Real estate comps tell us there are more foreclosures in the United States right now than we have ever experienced before. Prepared real estate investment professionals are turning the recession into great profits with a bit of creativity.
A popular real estate investing strategy is called ‘Bulk REO Investing’ and is a real monster. The basis of the Bulk REO business is foreclosures, so let’s analyze the foreclosure process now. Because to understand investing in Bulk REO, you have to understand the foreclosure process.
When a home owner begins to miss payments on their mortgage, the lender begins to send late/overdue notices to the home owner. After a certain period, the lender will then formally begin foreclosure proceedings. Between the formal beginning of the foreclosure process and the public auction is the ‘preforeclosure’ period.
To complete the foreclosure process, the property is offered at auction to the public. If there are no buyers at the foreclosure auction, the lender regains title to the property. 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. But as we all know ,with increasing frequency, REO properties are being sold for pennies or dimes on the dollar. And the purchase of a ‘package’ (or group) or REO properties is the trade-off for receiving such great prices.
These REO packages represent the potential to acquire huge amounts of equity for savvy real estate investors. Bulk REO Investors are most successful when they have a well-established source of funding for their REO packages. Taking advantage of a Bulk REO package can net you a nice end profit when you remember these basic fundamentals!