This week a call came from a former Northern Virginia client asking for help for his co-worker. The sheriff had turned up at the door of their rental property with orders to evict them from the premises. The renters a US Army Major and his family had moved in to the property in early June and had been paying their rent on time. Unfortunately the owners of the home had not been paying the mortgage. Instead it appears that they had been cashing the rent checks and using those funds for other expenses. Now the bank is foreclosing on the property and wants the tenants OUT!
Fortunately for the tenants when the sheriff arrived he was sympathetic to their plight and helped make arrangements for them to stay for another 2 weeks while we locate another property for them to move to. As it turns out the bank had no idea that there were tenants in the property and not the owners. With the plethora of rental properties available in the area finding them a new place to live is not a concern. They have little hope of being able to recover their security deposit and will have the expense, hassle and trauma of having to move in a hurry.
It turns out that this is not an isolated event. Speaking with other agents in my office it turns out there are others who have faced this same situation, some with literally an overnight notice to pack the van. Investors who have properties with a negative cash flow find that they no longer have the ability to come up with the extra cash needed every month. In some cases it may be rising mortgage payments from an adjustable rate loan and in others it may be just a rental scam. No matter what the family who is living the house are the ones who end up taking the brunt of the issue as they now pay for a move they hadn’t planned on making.
This family is “lucky” in finding officials who are willing to help them but it made me take a look through the MLS at newer properties around Northern Virginia listed for rent. It was easy to find a number of properties both listed for rent and sale where the comments in the sale information clearly stated “third-party approval” or “short sale.” This should be an immediate red flag to anyone who works with renters. Move on. The bank isn’t going to let a renter stay when they foreclose. There were also properties currently rented that say “Investors Only-currently rented-Short Sale”. If an investor doesn’t step up to the plate my guess would be the current renters are going to find themself on the street as well.
So for anyone who works with rental clients in Northern Virginia make sure you look closely at the MLS and tax information to help your clients avoid what this family is facing-an unexpected and traumatic move.