Fundamentals Of Bulk REO Investing

The weakness of the U.S. economy has given rise to the largest epidemic of foreclosures in American history. Yet well-funded investors in real estate are seizing upon this opening to profit from an profoundly profitable new opportunity.

The real estate investing strategy du jour is called ‘Bulk REO Investing‘ and is a real monster.

Let’s take a moment to analyze the basics of this incredibly lucrative business.

Understanding the notion of Bulk REO’s requires understanding of the foreclosure process.

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. From that time through public auction is called ‘preforeclosure’.

Foreclosure is completed when the property is put up for auction. 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. But more and more, lenders are selling their REO properties for a greatly reduced price. This happens because the buyer of the REO is required to purchase multiple REO’s in a single transaction.

Qualified real estate investors are increasingly finding once-in-a-lifetime opportunities in these REO packages. 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 hedge fund in New York.