Basics in Bulk REO Investment

There are more foreclosures in the United States right now than we have ever experienced before. But challenge always gives rise to opportunity, and opportunistic real estate investors are rising to the challenge.

‘Bulk REO Investing’ is the name of the new strategy, and it’s captured the attention of many well-heeled investors.

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.

Mortgage lenders faced with a non-paying home owner send a large volume of threats, warnings and documentation to the borrower who is late. Following a period of time determined by the lender, formal foreclosure proceedings begin. ‘Pre foreclosure’ is the name given to the time between implementation of the foreclosure proceedings and the public auction.

Foreclosure is completed when the property is put up for auction. If there are no buyers for the property at auction, the property is returned to the lender. Such a property is then classified as an ‘REO’ (Real Estate Owned) by the lender.

Local real estate agents are usually used to resale REO properties at retail price to the general public. But as a consequence of the weak economy, lenders are frequently selling their REO properties far below their actual value. This happens because the buyer of the REO is required to purchase multiple REO’s in a single transaction.

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 Bushemi of Dandrew Partners, a hedge fund in New York.