Basics of Bulk REO Investing
Editor’s note: Due to popular demand, this article is now syndicated on hundreds of websites throughout the internet. For more information, check out BulkREO.net
The recession in the U.S. economy has resulted in more foreclosures than experienced by any other generation of Americans. Yet as always, this challenge has given rise to a huge new opportunity for alert real estate investors.
‘Bulk REO Investing‘ is the name of the new strategy, and it’s captured the attention of many well-heeled investors.
Let’s take a moment to analyze the basics of this incredibly lucrative business.
You can’t understand Bulk REO Investments without understanding the process of foreclosure.
A home owner who misses one or more mortgage payments is faced with an ever-increasing volume of threatening correspondence from their lender. The official foreclosure proceedings begin subsequently, as directed by the lender. The name for this period is ‘preforeclosure’.
Foreclosure is completed when the defaulted property is auctioned. Ownership of the property is returned to the lender if the property is not sold at auction. The designation of ‘REO’ (Real Estate Owned) is then attached to the foreclosed property.
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, REO properties are now frequently sold for far less than their ‘book value’. This happens because the buyer of the REO is required to purchase multiple REO’s in a single transaction.
These REO packages represent the potential to acquire huge amounts of equity for savvy real estate investors. REO packages are easiest to buy and sell with a well regarded source of financing in place. 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. One excellent source of funding for Bulk REO Investment transactions can be found here: Bulk REO Investment Training.
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