Bulk REO Investing Guide To Getting Started

The weakness of the U.S. economy has given rise to the largest epidemic of foreclosures in American history. But smart real estate investors are turning these ‘lemons’ into ‘lemonade’ in an incredibly profitable new way.

‘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.

As a home owner misses a payment or two, the lender sends the predictable barage of threatening letters and warnings. After a certain period, the lender will then formally begin foreclosure proceedings. The name for this period is ‘preforeclosure’.

Foreclosure is completed when the defaulted property is auctioned. The lender regains ownership of the property if there are no buyers at auction. 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.

Qualified real estate investors are increasingly finding once-in-a-lifetime opportunities in these REO packages. Bulk REO Investors are most successful when they have a well-established source of funding for their REO packages. 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.