What’s A Great Strategy To Purchase Bulk REO’s For The Everyday

What’s A Great Strategy To Purchase Bulk REO’s For The Everyday Real Estate Investor?

Truly, there’s no one strategy that trumps them all.  But, a great way to get a hold of several REO properties at a time is to do the following:

1. Build up a good relationship with one or several banks (good relationships… get to know the people working there by a first name basis).  Usually local and regional banks are great places to start.
2. After you have a good relationship with your banker, tell them that you invest in real estate and would love to chat w/ their REO disposition supervisor … (the highest up person you can talk to that has the last say on REO sales).
3. Make sure you have the financing to be able to close deals fast and start off by purchasing REO properties one at a time from the bank.  This is where you build their trust and show them that you have the money to close fast and are the real deal.  If you get an offer accepted you better be able to close on it or you can kiss future deals from the bank goodbuy.
4. Once you have a property or two under your belt with the bank, it’s time to start thinking like a Fortune 500 corporation .
5. Find out when the banks financial quarter ends. This is where they report their quarterly earnings and financials… and when most of upper management get evaluated for bonuses.  Just like any business, banks don’t want to have these underperforming assets on their books… especially when their earnings reports are due (they need to keep their investors happy).
6. Leverage your relationship and your knowledge of their quarterly report timeline and come to them a few weeks to 1 month before their quarter ends and let them know you’re interested in purchasing several of their underperforming assets (REO properties) and would like to look at the REO properties available.
7. Analyze the properties, determine what you need to get them for, and put in your second (or third) best offer (never give your best offer first… do I really have to tell you that? ;-).
8. Negotiate until it’s a win-win. .. and you walk away with several properties at below market value… the bank walks away with those properties off of their books just in time for their quarterly earnings reports to shareholders.

In essence, companies who have investors have to please their investors.  Investors don’t like to see poor financials… so companies will often take a lower price on these properties so they can boost their financials in time for the end of the quarter.