The Basics Of Bulk REO Investment

No generation in American history has ever experienced the number of foreclosures and defaulted mortgages as is happening now. But smart real estate investors are turning these ‘lemons’ into ‘lemonade’ in an incredibly profitable new way.

The new opportunity is known as ‘Bulk REO Investing’ or ‘REO Package Investing’ and it’s a huge opportunity.

Let’s take a moment to analyze the basics of this incredibly lucrative business.

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

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.

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. 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. 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.

Qualified real estate investors are increasingly finding once-in-a-lifetime opportunities in these REO packages. 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. 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 New-York based hedge fund.