How to Buy Bulk Foreclosed Home
I bring this subject to the forum because I believe this method of buying foreclosures affords you the best profit potential. It isn’t going to be for everyone, however in may be something to shoot for in the future. Charlie
Investors regard the possibility of buying foreclosed homes in bulk as a profitable venture. Buying these homes in bulk, renovating, then reselling or renting them out provides a business model that can bring significant financial gain. When a severely depressed housing market exists, buying foreclosed homes in bulk presents a good investment opportunity for buyers and mortgage lenders benefit from these transactions as well.
Put together a partnership of investors to invest in a bulk purchase of foreclosed homes. Banks work with investor groups, and often seek them out, encouraging them to buy groups of foreclosed properties that they want to sell quickly. Divide the partnership duties amongst the partners. Work with a lawyer to draw up a contract, which specifies the responsibilities of each partner, how the partnership will arrive at decisions, how the partnership will distribute profits, and any other issues that the lawyer feels should exist in the agreement. Register the partnership with the Internal Revenue Service (IRS) to receive an EIN tax number, and open a bank account.
Look into the options of working with a foreclosure workout specialist. These companies act as "go-betweens," working with banks and the buyers of bulk foreclosed properties. They expedite the purchase process by locating lending institutions with bulk foreclosed homes for sale. They also assist the buyers in obtaining the best bank deals when purchasing the properties.
Determine the goals of the bulk purchase of homes. Some companies buy foreclosed homes in bulk and resell them immediately, without doing any sort of repairs or renovations. Other companies repair and renovate the foreclosed homes after purchase, and then rent or resell them. The first option provides an easier profit with less effort, but buyers who repair the homes first, believe it ultimately, results in a higher profit margin.
Ascertain the asking price for a bulk purchase of foreclosed homes. Lending institutions that own these homes want to sell them quickly, and will frequently give the buyers a break on the interest rate or down payment, often even waiving some closing costs. These homes have no taxes-owed or liens on them, and the lending institution might agree to finance the bulk purchase at a below-market rate. Also, houses that go through the appraisal process as part of the foreclosure proceedings don't need appraisals as part of their resale, so the buyers of a group of foreclosed homes can also eliminate the appraisal fees on lender-owned homes.
Investigate bank credit for bulk buys of foreclosed homes. Investment groups with a large amount of equity in other investments may receive a line of credit from the bank, which owns the REO (real estate owned) foreclosed properties, allowing them needed credit to buy the homes in a bulk purchase.
If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125