With more foreclosures now than ever before, America’s weak real estate market seems to set new dismal records each month. Yet well-funded investors in real estate are seizing upon this opening to profit from an profoundly profitable new opportunity.
The real estate investing strategy du jour is called ‘Bulk REO Investing‘ and is a real monster.
Let’s take a moment to analyze the basics of this incredibly lucrative business.
Understanding the notion of Bulk REO’s requires understanding of 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. Following a period of time determined by the lender, formal foreclosure proceedings begin. From that time through public auction is called ‘preforeclosure’.
When a defaulted property is placed up for auction, the foreclosure process is completed. 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.
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. However, REO properties are now frequently sold for far less than their ‘book value’. But the price of receiving such great pricing is the need to purchase multiple REO properties (a ‘package’) rather than individual properties.
There is huge profit potential in these REO packages for qualified real estate investors. 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 Kenny Rushing of Rush Capital Partners, a hedge fund in Tampa.