Bulk REO Investment Profit Strategies 101
The recession in the U.S. economy has resulted in more foreclosures than experienced by any other generation of Americans. Yet as always, this challenge has given rise to a huge new opportunity for alert real estate investors.
The real estate investing strategy du jour is called ‘Bulk REO Investing‘ and is a real monster.
Foreclosures are at the heart of the Bulk REO business, so let’s consider the foreclosure process.
Understanding of the foreclosure process is central to understanding Bulk REO investing.
A home owner who misses one or more mortgage payments is faced with an ever-increasing volume of threatening correspondence from their lender. 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 the property is not purchased at auction, ownership reverts to the original lender. The property then receives the designation of being an ‘REO’ or the more formal name, ‘Real Estate Owned’.
Local real estate agents are usually used to resale REO properties at retail price to the general public. But as a consequence of the weak economy, lenders are frequently selling their REO properties far below their actual value. The trade-off is that the buyer must purchase multiple REO properties in each transaction.
There is huge profit potential in these REO packages for qualified real estate investors. REO packages are easiest to buy and sell with a well regarded source of financing in place. 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. Additionally, one man is becoming very well known in the field of bulk REO investing, and his name is Sal Bushemi of Dandrew Partners, a New-York based hedge fund.