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Asset Management

The Cash for Keys Strategy

A Successful Alternative for a Return to Positive ROI By The End 2 End Team Return on Investment (ROI) is the most crucial aspect of owning a single-family rental property. You have put in the investment to purchase the asset, complete renovations and prepare the property for the rental market.  Finally, everything is complete, and you are ready to begin seeing the ROI that you expected when you purchased this asset. You diligently market the property and screen potential renters to find the most qualified candidate to secure your investment. It is time to finally see some revenue…. what could go wrong? Owning an investment or rental property can have its advantages and challenges. One of the biggest challenges investors face today is non-paying tenants occupying their rental properties. No matter how much effort you put into screening your tenants there is always the chance that the tenant will be late or stop paying. So, what do you do when you have a tenant who Is habitually late or just stops paying altogether? Your return on investment has just plummeted. Your holding, maintenance and utility costs continue to pile up and your tenant has stopped responding to your inquiries as to when payment will be made. Eviction timelines can take months in some jurisdictions and even if you are able to secure an eviction date with the courts and local sheriff, the cost to complete the eviction can be in the thousands of dollars. At this point, you will be lucky if the tenant has not vindictively destroyed your property just for the sheer fact that you proceeded to evict them. Now you have even more renovation costs to incur to get the property turned and ready for rent. This is a time to resort to some alternative resolution strategies to get back possession of your property quickly and in the best condition possible. One of these alternatives is called cash for keys or relocation assistance. In this scenario, you offer the tenant a specified number of dollars to vacate the premises and leave it in broom-clean condition. This type of transaction results in the tenant leaving amicably and ensures that you will receive the property back in a condition ready to be turned and made ready for rental. Why Pay Someone Who Owes Me Money? The reality is that paying out a few thousand dollars to get possession of your property now and get it back to being income producing, is a much better and more cost-effective solution than shelling out tens of thousands of dollars to wait and proceed to evict the non-paying tenant. Offer Determination When determining the amount you would offer an occupant in this type of situation, we suggest considering the amount of rent they currently pay as well as the amount they would need to pay to secure another rental. For most people to move, they need to pay at minimum the first month’s rent and security deposit. If the tenants did not have the money to pay you for the rent owed, the likelihood of them having funds to relocate on their own is minimal at best. Transaction Success The success of your transaction is going to depend on the offer you present and the diligence of your efforts to get the tenant to communicate and be interested in completing the program. Historically, the average success rate is about 30%. In recent months, the End to End Solutions team has been exploring additional communication methods, offer amounts, and additional offerings that in some scenarios have resulted in a 70% or more success rate in either getting the tenant to accept the offer and relocate, or to bring their account current and continue their current tenancy. Communication Methods How you communicate the offer to your tenants is the most important aspect of your transaction. There are a lot of scams and fraud going on these days, and ineffective communication can lead your tenant to believe that what is being offered is not legitimate and therefore not take it seriously. The offer should be presented to the tenant with a note or letter explaining why it is being offered. Communication attempts can include personal hand delivery of the letter, sending the letter to them via expedited delivery methods such as FedEx, UPS, or USPS, sending the letter and information via email, and following up with the tenant post-delivery via telephone to confirm receipt and discuss the offer terms. Additional Incentives Additional incentives can include the return of the security deposit (if the property is left in the same condition when rented), a waiver of the past due amount, and an agreement not to release this information to the reporting credit bureaus. These types of alternate add-on incentives can help to drastically increase your success rate and help in ensuring the property is returned to you in good condition. Deadlines When presenting an offer to your tenant, it is imperative that you impose deadlines for a response or acceptance of the offer as well as the vacate date. Setting a deadline for the tenant to respond or accept the offer will prompt them to make a decision in a timely manner. Failure to provide deadlines can result in an open-ended offer that the tenant will attempt to renegotiate or delay as there is no repercussion for failure to act. It can also be beneficial to present multiple offers with different deadlines. For instance, if the tenant vacates the property in two weeks, they will receive a higher dollar amount than if they vacate the property in three weeks. Presenting the tenant with options gives them a little more sense of control of the situation and allows them to choose what option is best for their situation. These unique and creative solutions allow you to effectively decrease the losses typically seen when a property becomes non-income producing and help increase your Return on Investment. The End to End Solutions team is constantly creating, testing, and producing

Due Diligence

Invasion of the Property Snatchers

The Financial and Community Impact By the End 2 End Team Your property is being taken without your consent and your knowledge. You find your asset is being essentially snatched away from you by a squatter, an individual living in your property while having no title, no rights, and/or no lease. Despite the squatter having no right to the property, it now falls upon you to determine how to remove them from your residence. You are not alone. This is one of the largest issues that plagues the real estate industry, and is quickly becoming a nationwide epidemic affecting many communities, with the hardest hit areas being our major metropolitan areas. While this is a growing problem, there are strategies you can take to protect your property from being invaded. While there are strategies to protect yourself from squatters — what do you do if you have fallen victim to this growing problem? What to Do The first step is to understand that squatters come in many forms. It will be helpful for you to understand what type of squatter is in your property to determine how to move forward. The type of squatter can vary from a vagrant to individuals who are well versed in the process of occupying vacant properties. In some cases, a vagrant occupant may be removed from the home by simply contacting your local authorities and rekeying the property. However, if you have a professional squatter, these individuals are aware of squatter rights and will pose a larger risk to the property and the timeline to legally obtain possession of the property. The worst-case scenario is a “master squatter,” where the property owner is not the only victim of this crime. A master squatter is a scam artist who is presenting themselves as an entity who has the authority to rent out the subject property. They rent the property to an inexperienced or high-risk renter who will pay the deposit and rent payments to the fake property management company that will disappear once the tenant becomes aware that they were scammed. The tenants will have a fake lease and in some cases are out a substantial amount of money due to a large deposit or were requested to pay for their lease in advance. In this scenario, you can either help relocate the tenant through relocation assistance or proceed with an eviction process to remove the tenant from the property. To plan on how to protect your asset, it is important to determine how the squatters or master squatters obtain access. In a day and age where technology continues to evolve exponentially, how do you bring a benefit to the user that does not open up a larger opportunity for deception or fraud affecting the property owner? How the Scammers Work While technology is helpful to market your property for rent, know that scammers are targeting vacant properties posted online by rental companies and social media outlets. They will copy the photos, place them on their own social media platforms claiming that they own or manage the property and are seeking tenants to occupy the unit. When they find an interested party, they will go online to the site where the property is listed by the actual property manager or owner and request an appointment to view the unit. During their visit to the property, they will find a way to leave something open to allow access to that unit after they leave, whether that be unlocking a back door, opening a window, etc. They then come back and access the property and change the locks. They create fake leases and accept funds from unsuspecting renters and provide them with the keys. Some of them have really done their homework using doctored leases used by some of the largest Single Family Rental Companies; therefore, to the uneducated renter, they appear to be legitimate. Soon after moving in, these victims find out that the person who rented the property to them did not have the legal right to do so. They will try to contact the person only to be harassed, hung up on, blocked or find that the phone number no longer works. A large percentage of these people also find out later that they are also now victims of identity theft, as the person they provided all of their personal information to was a criminal with ulterior motives. Once the property owner receives confirmation that their property has been occupied by illegal occupants, their first instinct is to call the police and have them removed and/or arrested; however, unless there are obvious signs that trespassing has occurred, the authorities will refuse to assist in the removal of the unauthorized occupants.  In most cases, they will refer to it as a civil matter that needs to be addressed with the eviction courts. This process can be rather difficult when the property is occupied by an unknown person whose name you do not have, and this information is required to file an eviction action in many states. Some states will allow you to file under Jane or John Doe, others do not, posing yet another challenge for the homeowner. Depending on the state and the situation, it can be a lengthy process to obtain judgment to move forward with a sheriff lockout. The challenges have been compounded by extended delays with the courts and sheriffs that have been created by the pandemic. In some states, we are seeing lockouts being scheduled months in advance. Unfortunately, this process is resulting in large losses for the property owner. Not only have you lost months of rental income, but you are spending hundreds of dollars on legal fees to obtain possession of a property that has been illegally inhabited. The Impact to the Community Unfortunately, the financial impact can be much greater than the loss of rental income and the legal fees spent to obtain possession of the property. In addition, the property owner will be required to pay

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