Sunday, June 2, 2013

Rent Escrow Program (REAP) Compliance Nightmare

Rent Escrow Program (REAP) Compliance Nightmare
By: PRWeb
Posted on May 24, 2012 at 06:49 AM EDT
The Madison Real Estate Group, a leader in multifamily and REO property management, was awarded the management of an eight unit Los Angeles REO property. At the time of takeover the property had been placed in the Los Angeles Rent Escrow Program (REAP).
Once a property is in REAP, it takes knowledge and expertise to get out -and even that does not guarantee full recovery of expected income. Trying to navigate those waters alone can leave an inexperienced owner drowning in paperwork, and failing profits. With this latest L.A. property, Madison Real Estate Group filed the necessary paperwork to clear the violations and obtain a refund for their client in excess of $20,000.
In the past few years, the number of REO properties has reached an all-time high, in what some are calling an unprecedented pace. With the number of REO properties hitting the market it is essential the right management company is retained. Once a property is in REAP, even those owners who immediately attend to the complaints have a lot of work ahead of them just to recover even the reduced rent if the tenant has chosen to pay the money into the escrow account set up by the city.
The Los Angeles REO property market has been plagued with problems from squatters to vandalism and multifamily property units are being placed into REAP at an alarming rate. For landlords and property owners who have fallen behind in their maintenance and repairs, the city of Los Angeles REAP can wreak havoc on their revenue and collectibles, and bury them in a landslide of paperwork. This, in addition to a complex bureaucratic structure, makes REO takeovers a logistical nightmare for firms or previous property owners that are inexperienced with it, which is where the Madison Real Estate Group can help.
As explained by an experienced member of the Madison Group, "the affected tenants are immediately given a rent reduction, usually somewhere between 10% up to 50% range, and it isn't unheard of to see a reduction in the upward range of 80 to 90%, depending on the severity of the violations. This is lost rent to the property owner and is non-recoverable. A notice of REAP is recorded and filed against the property's title with the County Recorder's Office. If this is not resolved, this recording may restrict the refinancing or sale of the property."
Immediately upon taking over the property, Madison's team of REO professionals took all the necessary steps needed to ensure their client's interest was being protected. Madison has systems in place when an REO property is placed under management, allowing them to act quickly and aggressively ensuring residents are protected and the value of the asset is being preserved.
About The Madison Real Estate Group
The Madison Real Estate Group is an entrepreneurial and experienced full service multifamily and commercial real estate company that serves as a trusted advisor to financial institutions and private investors. They have a successful track record working with city officials in getting the properties under their stewardship removed from the REAP program and recovering funds owed to their clients. They have built their reputation by offering innovative solutions to their clients property management needs, adding value to their portfolios, and consistently exceeding their expectations for service and performance.

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