No generation in American history has ever experienced the number of foreclosures and defaulted mortgages as is happening now. But challenge always gives rise to opportunity, and opportunistic real estate investors are rising to the challenge.
That opportunity is called Bulk REO Investing, and the opportunity is huge.
Consider with me, if you will, the fundamentals of the Bulk REO business.
Understanding of the foreclosure process is central to understanding Bulk REO investing.
When a home owner begins to miss payments on their mortgage, the lender begins to send late/overdue notices to the home owner. The formal process of foreclosure begins at the lender’s discretion. From that time through public auction is called ‘preforeclosure’.
Foreclosure is completed when the property is put up for auction. 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.
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. 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 Salvatore Buscemi of Dandrew Capital Partners, a hedge fund in New York.
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