Hi, there! Joe White here from Grow Property Management, your trusted property management company in Philadelphia.
Lenders typically become extremely concerned if a rental property is vacant. In fact they can take extreme & costly steps for a rental property investor, to remediate their concerns. These lender steps can be incredibly damaging to the rental property owner and avoiding this is important.
I want to discuss something crucial that every landlord and rental property owner should be aware of. Today, I’m heading to remove a large red notice placed on the door by a lender. They deemed the property vacant and took drastic measures-they drilled out locks and cut off our lockboxes, including a $175 one.
Lenders have a right to protect their assets, especially when the property serves as collateral for a loan. A vacant property is vulnerable to various risks like roof leaks, furnace failures, burst pipes, and vandalism. These issues can severely damage the property’s value and make it difficult for owners to maintain mortgage payments, leading to potential financial distress.
If a lender discovers a property is vacant, they often require a costly vacant property insurance policy and may impose additional requirements like leasing mandates. This can significantly impact owners financially and operationally. In our current case, the owner, who now lives in the Congo, has faced challenges with previous property management issues, leaving the property in a problematic state.
Communication breakdowns might mean the owner isn’t receiving crucial notices from the lender, exacerbating the situation. Today, I’m resolving the immediate issue with the lender and ensuring steps are taken to secure the property while we find a tenant quickly. While lenders will naturally be concerned about vacant properties, prompt action and clear communication can mitigate potential penalties and requirements.
If you own rental properties, staying informed and proactive with your lender is essential. Avoid unnecessary complications by promptly addressing vacancy issues and ensuring compliance with lender requirements. This approach minimizes financial burdens and maintains positive relationships with lenders.
Best of luck with your rental property endeavors!
