Where Did all the Tenants Go?
Sunday, October 4th, 2009Some of Them are Squatting in Vacant Homes
Landlords and property managers have a lot to keep them up at night: a soft real estate market means more competition, lower rents, and higher vacancy rates. And as more and more foreclosed homes come on the market, some people have found an alternative to paying rent at all—squatting, rent-free, for months in foreclosed, vacant homes. If you’re a landlord with vacant rental properties you can’t find tenants for, it could be because they’re squatting in an unoccupied home—lowering property values and rents, and costing you money.
Real estate agents across the country are reporting that upon visiting bank-owned properties to prepare them for listing, they are finding them occupied. Some squatters are friends or relatives of the former homeowners, who have been given permission to stay as long as they can—until the bank evicts them. Some are homeless people who roam from vacant house to vacant house, staying a step ahead of the police, and moving on when asked. More and more squatters are families who are avoiding paying rent by inhabiting a home while the long, drawn-out foreclosure process goes on.
Squatting is another indicator that in this economy, with record numbers of foreclosed properties, not only have the rules of the game changed, the game itself has changed, too. The ripples are spreading far and wide, affecting rents and vacancy rates in more areas across the country. Hardest hit are cities like Las Vegas, where law enforcement is having a tougher time keeping up with the number of squatters, and Merced, CA, where the foreclosure rate is the highest in the state.
To make matters worse, many banks are offering so-called “cash for keys” deals to the squatters—essentially paying them to move in order to avoid an eviction fight. As more squatters get wise to this deal, they take the money and run—to the next abandoned, foreclosed house—hoping to cash out again when the bank wants the keys back.
If you’re a landlord with vacant properties, keep an eye on them; if your properties are located in a distant location, you might consider hiring a property management company to do it for you. If you do find squatters on your property, call the police. They might be able to remove the squatter—but be prepared to start eviction proceedings.