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Fundamentals Of Bulk REO Investments

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.

‘Bulk REO Investing’ is the name of the new strategy, and it’s captured the attention of many well-heeled investors.

The basis of the Bulk REO business is foreclosures, so let’s analyze the foreclosure process now.

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 lender directs the subsequent timing of the actual foreclosure proceedings. The ‘pre-foreclosure’ time starts with filing of foreclosure paperwork and concludes at public auction.

To complete the foreclosure process, the property is auction to the public. If the property is not purchased at auction, ownership reverts to the original lender. The lender then categorizes the property as ‘Real Estate Owned’ – or ‘REO’ for short.

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’. 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. 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 Sal Buscemi of Dandrew Partners, a hedge fund in New York.

 

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This entry was posted on Sunday, December 6th, 2009 at 6:48 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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