Bulk REO Investment Tips
Posted by myarticlenetwork on January 7, 2010
The recession in the U.S. economy has resulted in more foreclosures than experienced by any other generation of Americans. However, opportunistic real estate investment professionals are turning the recession into great profits with a bit of creativity.
That opportunity is called Bulk REO Investing, and the opportunity is huge.
Foreclosures are at the heart of the Bulk REO business, so let’s consider the foreclosure process.
To understand Bulk REO investing is to understand the foreclosure process.
A home owner who misses one or more mortgage payments is faced with an ever-increasing volume of threatening correspondence from their lender. The lender directs the subsequent timing of the actual foreclosure proceedings. 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 for the property at auction, the property is returned to the lender. Such a property is then classified as an ‘REO’ (Real Estate Owned) by the lender.
Lenders have no interest in owning property, and thus usually opt to list their REO properties with a local real estate broker in hopes of a retail sale. But as a consequence of the weak economy, lenders are frequently selling their REO properties far below their actual value. But the price of receiving such great pricing is the need to purchase multiple REO properties (a ‘package’) rather than individual properties.
The REO investment packages available today have provided a way to profitably capitalize on the U.S. recession. REO packages are easiest to buy and sell with a well regarded source of financing in place. 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 Salvatore Bushemi of Dandrew Partners, a hedge fund in New York.
