With more foreclosures now than ever before, America's weak real estate market seems to set new dismal records each month. 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.
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.
A home owner who misses one or more mortgage payments is faced with an ever-increasing volume of threatening correspondence from their lender. After a certain period, the lender will then formally begin foreclosure proceedings. Between the formal beginning of the foreclosure process and the public auction is the 'preforeclosure' period.
To complete the foreclosure process, the property is auction to the public. If there are no buyers for the property at auction, the property is returned to the lender. The property then receives the designation of being an 'REO' or the more formal name, 'Real Estate Owned'.
Local real estate agents are usually used to resale REO properties at retail price to the general public. However, lenders are increasingly willing to take much less than their REO asset is actually worth. But the price of receiving such great pricing is the need to purchase multiple REO properties (a 'package') rather than individual properties.
The recession in the United States has yielded huge profits to real estate investors prepared to take advantage. The most successful Bulk REO Investors will have a well-respected source of funding for their transactions. 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 Buscemi of Dandrew Partners, a New-York based hedge fund.
