No generation in American history has ever experienced the number of foreclosures and defaulted mortgages as is happening now. But smart real estate investors are turning these ‘lemons’ into ‘lemonade’ in an incredibly profitable new way.
The new opportunity is known as ‘Bulk REO Investing’ or ‘REO Package Investing’ and it’s a huge opportunity.
Take a just a minute to consider the basics of this highly profitable business.
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. Following a period of time determined by the lender, formal foreclosure proceedings begin. The ‘pre-foreclosure’ time starts with filing of foreclosure paperwork and concludes at public auction.
The defaulted property is ultimately auctioned, thus completing the foreclosure process. If there are no buyers at the foreclosure auction, the lender regains title to the property. This property is then considered to be ‘Real Estate Owned’ by the lender, also known as an ‘REO’ property.
Typically, lenders list their REO properties with local real estate agents in hopes of selling the property to a retail buyer who will pay full price. Yet with increasing frequency, REO properties are being sold for pennies or dimes on the dollar. 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. One of the best ways to take advantage of Bulk REO Investing opportunities is to partner with a well-regarded source of funding. 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 Salvatore Bushemi of Dandrew Partners, a hedge fund in New York.
