With more foreclosures now than ever before, America’s weak real estate market seems to set new dismal records each month. Yet as always, this challenge has given rise to a huge new opportunity for alert real estate investors.

The real estate investing strategy du jour is called ‘Bulk REO Investing‘ and is a real monster.

Take a just a minute to consider the basics of this highly profitable business.

You can’t understand Bulk REO Investments without understanding the process of foreclosure.

As a home owner misses a payment or two, the lender sends the predictable barage of threatening letters and warnings. After a certain period, the lender will then formally begin foreclosure proceedings. The name for this period is ‘preforeclosure’.

Foreclosure is completed when the property is put up for auction. If the property is not purchased at auction, ownership reverts to the original lender. The lender then categorizes the property as ‘Real Estate Owned’ – or ‘REO’ for short.

Local real estate agents are usually used to resale REO properties at retail price to the general public. But more and more, lenders are selling their REO properties for a greatly reduced price. This happens because the buyer of the REO is required to purchase multiple REO’s in a single transaction.

Qualified real estate investors are increasingly finding once-in-a-lifetime opportunities in these REO packages. REO packages are easiest to buy and sell with a well regarded source of financing in place. 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 Partners, a hedge fund in New York.


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