The weakness of the U.S. economy has given rise to the largest epidemic of foreclosures in American history. However, opportunistic real estate investment professionals are turning the recession into great profits with a bit of creativity.
This new opportunity – known as ‘Bulk REO Investing’ – is so huge it’s captured attention from wealthy investors and private investment funds alike.
Let’s take a moment to analyze the basics of this incredibly lucrative business.
To understand investing in Bulk REO, you have to understand the foreclosure process.
Mortgage lenders faced with a non-paying home owner send a large volume of threats, warnings and documentation to the borrower who is late. After a certain period, the lender will then formally begin foreclosure proceedings. The ‘pre-foreclosure’ time starts with filing of foreclosure paperwork and concludes at public auction.
Foreclosure is completed when the defaulted property is auctioned. The lender regains ownership of the
Lenders have no interest in owning property, and thus usually opt to list their REO properties with a local real estate broker in hopes of a retail sale. However, lenders are increasingly willing to take much less than their REO asset is actually worth. 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.
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. 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 Bushemi of Dandrew Capital Partners, a hedge fund in New York.
Discussion
No comments yet.