The topic of Bulk REO Investing has really gotten a lot of attention lately, and with good reason. “Bulk REO Investing” refers to making profit by buying and selling groups of REO (foreclosed) properties as a unit rather than individually. For investors who are well educated about Bulk REO investing, this can lead to some truly significant real estate profits in just a short period of time (see below). But there are some things you need to know about Bulk REO Investing before you jump in with both feet:
First: The excitement over Bulk REO Investing is justifiable. Imagine being able to flip a large group of properties from one seller to one buyer and capture a large spread (frequently $50,000-$100,000+) in the middle. That’s exactly what Bulk REO Investing can do for you – if you’ve got the qualifications, which leads to the second point:
Second: Bulk REO Investing does require access to significant amounts of capital. Even small Bulk REO deals will require several hundred thousand dollars of funding. If it’s your money, you could make very large profits very quickly since Bulk REO buyers tend to get very large discounts off of the remaining principal balance values. But even if you don’t have money, there are some very well-capitalized investment firms that may be willing to back you and pay you a handsome fee for every deal you bring to them (I know of one hedge fund that will provide a $2 Million Proof Of Funds for serious investors).
Third and finally: Realize that the best sources of Bulk REO deals are frequently people in your immediate area. In fact, I saw a really great training video about 3 great sources for Bulk REO deals that you might want to check out… more details to come about this. (One of the sources – hard money lenders – was so simple yet so brilliant that it will take the average real estate investor less than 10-20 minutes to have a legitimate list of prospects.)
But let’s be clear: Bulk REO Investing is like every other part of the real estate investing business: Proper training is crucial, particularly considering the very large dollar investments necessary. If you’re interested in learning about this business, I recommend working with an investment firm that will train you and provide funding for your transactions.
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