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BULK REO - Real Estate Investing's Prize

By Duncan Wierman

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Published: 27Jan2010
Word count: 920
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Leverage is the Key. You can leverage your cash, your assets, other people's, anything, including your full portfolio if you want to go to the next level.

What's the biggest problem with banks in 2010? "Too big to fail" banks get a bailout from the government, which means the taxpayers prop them up, such that executives still get huge bonuses. What about those banks that are too big to fail, though? What do they do when they've got so many foreclosed properties to deal with?

Enter Bulk REO

Before we talk about bulk REO, let's talk about the foreclosure system in general. Once a home has gone through the foreclosure process and is auctioned off, it's done. If you own the underlying mortgage on the house, you'll put in a bid for the amount owed plus expenses; in that case, oftentimes, a real estate investor will outbid the original properly holder, such that the debt is paid off. If there is no bid or the lender is the highest bid, the lender ends up with the property. That's not what most lenders want. They simply have a property that's sitting there empty. The property is now called "real estate owned," or REO, which means the lender owns it. Hundreds or thousands of small banks and credit unions that are too big to fail have many of these properties on the books, and they're not producing any cash flow. Because they don't get bailout money, they don't get big bonuses and they need to get rid of these properties. What do those banks and credit unions do? They can sell them individually, or they can package them in one big bundle and sell them to someone who can come up with a reasonable offer.

Which do you think probably happens?

The REO packages are usually sold for much less than the market value, maybe $.40 or even $.50 on the dollar. That makes something that could be disastrous much less so. What's even better is that for the first time, these packages can be bought by individual investors to broker, buy, flip or even keep.

That's good news, but it can take some work to find these bulk REO packages. There are lots of so-called "brokers" who pretend to have direct access to these deals, but that's not usually the best way to go. Instead of going through a "middleman," you want direct access to these packages yourself if you want to get into this.

Finding Bulk REO Packages

Finding bulk REO packages is actually pretty easy to do if you know where to look and what to say to people. However, you don't look where you think you might. That's where the Bulk REO Secrets course can help. The steps in this course are based upon methods I used to get access to these packages myself, and for others, too.

Finding the Assets.

Finding the assets can be difficult, but don't waste your time trying to deal with banks that don't want to talk to you. Instead, go with smaller, regional or local banks, or even credit unions, that will. These are sometimes called "portfolio lenders," and if you find the person that's the one to go to at particular bank or credit union, that's great. Next, you need to figure out what to say. What do you say? You don't want to sound like you're inexperienced, and you want to be able to spot shysters who act like they have direct access but really don't. Bulk REO Secrets has all this information for you, to give you instant credibility and the means to get to the "go to" guys at the smaller banks and credit unions.

Three Forms Needed.

You'll need to fill out three forms to do bulk REO deals. You need a nondisclosure agreement, a letter of intent, and a proof of funds letter. You can get a $1 million proof of funds letter for free just for buying Bulk REO Secrets.

Take Care of Financing.

Finding can be the most difficult part of real estate investing, but not to worry. The course will teach you how to do this, too, depending on what your exit strategy is. You'll need to have financing lined up unless you're simply acting as a broker, in which case you won't. If you keep the course, you'll need something called "distressed REO financing," or if you're going to flip properties out of the package, you'll need to close with "transactional funding." This, too, is included in the course. I know someone who finances packages, with no credit score required, and a source for transactional funding with no upfront fees necessary, so that you can line up $1 million quite easily, no questions asked, or more than that if you make a phone call.

Flipping.

You can flip REO bulk deals in a package or individually, and this is a great way to syndicate what you do. As large scale wholesaling, it takes some finesse, and I can show you how to do that. What do you need to do? Build your buyer's list first and then start marketing before you get the tape.

"Bulk REO Brokering"

"Bulk brokering" is a favorite strategy, and you don't need a license or experience to do so. However, it can get you some amazing cash, fast. One of the best ways to market the package is to hedge funds, which you can find online. With this, you can get both cash and property. And that's all there is to it.

Duncan Wierman is the founding members of "Bank REO Property Deals. His company is connecting sellers of verifiable" product with qualified buyers. If you are interested in learning more about Bulk REO investing, he created a insiders training guide to help you through the maze getting started, all the way through the closing process. http://www.BulkReoPropertyInvesting.com/

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