Eviction Management
Transitioning From a Default Property to a Paying Asset
By Nickalene Badalamenti-Kalas
The government-mandated forbearance period on default properties expires this coming June. These properties will increasingly require eviction and asset stabilization services to ready them for new tenants.
What many may not be aware of is the delicacy — and absolute compliance — with which these services must be administered. A single misstep anywhere in the process, and the process will begin all over again. The current tenants remain in occupancy, incremental costs are incurred from legal and court fees, and the property continues to generate zero income.
To facilitate the transition from default property to paying asset, small and mid-size investors and trusts — and their attorneys — are turning to asset management companies with the regulatory expertise, eviction and nationwide in-the-field infrastructures, to manage this process and migrate these properties to tenant-ready, income-generating assets as quickly and comprehensively as possible.
THE RENTAL MARKET
As more and more properties emerge from forbearance, many investors are collecting portfolios and preparing them as rental properties, either as single-family rentals, high-quality vacation homes, or for short-term rentals such as Airbnb. Whether they decide to “fix and flip” or “buy and hold,” whoever has their new acquisition tenant-ready the soonest will see the fastest returns.
EVICTION/LOCK OUT FACTORS
In simplest terms, the eviction/lockout process consists of servicers like Five Brothers coordinating all activities with all stakeholders, including the investor, the attorney, the field service professionals, and local law enforcement. Amidst the eviction process, there are very specific compliance requirements mandated by the court, as well as local, county and state ordinances, and they must be followed to the letter. These regulations vary significantly from market to market, and asset management field service companies must be conversant with ordinances in each.
For example, New Jersey and New York have strict mandate requirements regarding the number of field service professionals needed on site during an eviction, unless it is specifically overwritten by the sheriff. In certain markets field service professionals may be required to be licensed, such as movers or storage facilities in order to have the capability to remove debris, personal effects, furniture, and even vehicles from the property, and relocating it to storage facilities or dumps.
Consistent with the specified lockout date and time, the need for an experienced eviction team to coordinate and complete lockout procedures is paramount. Another example of the need for accuracy: if the field team is even 5 minutes late, the sheriff can call off the lockout process, the property remains occupied, continues to generate no income, and the eviction process may be required to start from scratch. The need to understand and fully observe all local statutes and maintain the highest professional standards cannot be overstated.
The original eviction request may be a simple lock change, but once the interior of the property is accessible by the sheriff, he or she could immediately order a complete trash-out of the property, potentially involving hundreds of cubic yards of debris. If the sheriff requests a complete trash-out and/or seasonal maintenance to mitigate blight or violations in the property’s disposition, the field team must be capable of completing that task while on site. The field team is also responsible for providing the client with progress updates throughout the eviction process.
CASH FOR KEYS
A pre-eviction strategy called “cash for keys” offers a cash sum for the return of the property’s keys. Utilizing this tactic can save an investor money and help avert damage to the property inflicted by the current tenants out of spite or rancor towards the investor. In certain cases, this may take the form of forgoing the security deposit if the property remains undamaged and in broom-swept condition.
INSPECTIONS
Once the property is unoccupied, investors have the authority to begin rehabilitation to get these assets into tenant-ready condition. This begins with an inspection that thoroughly documents — with geo- and time-stamped photographs — the condition of the home and all work needed to prepare the property for the next tenant. These photos also help validate that the products and services ordered by the investor are those being utilized in the rehab. Geo- and time-stamping are becoming industry norms, and many funding partners are beginning to require them for fund disbursements.
ASSET STABILIZATION
For portfolio properties that are unoccupied, engaging in-the-field asset stabilization activities to ensure the property is in immediately-rentable condition is important. These activities may include minor rehabilitation work, yard cleanup, pool openings and closings, gutter clearing and lawn care. In colder climates, winterization may be necessary, ranging from heating and plumbing fixture maintenance to insulation work.
BEST-IN-CLASS DISASTER TECHNOLOGY
Five Brothers utilizes proprietary asset stabilization disaster technology called CLADE, an advanced mapping system designed to help investors monitor property status in the advent of natural disasters or severe weather events. CLADE leverages geospatial technology to help determine the likelihood of damage to properties potentially in a storm path, and to allow proactive measures to reduce or prevent damage. If damage is inevitable, CLADE technology helps investors determine which properties in their portfolio have likely been impacted, and generates a report sent directly to the investor. They can then order FEMA inspections, hazard claims repair bids, as well as remediation and restoration work.
SERVICE FLEXIBILITY
The need for fluency in the eviction, inspection and asset stabilization process is essential.
For investors without a dedicated asset stabilization team, Five Brothers can seamlessly function as the in-house field service company, providing all the elements required to remain in-the-know with compliance changes as they occur, and ensuring that property requirements are met quickly, completely, and compliantly and returning the property to tenant-ready status.
