My Peel Advertsing

The weakness of the U.S. economy has given rise to the largest epidemic of foreclosures in American history. 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 investing in Bulk REO, you have to understand the foreclosure process.

When a home owner begins to miss payments on their mortgage, the lender begins to send late/overdue notices to the home owner. The lender directs the subsequent timing of the actual foreclosure proceedings. The name for this period is ‘preforeclosure’.

To complete the foreclosure process, the property is auction to the public. The lender regains ownership of the property if there are no buyers at auction. The property then receives the designation of being an ‘REO’ or the more formal name, ‘Real Estate Owned’.

Lenders usually try to unload their REO properties at close to retail price by listing their REO’s with a real estate broker. However, lenders are increasingly willing to take much less than their REO asset is actually worth. The trade-off is that the buyer must purchase multiple REO properties in each transaction.

The REO investment packages available today have provided a way to profitably capitalize on the U.S. recession. Bulk REO Investors are most successful when they have a well-established source of funding for their REO packages. 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. 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 New-York based hedge fund.

The Rise Of The Bulk REO Business

The weakness of the U.S. economy has given rise to the largest epidemic of foreclosures in American history. But smart real estate investors are turning these ‘lemons’ into ‘lemonade’ in an incredibly profitable new way.

That opportunity is called Bulk REO Investing, and the potential is huge. The basis of the Bulk REO business is foreclosures, so let’s analyze the foreclosure process now.

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. Between the formal beginning of the foreclosure process and the public auction is the ‘preforeclosure’ period.

Foreclosure is completed when the defaulted property is auctioned. The lender regains ownership of the property if there are no buyers at auction. This property is then considered to be ‘Real Estate Owned’ by the lender, also known as an ‘REO’ 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. But as a consequence of the weak economy, lenders are frequently selling their REO properties far below their actual value. The trade-off is that the buyer must purchase multiple REO properties in each transaction.

The REO investment packages available today have provided a way to profitably capitalize on the U.S. recession. The most successful Bulk REO Investors will have a well-respected source of funding for their transactions. 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.

Note – One of the nation’s leading experts on bulk reo investing is hedge fund manager Sal Buscemi. Sal Buscemi recognized the irrationality of the real estate boom of the late 1990’s and early 2000’s and capitalized on this by forming his very well-regarded hedge fund, Dandrew Capital Partners.