Why don't banks just rent homes that are sitting empty or they can't sell right away?

Being a fan of real estate I try to pick the brains of investors whenever I can get and ear from them. There are some good points why banks do not rent property they have on their books. Banks do not want to own houses, that is the first thing. They only have the housed because the person who agreed to buy the house could not keep up with the payments. Seeing they do not want to be in the landlord business, they want to re-sale those houses, sooner rather than later. If there is someone in the house, it can make it more difficult to sale, or the home could be damage, or further damaged by the renting occupants. Then there is a chance the renter won’t leave, then you have to go through eviction, which may take a while. The potential buyer might not want to wait another 30, 60, 90 days on that property. All around it is not in the best interest of the bank to rent or lease it. Banks want to be in the money business, lending and gaining interest, not trying to run around collecting rent from people.

I understand why the banks don’t want to rent out houses, but many they are destroyed by vandals because the house sits empty for so long (maybe it’s time to lower the price more). And sometimes the banks don’t properly winterize the houses, so the pipes break. Neglect destroys the house so much the banks can’t hope to make any money off of them. It’s one thing to not rent out a house. It’s another to ruin your investment. I’m not getting it.

They don’t want to go through the trouble of being a land lord on top of everything else.

It seems like an easy solution yah, but its a lot of work that they just don’t want to go through. Plus if a buyer comes along who wants a house they’re renting, now they can’t sell until the current lease is up.

I would never own rental property.

Most renters do not take care of the property, since it does not belong to them.

I am sure banks feel the same way. It’s just a pain in the rear to own rental property.

I understand your thinking and your question.

Banks are better off letting the foreclosed on former owners just stay in the property until they are ready to sell it because renting just causes more issues than they get in benefits because renters get rights and getting tenants out is very difficult and no one wants to purchase a foreclosed property with someone living in it they have to evict, I know I didn’t even look at properties that had people living there when I looked at foreclosed properties.

@creative1 You can’t let them stay. They might damage the home just as squatters might. They would also make it difficult to sell. You’d have to evict them, as well.

You would think that banks might want to protect their investments by taking care of the properties. I’m sure there are services that do this kind of thing. But maybe there are just too many foreclosed properties for them to manage.

Some banks do. There’s a new business venture out here in hard hit Arizona for teams to work for banks changing locks and to do repairs to bring foreclosed properties to “rental ready”. Somehow the banks are renting these homes out.

Because they can write off the loss and depreciation on their books.

Man this could be a lucrative business opportunity to over watch bank forclosed properties… hmmmm I wonder

@creative1 To many investors it is quite lucrative, and banks have their favorites. Even if the property gets damage by squatters, or meth cooks etc, at some point the bank will bundle a bloc of homes together and call one of their favorite investors, then they will haggle over price per unit, when they have an agreement, the investor will buy up the bloc of 12, 15, 20 homes for X amount apiece. The investor having worked out a price where he/she can put X amount min in the property to make it resalable then put it on the market as a slight discount to move it fast. Usually they get them so cheap, even after fix up they can still turn a profit.

Just go to your bank loan or fiancé person and ask if they have any REO properties they are looking to lighten themselves of. I bet if they see you are serious about buying a lot of them, you will start being treated like a king. They see you walk through the door they will start smiling ear-to-ear.

Banks are in the business of banking, not the business of real estate (in that sense). You rent something out then you deal with the liability of repairs, collecting the rent, and possibly the long process of eviction or worse if you have bad tenants. . . There’s just too much that comes with renting for the banks to worry about it.

If you’re running a burger joint, you probably have no interest in making the chairs and napkins. So it goes with banking and property management.