With more foreclosures now than ever before, America’s weak real estate market seems to set new dismal records each month. Yet as always, this challenge has given rise to a huge new opportunity for alert real estate investors.
This new opportunity - known as ‘Bulk REO Investing’ - is so huge it’s captured attention from wealthy investors and private investment funds alike.
Let’s take a moment to analyze the basics of this incredibly lucrative business.
To understand Bulk REO investing is to understand the foreclosure process.
A home owner who misses one or more mortgage payments is faced with an ever-increasing volume of threatening correspondence from their lender. The official foreclosure proceedings begin subsequently, as directed by the lender. Between the formal beginning of the foreclosure process and the public auction is the ‘preforeclosure’ period.
To complete the foreclosure process, the property is auction to the public. If there are no buyers for the property at auction, the property is returned to the lender. The designation of ‘REO’ (Real Estate Owned) is then attached to the foreclosed property.
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. The trade-off is that the buyer must purchase multiple REO properties in each transaction.
The recession in the United States has yielded huge profits to real estate investors prepared to take advantage. The most successful Bulk REO Investors will have a well-respected source of funding for their transactions. 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.