‘Bulk REO Investing’ is the name of the new strategy, and it’s captured the attention of many well-heeled investors.

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

To understand investing in Bulk REO, you have to understand the foreclosure process.

A home owner who misses one or more mortgage payments is faced with an ever-increasing volume of threatening correspondence from their lender. The lender directs the subsequent timing of the actual foreclosure proceedings. The ‘pre-foreclosure’ time starts with filing of foreclosure paperwork and concludes at public auction.

When a defaulted property is placed up for auction, the foreclosure process is completed. 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.

Typically, lenders list their REO properties with local real estate agents in hopes of selling the property to a retail buyer who will pay full price. Yet with increasing frequency, REO properties are being sold for pennies or dimes on the dollar. The trade-off is that the buyer must purchase multiple REO properties in each transaction.

There is huge profit potential in these REO packages for qualified real estate investors. The most successful Bulk REO Investors will have a well-respected source of funding for their transactions. 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 Capital Partners, a hedge fund in New York.

Here are 5 reasons why:

1.  The governments $8,000 first time home buyers tax credit is set to expire on Dec. 1st. That means you’ve got to actually close on your new home. And because it typically takes at least 30 days to go from contract to close, you need to start taking action RIGHT NOW.

2. Believe it or not, there is some 100% financing programs still available. Now, these programs come with many more requirements and restrictions than similar programs that were available previously, but that doesn’t mean you can’t find them anymore.  Just be sure to shop around with lenders as some may offer different programs than others.

3. Everything is on clearance. Home sellers know this is a buyers market because many homes are selling at or below the original purchase price. There are many short sales and foreclosures available in the Fort Mill SC area, which means you can now get twice the home for half the price.  There really are some amazing deals available IF you have time on your side and a knowledgeable agent.

4. Interest rates may never be this low again. As the economy improves,  interest rates will undoubtedly rise and if you don’t act soon you may miss the opportunity.  Don’t be one that says “if I had only…”!  The best thing to do is to find one of the many free mortgage calculators on the web and play with the numbers.  You will find your mortgage monthly payment goes up much quicker with interest rates than if the house price drops a few thousand

5. Local builder incentives are growing. Because the inventory of homes available is growing, builders are willing to customize new homes for a fraction of what was available in the past.  If you can’t find what you’re looking for in the inventory of pre-built home, look at local builders for the many build-to-suit options available.

If you’re looking to purchase a new home in the Fort Mill SC in spite of the current economy, this really is a great time to take action.  These five reasons are just a few of the many why right now might be your best time to take action!

As one would expect, California and Florida led the way in foreclosures actions, and it was these 2 states that caused Wachovia Corp, the banking giant that was headquartered in nearby Charlotte NC, to falter considerably, paving the way for Wells Fargo to come in and purchase the bank late last year.

Fortunately, here in Rock Hill SC and For Mill SC we’ve been quite lucky in the fact that the number of foreclosures have remained relatively low, especially in comparison to other areas.

While President Obama’s recently revealed plan to help the mortgage crisis calls for some $75B worth of aid, it is sure to some significant challenges, especially given this revelation that much of the foreclosure activity is centered in small pockets across the country.

To see an interactive map of the nation’s foreclosure activity since 2006, visit the USA Today article here.

Why inspect if you can’t negotiate?

Foreclosure homes are usually “as-is” sales. This means that buyers cannot negotiate for the cost of needed repairs, as they may do in a traditional home purchase. Buyers must absorb repair costs themselves and consider this in their purchase offer at auction. So why get a professional inspection on a foreclosure property?

Too many foreclosure buyers think they’re getting a deal when, in fact, they might be purchasing a property with substantial and costly defects. The repair of these major issues could exceed the savings gained in buying a foreclosed property.

Sellers at foreclosure auctions are not usually obligated to disclose defects. But buyers can empower themselves by getting a professional property inspection before the auction that will provide valuable insights about the condition of the home. If pre-auction property inspections are not permitted at the foreclosure sale, buyers will need to weigh that risk carefully.

Knowledge is Power

Even with a significant influx of newly foreclosed properties due to the sub prime mortgage mess, the foreclosure market can be competitive, and it is often dominated by experienced real estate investors. Armed with the right information you can make informed bids and find the best home at the best deal. After all, a bargain isn’t a bargain if it costs more than expected down the line.

Remember, buying foreclosed properties can be a risky business, so be certain to consult with needed professionals, including a reputable, certified home inspector, to address questions about specific issues. More homebuyer and home maintenance tips are available online at housemaster.com.

This information is provided for general guidance purposes only. Neither DBR Franchising, LLC nor the local HouseMaster® franchise warrants its accuracy and assumes no liability related to its use. Contact the local franchise office and/or qualified specialists for advice pertinent to your specific house or circumstances. © Copyright 2008 DBR. Each HouseMaster franchise is an independently owned and operated business. HouseMaster is a registered trademark of DBR Franchising, LLC.

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