There are more foreclosures in the United States right now than we have ever experienced before. But smart real estate investors are turning these ‘lemons’ into ‘lemonade’ in an incredibly profitable new way.
That opportunity is called Bulk REO Investing, and the opportunity is huge.
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 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 at the foreclosure auction, the lender regains title to the property. The designation of ‘REO’ (Real Estate Owned) is then attached to the foreclosed property.
Typically, lenders list their REO properties with local real estate agents in hopes of selling the property to a retail buyer who will pay full price. However, REO properties are now frequently sold for far less than their ‘book value’. This happens because the buyer of the REO is required to purchase multiple REO’s in a single transaction.
There is huge profit potential in these REO packages for qualified 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 Salvatore Buscemi of Dandrew Partners, a hedge fund in New York.