No generation in American history has ever experienced the number of foreclosures and defaulted mortgages as is happening now.  But challenge always gives rise to opportunity, and opportunistic http://realestate.BryanEllis.comreal estate investors are rising to the challenge.

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

Consider with me, if you will, the fundamentals of the Bulk REO business.

Understanding of the foreclosure process is central to understanding Bulk REO investing.

A home owner who misses one or more mortgage payments is faced with an ever-increasing volume of threatening correspondence from their lender.  The official foreclosure proceedings begin subsequently, as directed by the lender.  ‘Pre foreclosure’ is the name given to the time between implementation of the foreclosure proceedings and the public auction.

To complete the foreclosure process, the property is auction to the public.  If there are no buyers for the property at auction, the property is returned to the lender.  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.

Qualified real estate investors are increasingly finding once-in-a-lifetime opportunities in these REO packages.  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.  One excellent source of funding for Bulk REO Investment transactions can be found here:  Bulk REO Investment Training.