REO Portfolios

Contrary to popular belief getting involved with REO portfolios is easier than people say. Yes there is leg work involved for the investor. You need to “know your stuff” so to speak. It is important that you understand how that property ended up being a REO, the value of the property and the condition of the property before you make an offer. There is a lot of money to be made with REO portfolios for those that do it correctly.

The very first step in buying a REO portfolio is to get “friendly” with the executives in the banks. Start with the smaller banks, the local banks. With small local banks the bank executives live locally and you have a better shot at getting to know them. You don’t have to become best friends but you want them to know you, like you enough to want to do business with you. Let them know you are a real estate investor and that you are interested in having a sit down with the person in charge of the REOs.

Important, don’t mention that you want to do this if you don’t have the money to back it up. One of the very first items a bank is going to want to see when you sit down to talk about REO portfolios is a Proof of Funds letter, this is a certified piece of paper that tells them you are good for the money you are offering. The quickest way to make sure no one deals with you in the REO world is to waste the time of the seller by not having the money to go through with the sale.

Generally your first REO portfolio is going to be a small one. Now, this may mean that you create your own REO portfolio; depending on the funds you have available, because banks don’t tend to deal with an investor that is only interested in one or two properties. For those types of deals you are sent to the real estate agent, just like any other person that is looking to buy property. Chances are you will pay more in the beginning but if you know what you are doing; you stand to make a lot of money when you package the individual REOs into a REO portfolio and sell it to investors.

There is another advantage to creating your own REO portfolio one piece at a time. You actually get to go and see the property, do a walk through, talk to the real estate agent about the market value compared to the asking price. When you deal with large REO portfolios that contain a 50, 60, 100 or more homes you don’t always know what you are buying. Remember that the banks ended up with these properties because the owners didn’t have the funds to pay their mortgage. In some cases, once the property reverted to the bank, evictions took place, angry people tend to do things such as tear up homes because they know they aren’t going to have to pay for it and the bank wouldn’t work with them.

Until you get your feet wet in the REO world it might be a good idea to build your own REO portfolios one piece at a time. You can work with a bank as well, if you decide to go that route make sure you have the funds and establish relationships with the big wigs at the banks you want to work with.

Tags: bank REO properties, bulk REO portfolios, proof of funds, REO bulk sales, REO portfolios for sale, REO portfolios real estate