Bulk REO Investing 101
Posted Under: Bankruptcy Alternative, Debt Consolidation, Debt Settlement
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There are more foreclosures in the United States right now than we have ever experienced before. But challenge always gives rise to opportunity, and opportunistic real estate investors are rising to the challenge.
The real estate investing strategy du jour is called ‘Bulk REO Investing‘ and is a real monster.
The basis of the Bulk REO business is foreclosures, so let’s analyze the foreclosure process now.
Understanding the notion of Bulk REO’s requires understanding of 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 lender directs the subsequent timing of the actual foreclosure proceedings. From that time through public auction is called ‘preforeclosure’.
To complete the foreclosure process, the property is auction to the public. If the property is not purchased at auction, ownership reverts to the original lender. This property is then considered to be ‘Real Estate Owned’ by the lender, also known as an ‘REO’ property.
REO properties are usually listed for sale with local real estate agents. 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. Bulk REO Investors are most successful when they have a well-established source of funding for their REO packages. 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 Sal Buscemi of Dandrew Capital Partners, a hedge fund in New York.
