Push the banks to the limit.
Cash in on their loss with bulk REO packages.
Its a deal that will make you smile.
When the bank's REO agents fail to sell an REO property through the MLS (multiple listing service), it is packaged up, into a "tape" and discounted even further. Brokering it enables you to make money on the package while retaining a property or two for yourself.
Foreclosures are everywhere, cherry pick from huge inventories and in all cities. Invest without any prior foreclosure knowledge or a real estate license or driving around looking for properties. Foreclosures are less time consuming and a lot less headaches. You also do not have to deal with emotional homeowners, short sales paperwork, or frustrating loss mitigation departments.
The lowest priced packages will be sold in as is condition and for cash.
The properties will probably be vacant and need repairs, many will have code violations.
Many properties may be defaced or vandalized and in hard war zone areas. But you can get them cheap and its all about cost here and bottom line. These types of properties are great for flipping back to rehabbers and landlords.
At the same time it is just as easy to get good quality REO properties in bulk form. You will just have to pay a little more and there is more competition among investors.
But there are less repairs and these assets are usually cash flowing and with tenants in place. It is from one of these packages that you will want to take one or two properties for your long term rental portfolio.
EASIEST WAY TO FIND BULK REO PACKAGES
Automated systems and software maximize your efforts and time. Let them work for you finding, organizing, and executing your bulk REO deals.
Be prepared, do your research, and connect the right people. Use a REO realtor. You want several of the top producing REO agents in the area sending you deals automatically. You'll find these deals to be clean and will close in a timely manner.
Online professional services and social media networking, such as Facebook and Linkedin will also offer you properties and a way to build a buyers list for selling and flipping the bulk REO packages. However, from these sources always verify your tape and your end buyer.
Develop relationships with your local banks and credit unions because they're a great source for Bulk REO inventory. They'll let you cherry pick through the properties and make your own package. And don't be surprised that if after you have bought a few of their REO properties using OPM, that they start offering their money to you too.
It is important to do business with the decision maker and avoid "daisy chains" from unknown brokers who are not authorization to advertise or sell the tape. They'll just slow you down.
As with all business relationships act and look like a professional at all times. Credibility is key in the bulk reo industry. Have a corporation or LLC, website, email, answering service, business cards and all the proper fixin's of a business in place before you begin.
BULK REO EXIT STRATEGIES
Flip the whole package
to an investor,
and your investor provides the funding.
Use private funds and OPM to buy Bulk REO properties then resell the package with owner financing to potential homeowners.
When you do so you'll also create cash flow notes that can be held for monthly payments or sold for an immediate lump sum.
Or to keep it all streamlined, just get fast hard money financing while you singularly flip the houses to investors that you already have lined up waiting on the properties.
And always try to invest with your IRA and dodge the tax man.
BULK REO DEAL UP FOR SUCCESS
Banks will not allow assignable contracts.
But you can still Beat the Banks. Use the name of a company, an LLC, or in the name of a land trust, or your name followed by "as trustee", but never use your own name by itself. By using one of these entities you will have the ability to assign the membership interest in the LLC, or the beneficial interest for the trust to your cash buyer.
Also in many states this strategy is recorded as a transfer and not a sale so there isn't any sales tax due. Plus it ensures a clean chain of title.
Write the contract in a LLC then sell the LLC to your end buyer
who then closes on the property. Closing costs are kept to a minimum
and everyone gets
built in asset protection.
This works well when you have a cash buyer.
However, you do not want to sell more than 5 LLCs a month without talking to your CPA or financial advisor first. But you can sign off of as many Land trusts as you want without any extra ramifications.
Or do a simultaneous close, double close and that means double closing costs but its worth it. You don't need to bring any money to the closing table, instead when your buyer brings the money to the table the 2 closings take place at once, each validating the other. However, in some instances transactional funding (24-48 hours) will be required to make the closing complete and this cost will eat into your profit margins.
Or using an addendum, add your buyer's name or company to the contract then quit claim your company off the deed. The closing takes place as normal then you sign a quit claim deed removing your company from the title. Closing costs are reduced because you are only closing once and it's also a clean closing.
Always use your own investor friendly title company especially if you pay for your own title policy. Have an inspection period of at least 7 days but try for 10-14 and try to never escrow more than $5000, depending on the dollar amount of the deal.
PRO TIP: These strategies can be used when buying all types of real estate not just Bulk REO properties.
WHO TO SELL YOUR
BULK REO PACKAGES TO
Break up the bulk reo package into smaller and single units. The pretty properties that are performing with cash flow and needing little or no repairs send out to your buyer's list of Landlords who like turn key properties. If the nice ones qualify for traditional financing, then sell them to a retail buyer because it will produce the highest profit margin with the least amount of work.
The ugly properties, market to your buyer's list of rehabbers. If the complete package has the potential for a cap rate of 20% or better than flip the complete package to one of your heavy hitting investors on your buyer's list.
PRO TIP: When you build your buyer's list make certain that it consists of a variety of investors who all use different investment strategies to build their portfolios.
Real estate has created more millionaires than any other business and the numbers continue to grow. Foreclosures and bank owned real estate are the most lucrative niches in real estate today. Push the banks to the limit. Cash in on their loss with a bulk REO package.
LIKE "bulk reo"