| If you pay attention to real estate investing trends, then | | | | other times the lender retains total control over the |
| you probably already know about Bulk REO Investing. | | | | properties and will only pay you a set finder’s fee. |
| This type of investing is huge right now – both | | | | Obviously, having PIF is pretty integral to success in |
| literally and figuratively. Bulk REO investing involves | | | | bulk REO investing. However, you need to be careful |
| buying large numbers of foreclosed properties (Real | | | | that you do not get roped into a PIF “deal” that |
| Estate Owned or REOs) from banks or other lenders. | | | | is not beneficial for you. One of my coaching clients |
| Often, you can get these deals at a steep discount | | | | came to me very excited because he had a 2 million |
| because the lenders have been unable to use the | | | | dollar proof of funds that he could use to do as many |
| properties to recoup their losses on the loans and are | | | | deals as he liked. He had paid over 2,000 dollar for |
| mainly focused just on getting rid of the homes as | | | | this PIF. However, when he tried to use it, he found out |
| quickly as possible. As you can see, the potential is | | | | that the owner of the funds had to personally approve |
| enormous. | | | | every deal before it was done, and this guy was not |
| However, in order to invest in REOs on a large scale, | | | | very quick when it came to reviewing his |
| you need large scale cash. A lender who has lost out | | | | customers’ deals. We waited nearly 3 months to |
| on a property once is not very likely to loan money on | | | | get the deal approved before we could even start |
| that property again. As a result, you need a major | | | | negotiating with the bank, and in the end the whole |
| funding source (we’re talking proof of funds in the | | | | thing fell apart because several other investors actually |
| millions in most cases) in order to even get the bank to | | | | had “ready money” and came in while we were |
| negotiate with you on a bulk REO deal. As recently as | | | | waiting and bought the properties. |
| last year, only a few sources of funding like this were | | | | Needless to say, my client was really upset. But it was |
| available. Now, however, more and more investors are | | | | all there in the fine print, and he had no recourse. If you |
| actually offering the use of their funds (for a price, of | | | | are thinking of buying a PIF, make sure that you really |
| course) in exchange for the leads on the deals. | | | | need one. See if you can partner with a private lender |
| This can be a really attractive offer if you cannot front | | | | directly so that the PIF is more under your control. You |
| the money yourself, but you need to be very clear | | | | also may have hidden assets that you can leverage to |
| about what your options are when you get involved in | | | | create your own PIF, such as a number of |
| the purchase of a proof of funds (PIF). Some private | | | | “small” retirement funds from different jobs that |
| lenders will allow you to use that PIF repeatedly as | | | | when lumped together can create some serious |
| long as you keep turning up good deals. Others limit the | | | | leverage. Buying a PIF service can be a good thing for |
| number of times you can access the PIF. Sometimes | | | | your real estate investing career, but only if you are |
| you can actually purchase individual properties from | | | | prepared to use those funds exactly how the actual |
| the lender once you have obtained the bulk deal, while | | | | owner of the money wants you to use them. |