Is it bad to help those that need it?

Question

I want to know this: If I were to go to a foreclosure, and the tenant was still there, what would you do? I want to help people get themselves out of debt, or at least into something manageable for their income stream. Or a rent-to-own situation. I'd charge an extra 200 buclks a month, and if they are upside down, to help thedm see that maybe it's not the right place for them.

How do you think I should proceed...?

This is completely hypothetical. I am still pursuing my paralegal degree, with an emphasis in real estate law. I should be done by 2020.

How do you think I should proceed...?

This is completely hypothetical.  I am still pursuing my paralegal degree, with an emphasis in real estate law.  I should be done by 2020.

Russ Draper · Answer

My experience is that people need a desire to help themselves first, financial education second.  Trying to help the foreclosed homeowner is admirable, but my experience shows that if they could have gotten themselves out of the situation before the auction they would have.  You will be throwing money away by letting them stay.  If you are the owner of a property where the homeowner hasn't moved, file for eviction or related right away.

Jason Salaz · Answer

Thank you so much for answering my question!  Remember, it was a hypothetical.  I will do all that I can to learn as much as possible, before hammering down what I will do.

Thanks much!

Aaron H. · Answer

If owner of a property went into foreclosure and left a good tenant, re-screen if necessary and be happy you inherited a good tenant.

If tenant is the one in foreclosure, they're unlikely to afford the rent if they already couldn't afford the mortgage. Evict.

There's lots of ways to help people in need (including in real estate) without throwing money down a hole.

Tom Gimer · Answer

Jason, if you bought a foreclosure, the former owner is no longer upside down.

If the former owner is there, they are not a tenant... you need to evict them.

If the former owner couldn't afford their mortgage and lost the home, they likely can't afford to pay whatever you are considering charging +$200.

Greg H. · Answer

Why do you think that ? The cap on real estate deduction? You realize that almost 70% of Americans claim the standard deduction and that with increase now by it being raised

Jon Baker · Answer

IF the occupant is a tenant and has a desire to stay there, I would start with a one year lease at the market price or at a price you are ok with.   I would run their credit and treat them as any other tenant, including security deposit and first month's rent.  I would also ask the neighbors how they like living next to the occupants. Plus you would want to see how they treated the property.  You may not want them as tenants.

IF they have a desire to purchase, I would require a decent down payment and have an attorney draw up a lease/purchase agreement.   I have sold a couple hundred foreclosures for banks and I can count on one hand the times the tenant is still there AND wants to lease the property.  It has happened, but typically they are aware of the pending foreclosure and leave or they have no desire to stay anyway.     It's very kind of you to think about it and I commend you for that.  I also think you should be very respectful to the tenants  if you need to ask them to leave, but don't be intimidated by that idea.  I have offered many tenant's cash for keys and had them leave peaceably with no incident.   It needs to be in writing by an attorney to protect you.   You aren't obligated to pay them anything of course, but often that is a much cheaper option than what they will do to your property if you don't pay them.   It's a carrot and stick approach.    Please leave by X date and leave the home in clean and broom swept condition and I will give you $x.00.   Do NOT give them the check until they are gone and you have locked the newly rekeyed door behind you.

Best of luck.

Troy Sheets · Answer

In my experience, almost without fail, no good deed goes unpunished. We've been called pro bono developers for many reasons, but the worst was around a $10k hit between lost rents, eviction, and damages after we housed someone in need. You want to help, donate money to a worth cause.

Jason Salaz · Answer

I am looking for properties close by and may go into tax lien investing first, and rentals second.  I feel (strongly) that the housing crisis is coming back after this Tax Reform bill started today.

Is it bad to help those that need it?

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