Bulk REO Investors 101
No generation in American history has ever experienced the number of foreclosures and defaulted mortgages as is happening now. Yet as always, this challenge has given rise to a huge new opportunity for alert real estate investors.
‘Bulk REO Investing’ is the name of the new approach, and it’s captured the attention of many well-heeled investors.
Consider with me, if you will, the fundamentals of the Bulk REO business.
To know Bulk REO investing is to know the foreclosure administer.
A home owner who misses one or more mortgage payments is faced with an ever-increasing volume of threatening correspondence from their lender. The formal administer of foreclosure starts at the lender’s discretion. The ‘pre-foreclosure’ time starts with filing of foreclosure paperwork and concludes at public auction.
To perfect the foreclosure administer, the property is auction to the public. If the property is not bought at auction, ownership reverts to the original lender. The property then receives the designation of being an ‘REO’ or the more formal name, ‘Real Estate Owned’.
Typically, lenders list their REO properties with community real estate agents in hopes of selling the property to a retail buyer who will pay full price. Though, REO properties are now frequently sold for far less than their ‘book value’. This happens because the buyer of the REO is required to buy multiple REO’s in a single transaction.
There is huge profit potential in these REO packages for qualified real estate investors. One of the best ways to take advantage of Bulk REO Investing opportunities is to partner with a well-regarded fund of funding. 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 Salvatore Bushemi of Dandrew Partners, a hedge fund in New York.
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