unless bought at sheriff sale.

Exactly... I remember originating loans on rooming houses was very, very difficult. And in this market, I cannot imagine that there would be much value to a rooming house. I would think that the borrower would have some negotiating power when it comes to doing a modification (being as I know what goes into modifying a loan too).

Of course I understand that the bank made the loan knowing that one day they might take it back, but I think that a simple mod would allow them to not have to take it on their books. A foreclosure would most likely net a lot lower number than if they did a mod.

Are loan mods getting done on investor loans at all? My feeling is the lenders figure investors knew what they were getting into and don't deserve loan mods.

James, before you think about buying it, consider the fact that your friend couldn't make enough with it to even make the mortgage payments, and there are many expenses above and beyond the mortgage.

Yes, buyers might be interested in buying it and converting it to something else.

Jon,

Yes, we modify over 500 of our commercial (investor) loans every month. I agree with what you say, but its a business decision between minimizing pain to our investors by keeping the loans performing, or going through the expensive foreclosure process.

P NW- I am not thinking of buying the property, just wondering why on earth the mortgage company would not consider a modification and would rather foreclose on a rooming house.

Steve- At this point, I appreciate the offer to get me in touch with the investor, but I am going to hold off on doing that right now. I was basically looking to see if anyone else was having trouble with their rooming house or had trouble in the past. I am considering working with my friend and dealing directly with his mortgage company to help him get modified.

Thank you all for your replies.

James,

Just a thought for you to consider.

You might want to check into having your employer acquiring that NPN for this rooming house. It would have to come at a discount of course. And then you can mitigate away once your employer is the servicer. You'd be able to plug in all the numbers and see if the loan mod makes more for your employer than the foreclosure.