Bulk REO Tape

For real estate investors that are looking for investments that could give them a profit of $50 million or so should take a very close look at bulk REO tape. Bulk REO tape is an industry term for banked owned real estate. These are homes that have been foreclosed on and didn’t sell at auction, so they revert back to the bank. The majority of banks have extensive bulk REO tape. This is good news for any investor that has the time and the cash to enter into a bulk REO tape deal.

What exactly is bulk REO tape? It is basically a group, big or small, that the bank doesn’t want to take the time or invest the effort to put on the market. They are basically looking for investors that are interested in taking a nice chunk of the properties off their hands all at once. There are homes that are banked owned that will be put on the market, the bank will call a realtor and go about selling the houses in much the same way you would sell your home… with a few differences.

In most cases banks are going to sell the homes in “as is” condition. They will have taken care of any tax issues or other liens against the property, which is good to know because had you bought the house that is going through foreclosure at auction you would have been stuck with everything that goes along with it. However, once the auction has failed, and the majority of auctions do fail, the bank takes care of all the monetary issues and will evict the people that are in the home.

The homes in a bulk REO tape are often priced from 40% to 70% of LTV or BPO. Of those two options you want BPO over LTV. Let us clarify the jargon, LTV is loan to value, which means if the property sold for $100,000 and the buyer put $5000 down the loan to value would be 95%. Whereas BPO stands for Broker Price Option, this is very much like an appraisal in that you get an idea of what the property is actually worth.

Keep in mind that you are dealing with bulk REO tape, which means more than one home. You also need to know that in reality a bulk REO tape is going to run you about $100M to $500M when you are dealing with a bank. They aren’t interested in dealing with investors that only want a few properties. If you are interested in smaller lots then you need to find an investor that has a bulk REO tape or two and work a deal with them. You also need to know that the better deal is going to be in the bigger bulk REO tape. Smaller consolidations generally go up in price as they get smaller.

A bulk REO compiler will put a package together once “an order” is placed. This package may be from one bank or source or from multiple sources. In order for you to place your “order” there are a few things you need to submit along with your request. These items include a letter of intent, Non-Circumvent, Non-Disclosure Agreement and a Proof of Funds letter. Getting all of these documents together for your bulk REO compiler will make the transaction go much smoother.

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