September 2010

Data.gov – A Cool Site With Lots Of Great Info

http://www.Data.gov I just found this site and wanted to share it.  It has a ton of info and reports.  If you have a project or just an “inquiring mind”, this is sure to be a hit.  Check it out and get the data you need.

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Homepath.com is Fannie’s Foreclosure Portal

Fannie Mae posts their foreclosured properties with a Realtor of their choice and also on http://www.HomePath.com.  What is cool about a Homepath property is that many times they will qualify for Homepath loans (requiring only 3% down) and no appraisal.  They also have a homepath Renovation loan.  There is a program called FirstLook, which allows certain selected developers and non profits to purchase these homes for rehabilitation first, so you might loose a home that is really a good deal. Still, don’t let this deter you.  I recently sold a home in Brooklyn Center that was a HomePath property.  It was pretty nice, just a little dirty. Because it was in very good shape, we were able to use FHA financing.  I’ve found that FHA financing is cheaper than Homepath with a minimum down payment.  We’ll have to see if that changes in the future.

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REO Listings and How You Can Find Them Yourself

By Anthony Aires

REO listings are highly visible these days, though they were difficult entities to access a few years ago. Today, people have the knowledge to distinguish between foreclosures and REO bank owned properties. As a result, those interested in REO houses search for specific real estate owned listings at different places and not the foreclosure listings.

Finding listing of REO properties is of interest to direct investors and the REO brokers. So, here is a discussion on how to find these listings and how to use them for REO investing.

REO Listings for Investors

REO brokers are the best source for the investors to find real estate owned listings. As an investor, you must search for a reliable broker dealing in bulk REO properties and sign-up with their services to receive the regular updates on REOs available in the market. Here are some tips to find brokers offering these listings:

• Choose the broker offering listings even in the smallest towns in your region.

• A broker should offer all types of details of the REO property.

• You may also be interested in the brokers offering bulk REO listings available with a seller.

• Consider the reputation of the broker before trusting on the listings offered by him.

Finally, always try to take recommendations from people around you and also from the regular REO investors about the REO brokers in your area.

REO Listings for Brokers

If you are an REO broker, you can obtain REO listings in a number of ways. Getting registered with the asset management companies is the most popular way to obtain these listings. These companies are hired by the banks to help them dispose off the REO properties. You may also subscribe to the services of banks that don’t hire asset management companies but deal with REO properties of their own.

Another way to obtain real estate owned listings is by maintaining good contacts with the asset managers. It is important to build and maintain relationships with the asset managers who give preference to inform you about the latest REO properties added to the listings. You can ask your fellow brokers to recommend your broker service to the asset managers. In fact, being a part of the brokers’ network should help you obtain REO listings. You can learn even more tips in this direction by joining an REO broker training program.

How REO Listings Help?

REO listings help the investors learn about the latest bulk REO properties available for sale. As an investor, you can use these listings to compare the different types of REO houses on the basis of their location, space available with each one of them, number of bedrooms and other such things.

Before you go through the real etate owned listings, it is important that you assess your financial conditions. You must set a budget to set the price you can spend as investment in the REO properties. This will help you choose the listings that have properties matching your budget limits.

You indeed need to spend time and efforts to scan different REO listings available on the web. REO properties are hot and happening investment options and you must search for them at the right places.

Anthony Aires here and I want to help you learn more about REO Listings and how you can find them for yourself. Simply Click Here

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Why You Should Invest in REO Companies & REO Properties

By John C Hanlin

What are REO Properties?

“REO” is an acronym that stands for “Real Estate Owned” properties. A loose definition is: homes that have been foreclosed upon and subsequently become the property of the foreclosing bank or lender. REO properties are also known as bank owned residential property, bank REOs, house foreclosures, etc. “REO companies” are businesses that deal exclusively with these investments.

A New Industry Is Born:

Foreclosure has been front page news across America for the past couple of years. And this phenomenon is expected to continue unabated for the next 2-3 years, if not longer. And, as a result, foreclosure property investment has become an industry unto itself. This article is written to help investors understand the REO properties business and most importantly, the best way to profit from this tremendous opportunity: by investing in “specialized REO companies” .

Today, at any point in time, there are several MILLION homes in various stages of foreclosure. As a result, companies that are completely dedicated to the acquisition and resale of REO & bank owned residential property have been springing up all around the United States. These are called “REO companies” or “REO asset management companies”.

Specialized REO Companies Emerge:

As foreclosure properties were just beginning to grab headlines, various investors and real estate professionals began to approach banks and lenders for their lists of bank REOs. When the banks supplied these lists, they also provided the selling prices that they would accept for those homes. There was some negotiation room at that time, but the banks weren’t really willing to drop their prices too much below the amount of their original loans to the former homeowners. At the time, making a foreclosure property investment was basically an informal process done on a bank-by-bank, house-by-house basis.

However, that changed when foreclosures began to sweep across the US like a tidal wave. Banks and other lenders were literally being inundated with foreclosure properties every week and began to seek means to cut their losses and unload these bank REOs. This is because it costs money to hold onto a house with no payments coming in. The banks and other lenders still have to continue to pay fire insurance, maintenance, utilities and numerous other expenses on every one of their REO properties. As a result, they began to reduce their asking prices and became more willing to negotiate in order to unload their ever-increasing inventories — thus, an industry was born.

So, in the American entrepreneurial spirit, specialized new companies began to take shape. These new “REO companies” deal only with “distressed” real estate, including bank owned residential property, homes in various stages of foreclosure and homes that are in jeopardy of foreclosure. An over-simplified description of their business model is that they acquire bank REOs well below the current market value, repair them to “move-in” condition and resell them as soon as possible at a profit.

There are a lot of businesses that like to consider themselves “REO asset management companies”. However, most are not making any money. This is because they lack one or more of the following: experience, strong management, funding/cash flow, relationships with banks and lenders, networks of realtors, contractors and appraisers, etc. However, the REO companies that ARE profitable have ALL of these attributes and proven business processes as outlined below:

What Successful REO Asset Management Companies Do:

1) They request lists of bank owned residential property from their bank and lender contacts. These lists are often provided to these companies before they are released to the general public because they typically will buy in bulk and can quickly reduce the inventory of bank REOs significantly.

2) The best REO asset management companies have networks of associates “on the ground” around the country that physically inspect each of the foreclosure homes individually. They create a file for each property, describing its condition and all relevant details regarding repairs that need to be made and any other pertinent issues (complete with photographs).

3) They have a network of appraisers who will provide a “BPO” (broker price opinion) for each of the REO properties based on its current market value in “as is” condition. This will help them formulate their purchase price offer to the bank.

4) Next, the REO companies will submit their offers to the banks for each bank owned residential property that they believe has good resale potential. NOTE: offers will typically be no greater than 50-65% of the calculated current market resale value of the home. (This is where they make their money!)

5) Upon bank approval, the bank REOs are purchased.

6) Then, the REO asset management companies send in their networks of building contractors to make any necessary repairs to get the former REO properties into “move-in” condition.

7) Finally, the homes are listed for sale via their affiliated real estate brokers around the country. The properties are then typically priced under current market value in order to resell the the former REO properties quickly.

And, believe it or not, some of these REO companies are so efficient that they can buy, repair and resell these home in an average of 4-6 months!

How To Invest In Successful REO Companies:

Professional REO asset management companies will set out to acquire what is called an “investment pool” of bank owned residential property. Typically, they will first seek out investors as “silent partners” to raise a certain amount of capital to help fund the pool. For an example, let’s say they will raise $5,000,000. (This is money from investors like you and me.) The silent investors are not involved in the day-to-day management of the pool. It is a “passive” investment for them.

Once the $5,000,000 is raised from investors, the REO companies will usually go to their lending institution(s) and initiate a new loan for an additional amount of capital — leveraging the $5,000,000 of investor money that they have raised. Let’s say that is another $10,000,000. Now, they have a total of $15,000,000 in buying power with which to acquire bank REOs for their investment pool of homes.

Next, the REO companies will begin the processes listed above in Steps 1-7. They will purchase the “cream of the crop” from the bank REO lists until they reach their $15,000,000 limit. Now they have acquired their pool of homes. (Let’s say 100 homes, averaging $150,000 each.)

As an investor, you would now be invested in this pool of REO properties. When all 100 homes in the pool are finally sold (often within 4-6 months), the pool is closed. At that time, the $10,000,000 loan is repaid and the investors are repaid their original investments (totalling $5,000,000). Finally, net profits are calculated and investors are paid their pro-rated share of the profit.

NOTE: It is not uncommon for the top REO companies to payout HIGH double digit returns in just 4-6 months!

About the author:

John Hanlin is an Independent Investment Consultant specializing in high yield safe investments secured by real estate. He is a seasoned investor of over 25 years. Mr. Hanlin is the owner of the investors’ website: http://www.JohnHanlin.com.

To learn more about investing in REO Companies & REO properties, click on this link: CONTACT FORM

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