The weakness of the U.S. economy has given rise to the largest epidemic of foreclosures in American history. However, opportunistic real estate investment professionals are turning the recession into great profits with a bit of creativity.

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

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

Understanding the notion of Bulk REO’s requires understanding of the foreclosure process.

When a home owner begins to miss payments on their mortgage, the lender begins to send late/overdue notices to the home owner. 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.

Foreclosure is completed when the defaulted property is auctioned. If there are no buyers for the property at auction, the property is returned to the lender. Such a property is then classified as an ‘REO’ (Real Estate Owned) by the lender.

REO properties are usually listed for sale with local real estate agents. But more and more, lenders are selling their REO properties for a greatly reduced price. Lenders are willing to do so in exchange for the buyer’s agreement to purchase a ‘package’ of REO’s rather than a single property.

These REO packages represent the potential to acquire huge amounts of equity for savvy real estate investors. REO packages are easiest to buy and sell with a well regarded source of financing in place. 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.

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