Bulk REO Investing In Today's Market
Bulk REO Investing is proving to be one of the most profitable fields of investment during this year and potentially beyond. Bulk REO Investors profit by buying groups (commonly called portfolios) of properties from lenders who have foreclosed the properties and have urgent desire to reduce pressure on their balance sheets. Due to the urgency of the balance sheet needs of the banking institutions coupled with the investors ability to purchase a package of REO properties rather than singular properties, its quite possible for a well-financed bulk reo investor to acquire REO packages at extremely attractive deals.
Most bulk REO real estate investors make offers to lending institutions on the basis of a percentage of unpaid mortgage balance. This means that if the investors make an offer of 60 cents on the dollar for a package of loans with a remaining balance of $3,000,000 in principal balance, then they pay $1,800,000 to acquire that group of houses.
When the REO portfolio transactions are finalized, investors have multiple houses which may then be sold to bring a return to their fund. To do this, the investors resell their houses to retail home buyers via seller financing. By eliminating traditional lenders out of the transactions, they are able to move their houses quickly and at very attractive options.
Make an attempt to find out when the banks financial quarter ends. This is where they record their quarterly earnings and financials and when most of upper management get reviewed for bonuses. Just like any company, banks dont want to have these underperforming assets on their records, especially when their earnings records are due.
Analyze the properties, determine what you need to get them for, and put in your second (or third) best offer (never give your best offer first).
Negotiate until its a win-win, and you walk away with several houses at well below market value, and the lending institution walks away with those houses off of their records just in time for their quarterly earnings reports to their shareholders.
The future seems quite bright for astute Bulk REO investors.
Most bulk REO real estate investors make offers to lending institutions on the basis of a percentage of unpaid mortgage balance. This means that if the investors make an offer of 60 cents on the dollar for a package of loans with a remaining balance of $3,000,000 in principal balance, then they pay $1,800,000 to acquire that group of houses.
When the REO portfolio transactions are finalized, investors have multiple houses which may then be sold to bring a return to their fund. To do this, the investors resell their houses to retail home buyers via seller financing. By eliminating traditional lenders out of the transactions, they are able to move their houses quickly and at very attractive options.
Make an attempt to find out when the banks financial quarter ends. This is where they record their quarterly earnings and financials and when most of upper management get reviewed for bonuses. Just like any company, banks dont want to have these underperforming assets on their records, especially when their earnings records are due.
Analyze the properties, determine what you need to get them for, and put in your second (or third) best offer (never give your best offer first).
Negotiate until its a win-win, and you walk away with several houses at well below market value, and the lending institution walks away with those houses off of their records just in time for their quarterly earnings reports to their shareholders.
The future seems quite bright for astute Bulk REO investors.