Bulk REO Investment Profit Strategies

Posted on December 7, 2009
Filed Under Unemployment Will Cause The Most Foreclosures In 2009! |

The recession in the U.S. economy has resulted in more foreclosures than experienced by any other generation of Americans. But challenge always gives rise to opportunity, and opportunistic real estate investors are rising to the challenge.

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 borrower becomes increasingly behind in his mortgage, the lender regularly calls and writes the borrower with default warnings and threats. The formal process of foreclosure begins at the lender’s discretion. The ‘pre-foreclosure’ time starts with filing of foreclosure paperwork and concludes at public auction.

Foreclosure is completed when the defaulted property is auctioned. Ownership of the property is returned to the lender if the property is not sold at auction. This property is then considered to be ‘Real Estate Owned’ by the lender, also known as an ‘REO’ property.

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 more and more, lenders are selling their REO properties for a greatly reduced price. However, the purchase of a ‘package’ (or group) or REO properties is the trade-off for receiving such great prices.

These REO packages represent the potential to acquire huge amounts of equity for savvy real estate investors. 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 Sal Buscemi of Dandrew Capital Partners, a hedge fund in New York.

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