There are more foreclosures in the United States right now than we have ever experienced before. 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 strategy, and it’s captured the attention of many well-heeled investors.
Let’s take a moment to analyze the basics of this incredibly lucrative 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 official foreclosure proceedings begin subsequently, as directed by the lender. From that time through public auction is called ‘preforeclosure’.
Foreclosure is completed when the defaulted property is auctioned. The lender regains ownership of the property if there are no buyers at auction. Such a property is then classified as an ‘REO’ (Real Estate Owned) by the lender.
Lenders have no interest in owning property, and thus usually opt to list their REO properties with a local real estate broker in hopes of a retail sale. However, lenders are increasingly willing to take much less than their REO asset is actually worth. But the price of receiving such great pricing is the need to purchase multiple REO properties (a ‘package’) rather than individual properties.
The recession in the United States has yielded huge profits to real estate investors prepared to take advantage. 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. One excellent source of funding for Bulk REO Investment transactions can be found here: Bulk REO Investment Training.
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