How it works REO (Real Estate Owned) properties?

Question

Is it REO (Real Estate Owned) properties a good way to invest in a second home for rent?

I'm planning to buy a second home for investing (rent) soon in Texas. REO looks to be a good way to start in Real Estate.

Any help will be appreciated.

Ram

Cassi Justiz · Answer

There are a lot of different REO options. Generally, if you are prepared to do a little bit of work you may be able to get a decent deal on an REO property. Just know your market and make sure you don't over pay. A lot of the REOs in my market are going for full retail prices.

Also, some REO options will give owner occupants first option to put in their offers. If it doesn't have an acceptable offer then the investors have their turn to offer on it. Just make sure the agent you are working with is familiar with REO properties or they partner with someone that is. REOs have different quirks to their process that retail sales do not.

Dan Maciejewski · Answer

Not sure how the market is in your area -- in mine we are running out of REOs and the banks are waiting to get their dollar (they're closing at 99-100% of list price on average), so there's not much room for profit.  They are selling at market value, which is NOT to say that an REO wouldn't make a great rental.  You just have to run the numbers as well as with any other property.  In my market, I would advise to keep looking at everything and not narrow down to just REOs as that would severely limit your opportunities.

Good Luck!