Basics of Bulk REO Investing

With more foreclosures now than ever before, America’s weak real estate market seems to set new dismal records each month. 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.

Consider with me, if you will, the fundamentals of the Bulk REO business.

Understanding of the foreclosure process is central to understanding Bulk REO investing.

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. ‘Pre foreclosure’ is the name given to the time between implementation of the foreclosure proceedings and the public auction.

The defaulted property is ultimately auctioned, thus completing the foreclosure process. If there are no buyers at the foreclosure auction, the lender regains title to the property. This property is then considered to be ‘Real Estate Owned’ by the lender, also known as an ‘REO’ property.

Lenders usually try to unload their REO properties at close to retail price by listing their REO’s with a real estate broker. However, lenders are increasingly willing to take much less than their REO asset is actually worth. 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. 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. One excellent source of funding for Bulk REO Investment transactions can be found here: Bulk REO Investment Training.