Bulk REO Investor Profit Strategies (The Basics)
The weakness of the U.S. economy has given rise to the largest epidemic of foreclosures in American history. Yet as always, this challenge has given rise to a huge new opportunity for alert real estate investors.
This new opportunity – known as ‘Bulk REO Investing’ – is so huge it’s captured attention from wealthy investors and private investment funds alike.
Consider with me, if you will, the fundamentals of the Bulk REO business.
To understand investing in Bulk REO, you have to understand the foreclosure process.
As a home owner misses a payment or two, the lender sends the predictable barage of threatening letters and warnings. Following a period of time determined by the lender, formal foreclosure proceedings begin. From that time through public auction is called ‘preforeclosure’.
When a defaulted property is placed up for auction, the foreclosure process is completed. If the property is not purchased at auction, ownership reverts to the original lender. Such a property is then classified as an ‘REO’ (Real Estate Owned) by the lender.
Lenders usually try to unload their REO properties at close to retail price by listing their REO’s with a real estate broker. But more and more, lenders are selling their REO properties for a greatly reduced price. This happens because the buyer of the REO is required to purchase multiple REO’s in a single transaction.
The recession in the United States has yielded huge profits to real estate investors prepared to take advantage. The most successful Bulk REO Investors will have a well-respected source of funding for their transactions. 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 hedge fund in New York.
Filed under: Financial Advice