How to Effectively Buy and Sell Bank Bulk REO and NPN

Don’t you just find it amazing how some people still claim they have a buyer to take down a billion dollar Bulk REO tape and that they need to close fast. Are these people taking some type of medication that clouds their sense of reasoning? Do you truly believe that any given regional bank keeps this amount of toxic assets? Have you even broken this down into numbers and stepped back to consider the amount of Real Estate property this would entail?

Unfortunately, most new comers to the world of Bulk REO (bank owned properties sold in bulk packages or tapes) feel that real players will pay more attention to them if they bounce around the word “billions”. The truth is that the majority of real Bulk REO packages range from as little as $100K to an average of $15MM. These tapes normally contain 10 to 300 properties.

These realistic numbers open a window of opportunity for every level of investor out there. If you have been kissing your local reo agent’s butt for a meager property here and there at almost retail price, you really need to look into Bank Bulk REO and NPN (non performing notes) investing. The profits here dwarf anything you would attain with your local Realtor and you do not have to kiss any body parts for it.

Gurus have taught us to approach the local banks and credit unions directly to solicit Bulk REO and/or NPN product. This really is not a good idea, you control nothing when dealing with a bank, plus at the end of the day you are still negotiating with a salaried employee. Dealing directly with a bank will not guarantee you the best deal. Banks give their “best deals” to larger institutions such as other banks and hedge funds with which they have established relationships.

Contrary to popular belief, the best deals are secured when dealing with Bulk REO Traders. These individuals or companies have done the dirty work for you and negotiated the best price possible with the banks. Another advantage of dealing with traders is not having all the pressures and paperwork imposed by banks. Plus you get exactly what you paid for; most of them allow you to “cherry pick”.

That sounds easy enough, but if it was this easy then everyone would be doing it.

The toughest part of investing in Bulk REO and NPN is finding a real source with real product that has not been shopped and blasted all over the web.Use the internet to your advantage, search the name of the “mandate” or broker. Make sure he shows up related to the industry in several credible sites. Also make sure that he has not been blacklisted everywhere. After the research, use your common sense and feel the person out; does he know the business, does he at least sound like he knows what he’s talking about, etc.

With some help from Google and good use of your common sense, you will be able to determine if you have found the real source for Bulk REO and NPN product. Once you do, be ready to “proof up” (provide a verifiable proof of funds). No reputable mandate or asset manager will send out their tapes unless they know you are financially capable of taking down the package. It does not have to be bank statements; it can be a simple 3 line letter from your banking officer.If your new found Bulk REO source does not have what you are looking for, don’t give up. These mandates or companies usually have new product every month, just make it a habit of following up with them.

Word of caution; do not get caught in the “I want to build a dream tape with properties located within driving distance of my home”. This will NOT happen and it is NOT real, also don’t expect to find high end condos in South Beach within these tapes.

People please wake up and come back to reality, bank tapes are composed of aged old assets that the lender can not sell off through the MLS or Multiple Listing Service. Think about it, why would a bank package into a discounted tape nice clean property that they can get top retail dollar via the MLS. If it doesn’t make sense to you, why would it make sense to the bank?

You can still make a handsome profit investing into these bank’s toxic assets. All you are doing is buying cheap, selling cheap and still rack up trucks full of dollars for yourself.

That sounds very nice Ray Piel, but how do I sell something that’s across the country which I have never seen?

Good question, do as our company and the banks do!

Stay with me for a minute… To run your due diligence, you normally will hire a third party to get you a BPO or Broker Price Opinion of the properties. These BPOs are performed by local licensed Real Estate Agents or REO Agents. The competition is tough for these agents to get hired to do these BPOs, meaning that the ones that get the jobs are the sharpest of the group.

Here’s the answer to the question… Hire the same agent that does your BPO to list and sell the property for you. This agent can also help you maintain and protect your investment during the sales process.

Don’t complicate it more than it is, on your first run you may feel a bit overwhelmed; I sure did. But like anything else in life, after a couple of transactions, you will be a seasoned Bulk REO investor putting millions back in your pocket.

This amazing opportunity to make this kind of money in such a short amount of time will not be around forever. Stop seating on the sidelines watching people who are no different or smarter than you make all the money.

Go invest in Bulk REO and/or NPN and make a million bucks before the end of 2010.