A Creative Solution to Manage Vacant Bank-Owned Properties
Mom-and-pop lodging options are popular among vacationers on a budget. And a novel type of short-term rentals adds vacant foreclosures to a traveler’s list of inexpensive options if REO managers are willing to embrace new ideas.
Marketing vacated REOs to seasonal tourists may seem like a stretch, but the upswing in the number and management costs of vacant REOs requires out-of-the-box management in areas that happen to be tourist attractions close to popular vacation sites.
Asked whether it is at all possible, Christine Karpinski, author and director of owner community for HomeAway Inc. of Austin, Texas, which represents over 540,000 paid vacation rental home listings in 120 countries and operates BedandBreakfast.com, told this publication it certainly is an option.
“As long as they are fully furnished,” she said, vacant properties can be rented. However, “other issues” that should also be worked out include “making sure HOA dues are current so the guests can use the amenities.”
Apparently the thought has crossed the minds of at least a few pioneers who already are offering short-time rentals in Florida.
“I’ve seen it in Panama City Beach and Destin City” in South Florida, Karpinski says. “I heard of a couple of HOAs renting the REOs so they can recoup some of the back and incurring HOA dues.”
This untraditional approach represents opportunity to minimize losses and upkeeps vacated properties in strategic locations.
While scattered across the country the nation’s REO inventory is higher in Nevada, California, Florida and Arizona—the states hardest hit by the foreclosure crisis. All four have impressive tourist attraction resumes.
For example, Nevada takes the lead in all national foreclosure reports. It also leads lists of the nation’s unique destinations.
Besides the famously bright lights of Las Vegas, the crystal-clear waters of Lake Tahoe, or magnitude of the Great Canyon, the Great Basin National Park in the desert region on the border with Utah, there are many less-talked-about attractions.
The Hoover Dam in Boulder City, completed in 1936, is considered by various travel websites as the best known of Nevada’s unique landmarks. It means that any of the 144 REO properties currently listed for sale on the Boulder City foreclosures website could be rented out to curious travelers.
Lovelock is another unique attraction in rural Nevada. A city with a population of barely 3,000, it has earned a place on the National Register of Historic Places because it hosts one of only two round courthouses in the nation built in 1919. It also is the city that built the Lover’s Lock Plaza to honor its 19th century Chinese immigrants’ tradition that believes lovers can make their love endure for eternity if they lock it into the chain of love. It is the only place in the country where one fastens a “lovelock” to the plaza chains.
Lovelock currently lists 14 delinquent properties and two REOs, according to roost.com. The same website describes Nevada’s 20,091 foreclosures for sale as a mix of mountainside retreats, lakeside getaways, towering townhouses and gorgeous planned home communalities—among which are properties that with a little imagination can turn into a traveler’s delight.
Those interested in traveler renting strategies, however, need to do their homework.
Karpinski’s book, “How to Rent Vacation Properties by Owner: The Complete Guide to Buy, Manage, Furnish, Rent, Maintain and Advertise Your Vacation Rental Investment,” offers insights that can be recycled for use in the REO management market.
Booking possibilities are abundant given the variety of traveler types.
Karpinski categorizes these travelers as leaf peepers looking for scenic drives to admire the changing colors of the fall foliage; warm weather seekers who typically see snow by the foot in winter; sports enthusiasts, or college alumni who travel to their alma maters to attend football games and other sporting events.
They can also include fishermen and hunters, who are not looking at what is inside the home but rather what is near the home; treasure chasers, who see shopping as the highlight of their trip; pet lovers, who cannot bear to leave their pets behind; and corporate retreat planners looking for “outside the cubicle walls” healthy mix of brainstorming sessions and rounds of golf—along with wildlife and bird watchers, bargain hunters, so-called empty nesters, honeymooners, special-event seekers, early skiers and couples.
Karpinski finds semi-local travelers represent an emerging new trend. They are budget-conscious (or time-strapped) travelers taking short trips closer to home. “Make sure your listing reaches out to those travelers” looking for a long weekend out of town.
“Whether your home is surrounded by nature trails for viewing leaves is located in a town that hosts local festivals and fun gatherings or if it features romantic amenities,” Kaprinski says, the fall is the best time to attract these kinds of travelers. “You may be pleasantly surprised.”
Given the popular belief that everything is location it is easy to think that some places are not rentable. Wrong, Karpinski says, “Virtually there are no places that it is not possible…from small towns in the middle of nowhere to major tourist destinations, renting on a weekly basis is successful for many people in many levels.”
Vacant REO renting is an opportunity that comes along with the untraditional task banks are dealing with in today’s market: owning property. “You can sit back and complain about it or sort of make lemonade out of the lemons you’re holding,” argues Karpinski. “But it is a challenge.
In Florida, renting condos means the bank must pay homeowners’ association dues.”