I attended a seminar yesterday in which a very successful investor was explaining how to purchase REO/Foreclosures directly from the bank. She explained that you can buy directly from the bank and use the equity in the property you want to buy to finance the sale. I understand all of this, but what I'm not clear on is where do I go to get this funding? From who? If anyone has done this before or does this, I would be grateful for some insight and advice.
Justin, the only time this worked for me was when a family friend was in charge of the reo's for a local bank years ago and we lined up to purchase it if no one bought it at the auction. We didn't have cash for auction, but they pre-approved us to take over the loan if the guys holding the 2nd and 3rd didn't show, and they didn't. I've tried going directly through banks since and was always told I had to go through a real estate agent once it's listed, although I know they sell them off in packages to private investors, so maybe if I had funding for 10 or so, I'd get somewhere. I, too, am interested if anyone else knows how to do this.
From everything that I am seeing, banks no longer sell properties direct unless you are buying in bulk. They almost always list them with a real estate agent.
Additionally, I do not believe that lenders will finance than the purchase price which means that you cannot use any equity that may exist. For example, if the market value of a property is $200,000 but it is listed at $175,000, you cannot use the $25k equity as a down payment. You will need to come up with 20% of the $175,000 to get a conventional loan.
Justin, I'm curious....you say he explained how to do it. Did he "explain how to do it" or just say that he did do it. If he explained "how to", please share.
Less than 20-25 properties in a package, I doubt it. "Using the equity in the property" sounds like guru speak.
The strategy doesn't align with what I see in the real world. About 20 years ago, I met with a loan officer at a fairly large bank, and asked him about REO properties that I could buy. He said, "Do you want to see the list?" Ahhh, those were the days...
Now just getting someone to talk to you (let alone someone who knows what they are doing) is virtually impossible.
I think you might get some traction with this strategy at a small local bank, but the successes will be few and far between because few of the defaulted loans are with such banks.
I would love to get some REO listings in Vegas. If anyone has a connection that they could share with me it would be GREATLY appreciated. Especially, if they amend or get rid of AB284 the REO's hitting the market should increase. This would be a great opportunity for my team and I. Please contact me directly if anyone has any connection like this.
Hmmm, I thought I answered this question already. I guess it must have been one of the other 'how do I buy an unlisted REO" questions that is asked on a daily basis.
I am curious how you know she is a "very successful investor", and not just a seminar pitch woman?
I will be getting some REO;s from the bank in about 2 weeks in Vegas. You will need to be able to buy 25 at a time.
You must be a BiggerPockets member to post on the forums
Join the world's largest, most open Real Estate Investing Community online, 100% free forever!