Anyone knows how the Fannie Mae REO Pool Sale is going? Who has done it and got inside info to share?
From BP podcast show 60, the guest Serge Shukhat mentioned a group of Texas investor buying from Fannie Mae REO Pool at $1 million for 30 single houses. Sounds very interesting.
I am looking at the strategy of buying a lot of single houses quickly, renting out, and selling at the next market peak (in 15 years, maybe?). Assuming I can raise the large amount of money needed (a big if). Using MLS and real estate agent would not work. Buying from Fannie Mae REO Pool seems feasible.
Any detailed info would be greatly appreciated.
The Gaylords been buying Fannie Mae REO Pool for a long time and they will ask for a bank statement in the amount of $2 million before they will deal with you.
Here is an email I recently received from Fannie about their bulk 'deals'.
"Thank you for your interest in Fannie Mae’s Pool Sales program. This program is designed for investors who are interested in purchasing multiple Fannie Mae properties in one transaction. Pools are offered on a monthly basis and are national in scope. Current Homepath properties are not available for pool. The inventory comes from properties that did not sell on Homepath and have been removed from the site. We do not pay commissions.
·Pool Location/Size – Pool properties are identified by Fannie Mae and are grouped into sub-pools based upon their location. Sub-pools will usually include properties in multiple states and on average contain a minimum of 25 properties. We cannot help you with pools that are city, county or zip code specific. Most properties are in non metro areas. Investors must purchase all properties in a sub-pool. Custom pools and buyer select pools are not available.
·Property Condition – Properties are sold in “As Is, Where Is” condition without guaranty that insurable title will be conveyed, and no proration of real estate taxes or fees. Properties are in the bottom 15% value band for the state in which they are located. For most of the country that means that they are below $50,000. in BPO value. Average property value is around $25,000. Many properties are in poor or distressed condition. All have been on the Homepath site and the MLS for over 90 days without sale.
·Resale Restrictions – properties purchased in a pool may only be re-sold to owner occupants or rented during the first 90 days of ownership. No sales to investors are allowed during this period. After 90 days, only 20% of properties may be sold to other investors. After 1 year all restrictions fall away.
Investors who want to participate in a Fannie Mae Pool Sales must be approved by Fannie Mae before participating. Eligible buyers must have a proven track record in acquiring and managing bulk real estate transactions and have a minimum of $250,000. in available funds. All pool sales are for cash."
Joe Gore, Phil Z.: Thanks a lot for the info. Based on your info, an investor can buy maybe 30 properties for about $1M. Spend maybe up to $0.5M to renovate and then rent out the property. Sounds like a good deal. Renovating and renting out 30 properties could be challenging, needs good contractors and property management company.
You guys have any idea or experience raising money from accredited investors?
Fannie Mae clearly says that they couldn't sell the houses for even less than $50k being on the market for 90 days. Sounds like its a bulk tear-down/land deal to me.
Hmmm, you are right. Does it mean the quality of their pool sale is much worse than a year or two ago? Since 2012, the hedge funds such as Blackstone has been buying the REO houses like crazy. At the height, Blackstone was buying $100M per week. I assume they must be buying from the Fannie REO pool. It is impossible to buy so many houses in such short period of time using MLS and realtors. So now the good bargins are gone, what's left are junks? Who has the real time info?
"Average property value is around $25,000." .. Some states that might not sound bad .. but in Connecticut .. that's a tear down with little/no land value.
Also look at the resale restrictions: "properties purchased in a pool may only be re-sold to owner occupants or rented during the first 90 days of ownership. No sales to investors are allowed during this period. After 90 days, only 20% of properties may be sold to other investors."
Essentially your buying the tax burden (a liability) ..
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