With more foreclosures now than ever before, America’s weak real estate market seems to set new dismal records each month. But challenge always gives rise to opportunity, and opportunistic real estate investors are rising to the challenge.
That opportunity is called Bulk REO Investing, and the opportunity is huge.
Take a just a minute to consider the basics of this highly profitable business.
To understand investing in Bulk REO, you have to understand the foreclosure process.
Mortgage lenders faced with a non-paying home owner send a large volume of threats, warnings and documentation to the borrower who is late. Following a period of time determined by the lender, formal foreclosure proceedings begin. From that time through public auction is called ‘preforeclosure’.
When a defaulted property is placed up for auction, the foreclosure process is completed. If there are no buyers at the foreclosure auction, the lender regains title to the property. Such a property is then classified as an ‘REO’ (Real Estate Owned) by the lender.
REO properties are usually listed for sale with local real estate agents. Yet with increasing frequency, REO properties are being sold for pennies or dimes on the dollar. This happens because the buyer of the REO is required to purchase multiple REO’s in a single transaction.
Qualified real estate investors are increasingly finding once-in-a-lifetime opportunities in these REO packages. The most successful Bulk REO Investors will have a well-respected source of funding for their transactions. Some sources of funding for these transactions are: personal funds, hard money lenders, commercial lenders and non-conventional sources such as private investors and hedge funds. One excellent source of funding for Bulk REO Investment transactions can be found here: Bulk REO Investment Training.
There are more foreclosures in the United States right now than we have ever experienced before. But smart real estate investors are turning these ‘lemons’ into ‘lemonade’ in an incredibly profitable new way.
That opportunity is called Bulk REO Investing, and the potential is huge. The basis of the Bulk REO business is foreclosures, so let’s analyze the foreclosure process now.
Mortgage lenders faced with a non-paying home owner send a large volume of threats, warnings and documentation to the borrower who is late. The lender directs the subsequent timing of the actual foreclosure proceedings. The name for this period is ‘preforeclosure’.
To complete the foreclosure process, the property is auction to the public. If there are no buyers at the foreclosure auction, the lender regains title to the property. The property then receives the designation of being an ‘REO’ or the more formal name, ‘Real Estate Owned’.
Typically, lenders list their REO properties with local real estate agents in hopes of selling the property to a retail buyer who will pay full price. Yet with increasing frequency, REO properties are being sold for pennies or dimes on the dollar. Lenders are willing to do so in exchange for the buyer’s agreement to purchase a ‘package’ of REO’s rather than a single property.
These REO packages represent the potential to acquire huge amounts of equity for savvy real estate investors. Bulk REO Investors are most successful when they have a well-established source of funding for their REO packages. Some sources of funding for these transactions are: personal funds, hard money lenders, commercial lenders and non-conventional sources such as private investors and hedge funds.
Note – One of the nation’s leading experts on bulk reo investing is hedge fund manager Sal Buscemi. Sal Buscemi recognized the irrationality of the real estate boom of the late 1990′s and early 2000′s and capitalized on this by forming his very well-regarded hedge fund, Dandrew Capital Partners.
