Bulk REO Investment Basics
The weakness of the U.S. economy has given rise to the largest epidemic of foreclosures in American history. However, opportunistic real estate investment professionals are turning the recession into great profits with a bit of creativity.
‘Bulk REO Investing’ is the name of the new strategy, and it’s captured the attention of many well-heeled investors.
Take a just a minute to consider the basics of this highly profitable business.
Understanding the notion of Bulk REO’s requires understanding of the foreclosure process.
When a home owner begins to miss payments on their mortgage, the lender begins to send late/overdue notices to the home owner. The official foreclosure proceedings begin subsequently, as directed by the lender. ‘Pre foreclosure’ is the name given to the time between implementation of the foreclosure proceedings and the public auction.
Foreclosure is completed when the defaulted property is auctioned. If the property is not purchased at auction, ownership reverts to the original lender. The designation of ‘REO’ (Real Estate Owned) is then attached to the foreclosed property.
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. But as a consequence of the weak economy, lenders are frequently selling their REO properties far below their actual value. This happens because the buyer of the REO is required to purchase multiple REO’s in a single transaction.
There is huge profit potential in these REO packages for qualified real estate investors. The most successful Bulk REO Investors will have a well-respected source of funding for their transactions. 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. One excellent source of funding for Bulk REO Investment transactions can be found here: Bulk REO Investment Training.