Bulk REO

If you have deep pockets or are associated with those with deep pockets then bulk REO is certainly a very sure way to make a truckload of money in real estate. A bank which wants to replenish its coffers quickly and does not have the patience to wait for months may resort to selling its foreclosed properties in bulk at steep discounts. Depending on which part of the US you are interested in you may find yourself buying these properties anywhere between 20 to 70 cents on the dollar.

The Process

I remember some of my listings being featured on the tape (i.e. the list) my client sent out to the investors back in 2009. On the list was a cute property located in a very desirable area in San Leandro. At that time, their price was 70 cents on the dollar. I had listed the property for $289,000. Seventy cents on that cute home was only $202300. Do you know that as soon as I had listed the property, I received a call from an agent. She was ecstatic. Her client, a single PhD woman working at Ohlone College, had been dreaming to buy a home in that area for ages. There was a property listed across the street from my listing but, at $500,000, it was well above her price range. Oh, my God, you can t believe it, Paul, the agent gasped. I will come to your office as soon as I have my client sign the offer.

It was the first time ever a buyer s agent had personally delivered an offer to me. She honored her promise and met me at my office, offer in hand, at the appointed time. I looked at the first page. $325,000. And if there are any other offers, Paul, you need to let me know immediately Oh my Gosh, Paul, you don t know how excited I am.

My phone rang incessantly that Friday and throughout the weekend. One agent called and said that her client was ready to close in 20 days. She d put 20% down and take the property AS IS. Her offer was $340,000. The agent with the first offer came back the following Monday with a revised price. She increased her offer to $365,000 and hoped and prayed that the tiny house would appraise to that amount. Since she was the first offeror and most persistent at that, I persuaded the asset manager to consider taking her offer above the rest. She did and I placed it in pending status. In the meantime, while we were in escrow, someone offered me $400,000 cash for the same property. He d take the property AS IS, with no inspection or appraisal contingencies. Unfortunately for this would-be buyer, the bank had already accepted another offer.

Deep pockets mean SERIOUS profits.  If someone had picked up that property as a bulk purchase for only $202,300 that person would have stood the opportunity of reselling the same property for up to $400,000, thus making a HUGE profit close to $197,700 in less than 2 months. Now, you know why they say the rich get richer, don t you? They have the same features as you and I: 2 eyes, one nose, two feet, etc. They just happen to have deeper pockets.

But you do not need to have deep pockets. You just need to have the connections. I recall being connected to a guy in Florida in April 2011. This guy had raised over $2,000,000,000. That is two Billion dollars, with a B. All I have now is my reputation, the BIG guy pleaded with me. He had approached investors, money people, and made them all excited about increasing their collective network buying California properties in bulk. He said the maximum he would pay for these things was 60 cents on the dollar. Not only was there very little inventory for the kind of money he had raised no one was selling California properties for 60 cents on the dollar irrespective of how much money the buyer had. I d love to help this guy. A 1% cut for me for an amount that HUGE would be a cool $10,000,000 pay day for me. And just what would I have done with that serious money? Many things. For one thing, I would build a road or two in Cameroon and make many people s lives better than they were. I d build me a $1,000,000 home somewhere close to where water abounds, I d give $1,000,000 to the Lord s work, for sure, another $1,000,000 to start a cash-flowing business and I d make a major portion available for real estate investing.

How about you? What would you do with a $10,000,000 pay check? Bulk REO can get you there and that s for sure.