I won't ID the Realtor who alerted me, at least not now, as I don't have his permission. But his observation...
Ouch! And one of the issues rising to the surface is how foreclosing lenders are handling rental properties. Or, perhaps better stated--how they are not.
If we only have a 5% foreclosure rate on rental homes in Dare and Currituck Counties, that will be about 750 homes with an average of 12 weeks booked...that's 9000 weeks that could be affected. This will have a disastrous affect on our bread and butter tourism economy.
Ronnie Roach warned about some of these downsides over a year ago in his blog, especially on this post.
Essentially, these banks are not leaving the homes in rental programs. The deposits and other monies are being taken from the rental companies and the former owners, typically because the bank had the borrower sign an Assignment of Leases and Rents. Next, they sell the furniture in many cases, leaving an empty rental home for the next buyer. Finally, they take the house out of the rental pool and list it for sale. Any booked weeks are vaporized...gone.
As our Realtor above states, if (and we emphasize, if) we have that many rental foreclosures, the local economy will be hard pressed to absorb the loss of 9,000 rental weeks. And, once word spreads about canceled rentals due to foreclosure, people may become reluctant to make reservations with a 50% deposit up front.
Its hard to imagine why these lenders are not keeping the homes intact and leaving them in rental programs; some income is better than none. I imagine that the concept of weekly rentals is alien to most of them, its likely they aren't really aware of how the system works. Likewise, they probably do not have the staff to manage all the contracts and pay the bills. But, their repo's will sell faster and for more $$ if they leave the homes furnished and maintain their rental history. Plus, the cash can be applied to reducing the principal balance.
My suggestion is that OBAR and others reach out to the national third party companies that typically handle foreclosures for large lenders and enlighten them, perhaps even offer to help them manage, book, and pay the associated bills. That way, everyone wins.