Nom de Plumber is a Nom de Plume
How do multi-family rental properties and single-family REO-to-rental programs differ?
First, take a multi-family property, and physically detach all its living units far from each other. (Think of each rentable REO today as a pre-towed trailer home.)
Then, add the following costs:
- geographic dispersion (REO’s and time-consuming, gas-guzzling sprawl are kissing cousins)
- custom yard work outside every unit (add extra for increasingly frequent hurricanes)
- uncooperative neighbors (defaulting borrowers might not engender happy neighbors)
- disparate, increasingly strict local ordinances (one city might want REO lawns to resemble Martha Stewart tea parties, another city might seize for eminent-domain urban chicken farming).
Then, remove the following operating economies:
- interchangeable physical fixtures, for repair/maintenance/furnishing purposes (renters prefer matching kitchen cabinets)
- shared site management/security infrastructure, like lobby attendants, upkeep staff, and closed-circuit monitoring.
Yes, ignoring the above lose-lose tradeoffs, Fannie and Freddie should expect REO-to-rental programs to unwind effectively their foreclosure backlogs.
Prudent lending begets prudent landlording.
From the ashes of pigeons will rise the next buzzard.