Ways To Get Out Of Debt

Beginner Bulk REO Investing 101

November 27th, 2009

With more foreclosures now than ever before, America’s weak real estate market seems to set new dismal records each month. Yet well-funded investors in real estate are seizing upon this opening to profit from an profoundly profitable new opportunity.

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

Let’s take a moment to analyze the basics of this incredibly lucrative business.

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. After a certain period, the lender will then formally begin foreclosure proceedings. The ‘pre-foreclosure’ time starts with filing of foreclosure paperwork and concludes at public auction.

Foreclosure is completed when the property is put up for auction. If there are no buyers for the property at auction, the property is returned to the lender. The designation of ‘REO’ (Real Estate Owned) is then attached to the foreclosed property.

Lenders usually try to unload their REO properties at close to retail price by listing their REO’s with a real estate broker. However, REO properties are now frequently sold for far less than their ‘book value’. But the price of receiving such great pricing is the need to purchase multiple REO properties (a ‘package’) rather than individual properties.

The recession in the United States has yielded huge profits to real estate investors prepared to take advantage. 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 Salvatore Bushemi of Dandrew Partners, a New-York based hedge fund.