Bulk REO Investor Profit Strategies (The Basics)

Posted on October 27, 2009
Filed Under Investments | Leave a Comment

With more foreclosures now than ever before, America’s weak real estate market seems to set new dismal records each month. Yet as always, this challenge has given rise to a huge new opportunity for alert real estate investors.

‘Bulk REO Investing’ is the name of the new strategy, and it’s captured the attention of many well-heeled investors.

Foreclosures are at the heart of the Bulk REO business, so let’s consider the foreclosure process.

You can’t understand Bulk REO Investments without understanding the process of foreclosure.

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. Between the formal beginning of the foreclosure process and the public auction is the ‘preforeclosure’ period.

Foreclosure is completed when the property is put up for auction. 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. 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.

There is huge profit potential in these REO packages for qualified real estate investors. One of the best ways to take advantage of Bulk REO Investing opportunities is to partner with a well-regarded source of funding. There are many sources of funding for these transasactions including: hard money and commercial financing, as well as non conventional sources such as hedge funds and private investors. Additionally, one man is becoming very well known in the field of bulk REO investing, and his name is Sal Buscemi of Dandrew Partners, a hedge fund in New York.

 

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