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The Fundamentals Of Investing In Bulk REO
March 26, 2010 by man
Filed under First Time Home Buyer Michigan
Bulk REO Real Estate Investing
No generation in American history has ever experienced the number of foreclosures and defaulted mortgages as is happening now. Yet well-funded investors in real estate are seizing upon this opening to profit from an profoundly profitable new opportunity.
This new opportunity – known as ‘Bulk REO Investing’ – is so huge it’s captured attention from wealthy investors and private investment funds alike.
Foreclosures are at the heart of the Bulk REO business, so let’s consider the foreclosure process.
You can’t understand Bulk REO Investments without understanding the process of foreclosure.
Mortgage lenders faced with a non-paying home owner send a large volume of threats, warnings and documentation to the borrower who is late. The lender directs the subsequent timing of the actual foreclosure proceedings. Between the formal beginning of the foreclosure process and the public auction is the ‘preforeclosure’ period.
Foreclosure is completed when the defaulted property is auctioned. If there are no buyers for the property at auction, the property is returned to the lender. The property then receives the designation of being an ‘REO’ or the more formal name, ‘Real Estate Owned’.
Lenders usually try to unload their REO properties at close to retail price by listing their REO’s with a real estate broker. But as a consequence of the weak economy, lenders are frequently selling their REO properties far below their actual value. Lenders are willing to do so in exchange for the buyer’s agreement to purchase a ‘package’ of REO’s rather than a single property.
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 Partners, a New-York based hedge fund.
