Got REO ? Better CYA (Cover Your Assets)!

Implications: Vacant properties invite a host of ills including vandalism,neglect,arson,and even destruction by former owners.  REO managers must have a set of preemptive security tools at hand to protect against deliberate damage and,as much as possible, the unpredictable forces of nature.  Grafitti artists,homeless vagrants,and litterbugs will never be eliminated,but being alert,aware,and incorporating sound property preservation techniques can greatly reduce loss to the portfolio.  

Analysis: Basics should include new locks on every REO entrance as well as security bars for patio glass sliding doors.  Garage door openers should be disengaged and manual door jams installed to prevent vandals from garage access to the property.  Older homes in the inventory may even require updated security locks for the wood framed windows.  Regular and predictable surveillance is perhaps the best tool in your arsenal of damage prevention tools.  I cannot emphasize enough this idea of predictability.  Remember,that you are not trying to catch someone in the act of property damage,but,rather,preventing such activity in the first place.  This means morning, midday,afternoon and evening monitoring of properties.  Whether they are called loss mitigation,property preservation or damage control specialists,the important thing is to hire a subcontractor who specilaizes in offering this type of property protection service.  Begin with and demand a property by property inspection with reports of preexisting damage for each parcel.  Contractors should all be background checked and REO experience is a huge plus.  Establish in writing your service expectations with each contractor at the outset.  This eliminates the many problems associated with miscommunication.  Finally,realize that damage will occur no matter how much you invest in property preservation. 

Preventive measures will,however,reduce the level of loss to any portfolio of real estate holdings.  After all,its your asset in the sling!