4 Things You Must Prepare Before Diving Into Bulk REO Packages

Posted on: January 18, 2011

Categories: Buy, Investors

Author: lbuen

2987611025 b9a279bba1 m 4 Things You Must Prepare Before Diving Into Bulk REO PackagesForeclosures Drowns Banks With Unwanted Assets

The turbulent waves of foreclosures continue to wash out distressed home owners who are unable to keep their finances afloat. As these combers ebb, their backwash brings back to shore hordes of homeless families for the government to look after and piles of foreclosed properties for the banks and developers to deal with. Unlike a seashell collector who may not mind the extra weight of the pieces she gathers from the shore, these institutions do not enjoy collecting these foreclosed properties as loads of them cause an imbalance to their financial statements.

Bulk REO Packages – Banks’ Life Jacket, Nourishment to RE Investors’ Pocket

That is why they have come up with bulk REO packages or groups of “real estate owned” by the bank that are greatly discounted for bulk purchases so that banks can quickly get rid of these “unwanted” assets which are rapidly accumulating in their inventory due to the waves of foreclosures. The longer they hold these REOs in their hands, the greater their losses. Real estate investors like this urgency because it means that the banks are motivated sellers, and motivated sellers are willing to lower their price just to sell off.

True to form, banks offer great discounts, that could go as high as 60 percent, to encourage real estate investors to acquire them by bulk, sell them off as individual pieces of properties. The more massive the bulk REO package, the greater the discount. This affords investors of bulk REO packages to make heaps of profits. Investors can also rehabilitate some and groom them to become sources of steady cash flow. This is a classic illustration of the advice given to newbie real estate investors to “make a profit when you buy, not when you sell.”

Bulk Up Your Real Estate Investor’s Muscles Before Diving Into the Sea of Bulk REO Packages

Considering the relative enormity of the properties included in the bulk REO packages, this kind of deals may not be for the newbies. There are a number of things that an investor has to put together to succeed in venturing in this type of deal.

Assemble Your Buyers’ List. Getting hold of a bulk REO deal means that you will be marketing a great deal of properties, either by flipping the bulk REO package or by reselling properties by piece. Gathering names and pertinent details of potential buyers ahead and setting up a buyers’ database is crucial to shorten the time that the properties are in your inventory. With your buyers’ database, you know the real estate needs of specific buyers and you can match these needs with the corresponding properties that are in the bulk REO package. If the bank allows you to inspect the properties or with the help of compilers who allow you to tailor-fit your package, you can choose to include in the pack the properties that satisfy the needs of buyers who are in your list. With tailor-made packages, you can cherry-pick assets according to the average ARV, the target market for the properties, zip codes and package size of your choice.

Plot Your Exit Strategy. Prior to buying any bulk REO packages, you already must have drawn up your strategy on what you will do with the 91 properties that you would have acquired. Will you be flipping the whole package to another investor, just sell the properties individually, keep some for rehab and rental income? Plotting this would be easier with the help of your buyers’ list.

Round Up Documentation. The three documents you will need to present to the bank include a (1) Nondisclosure Agreement, (2) a Letter of Intent and (3) a Letter to Show Proof of Funds. To be able to come up with the third document, you either must have enough funding or better yet read the next item.

Find Financing. Access to substantial amount of capital is requisite to be able to pull off this large scale deal. There are a number of investment firms, some international, that can offer hedge funds to resolute investors.

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LEAVE A COMMENT:  2 Comments

2 Responses to “4 Things You Must Prepare Before Diving Into Bulk REO Packages”

  1. Mike Strong says:

    I am looking for bulk REO buyers. Custom tape. Southern California available. Nationwide. I have several sellers. Tell me what you want to buy and I will find it. 888-332-2820 Mike Strong

  2. AAA Network Solutions INC says:

    I am looking into the possibility of purchasing bulk REO properties in the State of IL around the zip code 60139. My email is nangel45@gmial.com. Please provide any information that might help us complete our goal.

    Thank you!

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