Bulk REO Investing Basics

June 27th, 2009 by admin

The Rise Of The Bulk REO Investing Strategy

The recession in the U.S. economy has resulted in more foreclosures than experienced by any other generation of Americans. However, opportunistic real estate investment professionals are turning the recession into great profits with a bit of creativity.

That opportunity is called Bulk REO Investing, and the potential is huge. Let’s take a moment to analyze the basics of this incredibly lucrative business.

When a home owner begins to miss payments on their mortgage, the lender begins to send late/overdue notices to the home owner. Following a period of time determined by the lender, formal foreclosure proceedings begin. ‘Pre foreclosure’ is the name given to the time between implementation of the foreclosure proceedings and the public auction.

Foreclosure is completed when the property is put up for auction. The lender regains ownership of the property if there are no buyers at auction. The property then receives the designation of being an ‘REO’ or the more formal name, ‘Real Estate Owned’.

REO properties are usually listed for sale with local real estate agents. But as a consequence of the weak economy, lenders are frequently selling their REO properties far below their actual value. However, the purchase of a ‘package’ (or group) or REO properties is the trade-off for receiving such great prices.

The REO investment packages available today have provided a way to profitably capitalize on the U.S. recession. 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.

Note – One of the nation’s leading experts on bulk reo investing is hedge fund manager Salvatore Buscemi. Sal Buscemi recognized the irrationality of the real estate boom of the late 1990’s and early 2000’s and capitalized on this by forming his very well-regarded hedge fund, Dandrew Capital Partners.

If you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!