It is no secret that America is facing an unprecedented foreclosure crisis. But, what happens to all of those foreclosures if no one buys them at the auction? Well, the banks have to take back the properties, and they become Real Estate Owned, or REO. Contrary to popular notion, the banks do not want to take these properties back. These properties become non-performing assets for the bank, and hinder the bank’s borrowing and lending powers. Because these properties propose such a negative situation for the banks, they become very motivated to sell off these REO properties. Since the banks are motivated sellers, they are often willing to accept deeply discounted offers for REO properties. This presents an incredible opportunity for real estate investors to buy properties for prices far below market value.
It is often a good idea to focus on REO’s that have been back on the bank’s non-performing asset list for more than 90 days*. If you try to negotiate a discount with the bank before 90 days*, you could face more resistance from the bank. Also, there is a very small group of realtors in each area that are able to market REO listings. It is crucial to find out who these realtors are in your area, and contact them if you want to excel in purchasing REO properties.
This is the acquisition strategy that Justin Kain executed when purchasing 49 properties in a single REO package. Through negotiation and patience, he was able to purchase this entire package of 49 properties for $.04 on the dollar. He now has a team working there full time rehabbing, renting, and selling the REO properties that we were able to obtain.
It may seem unbelievable that Justin was able to accomplish this after only 2 years of investing full-time. We want to help you do the exact same thing! The goal of this blog is to share the stories, experiences, and knowledge of our colleagues and ourselves with you, while opening up discussion forums so that you can ask questions, comment, and collaborate with us.
*Please note: It is crucial to your success as a real estate investor that you check with local attorneys about the specific timelines, laws, and regulations in your county, city, and state. These types of numbers are to be used as a reference point only. We do not claim to give any legal advice. Please determine what the limits/norms are in your area.
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