This new opportunity – known as ‘Bulk REO Investing’ – is so huge it’s captured attention from wealthy investors and private investment funds alike.
Take a just a minute to consider the basics of this highly profitable business.
Understanding of the foreclosure process is central to understanding Bulk REO investing.
As a home owner misses a payment or two, the lender sends the predictable barage of threatening letters and warnings. The official foreclosure proceedings begin subsequently, as directed by the lender. The ‘pre-foreclosure’ time starts with filing of foreclosure paperwork and concludes at public auction.
When a defaulted property is placed up for auction, the foreclosure process is completed. The lender regains ownership of the property if there are no buyers at auction. The designation of ‘REO’ (Real Estate Owned) is then attached to the foreclosed property.
Lenders usually try to unload their REO properties at close to retail price by listing their REO’s with a real estate broker. Yet with increasing frequency, REO properties are being sold for pennies or dimes on the dollar. 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.
There is huge profit potential in these REO packages for qualified real estate investors. REO packages are easiest to buy and sell with a well regarded source of financing in place. There are many sources of funding for these transasactions including: hard money and commercial financing, as well as non conventional sources such as hedge funds and private investors. 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 hedge fund in New York.
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