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Bulk REO Investments – The Basics
March 20, 2010 by man
Filed under Michigan Refinance
The weakness of the U.S. economy has given rise to the largest epidemic of foreclosures in American history. But challenge always gives rise to opportunity, and opportunistic real estate investors are rising to the challenge.
The new opportunity is known as ‘Bulk REO Investing’ or ‘REO Package Investing’ and it’s a huge opportunity.
The basis of the Bulk REO business is foreclosures, so let’s analyze the foreclosure process now.
You can’t understand Bulk REO Investments without understanding the process of foreclosure.
A home owner who misses one or more mortgage payments is faced with an ever-increasing volume of threatening correspondence from their lender. The lender directs the subsequent timing of the actual foreclosure proceedings. From that time through public auction is called ‘preforeclosure’.
When a defaulted property is placed up for auction, the foreclosure process is completed. If there are no buyers for the property at auction, the property is returned to the lender. Such a property is then classified as an ‘REO’ (Real Estate Owned) by the lender.
REO properties are usually listed for sale with local real estate agents. However, REO properties are now frequently sold for far less than their ‘book 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. One of the best ways to take advantage of Bulk REO Investing opportunities is to partner with a well-regarded source of funding. 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 Salvatore Bushemi of Dandrew Capital Partners, a New-York based hedge fund.
