| A bank or mortgage company forecloses on a | | | | handful of asset managers, companies that buy these |
| property. After a few months of legal hassles, the | | | | old REO properties in bulk, that lenders turn to when |
| lender finally gets clear title to the property and hires a | | | | they absolutely must liquidate the non-performing |
| local real estate agent. Of course, the lender, at this | | | | assets. These asset managing companies turn around |
| point, wants to try and recover almost all of the | | | | and sell, in bulk, to a "secret" list of private, seasoned |
| money lent on the property. | | | | investors who actually purchase 50 to 100 to 400 |
| 6 months or a year go by and this period is full of price | | | | houses at a time. |
| reductions and repairs to the property. The property | | | | And guess what? These investors are able to |
| may have been vandalized, lived in by squatters, had | | | | purchase these homes, on average, for $2350 to |
| new carpet and paint, even had new landscaping. The | | | | $5000 per house! I kid you not. I actually spoke to an |
| problem is usually that the lender refuses to set the | | | | investor who bought around 182 houses direct from |
| price where it should be so the property, although | | | | Fannie Mae for $400,000. You do the math. That is |
| shown many times, continues to sit on the market. | | | | under $2500 per house. |
| There is a hidden time limit for this lender. Does you | | | | The thing about this kind of setup is that the investor |
| know how long it is? How long can the lender keep a | | | | must buy all of the homes in a package - whether |
| non-performing asset on its' books? How long can the | | | | they are vacant lots, burnouts, or condemned. AND - |
| property be an REO? We aren't talking about | | | | they are not in one location but spread out all over the |
| government foreclosures here (FHA and VA loans), | | | | country. That's why the average price per home is so |
| the government can keep them forever. We are | | | | cheap...to spread the risk. But, these homes have all |
| talking about bank or lender owned foreclosures. | | | | been in an MLS system somewhere - they were all |
| I have a done a little research and it appears that the | | | | REO properties at one time - so there is a way to find |
| time limit that a private lender can keep an REO on its' | | | | the market value pretty easily: Call a local agent! |
| books is 2 years plus or minus a little. | | | | AND since the investor may live in Maine or south |
| The questions is... What happens to the house or | | | | Florida, he or she will also call a local agent to list these |
| property AFTER the statutory time period has expired | | | | properties. They usually pay a high commission |
| and the lender is forced to "get rid of the property at | | | | because the price will be low and because they have |
| any price"? | | | | very little invested in the house. |
| Unfortunately, researching this topic has produced very | | | | One other little tidbit I found out: a lot of the packages |
| little in the way of usable results. However, I did happen | | | | that these asset managers sell consist of only 10 or 20 |
| upon a few references . Apparently there really is a | | | | homes. Think about that. You could buy 10 homes for |
| place that lenders can "dump" their old REO inventory | | | | $30,000 or $40,000. While some of them may not be |
| as a last measure. And, they dump them at dirt cheap | | | | the jewels you would want, several of them will |
| prices - usually for thess than lot value. | | | | always be great fix and flip homes that will sell for as |
| My research has found that there appears to be a | | | | much as you paid for the entire package. |