Advanced Acquisition Strategies for Wholesaling REOs
Where can investors find better house deals for wholesaling real estate and REOs?
According to recent stats, flipping houses is up 25% in 2012 and quite likely much more. This surge in flipping plus a huge appetite for distressed properties and foreclosures from giant billion dollar private equity firms has really put the squeeze on some investors’ acquisition strategies.
So, where can real estate investors find better deals on foreclosure properties for wholesaling REOs if public auctions and new public MLS listings are just too competitive and lack the spreads needed to make big profits in an acceptable amount of time?
Many investors, including even veteran pros, continue to overlook the massive availability and potential of HUD homes. HUD homes are those foreclosures which were taken possession of for defaults on properties which had FHA guaranteed loans on them. These properties are sold through an online auction and bidding system and frequently offer sizable discounts, often on homes which have had considerable rehab work already done to them. Better yet, they require very little deposit to be taken off the market, making them a great choice for those looking for no money down real estate deals or who are working with very limited resources.
Another, more advanced acquisition strategy for acquiring distressed properties and beating out the heavy competition at auctions or realtor held listings, is to go straight to the bank and find off-market homes. Wholesaling REOs in this way can mean tapping into a steady stream of deals with little effort, once supply lines are established and being able to negotiate even bigger discounts due to a lack of competition. The key here is getting higher level contacts and jumping over the low level customer service teams who have little knowledge of them or power to cut deals.
Another angle on this strategy for finding and wholesaling REOs is to tap into other off-market properties before they even become REOs. Many struggling homeowners don’t want to publicly list their homes and let everyone know they are in trouble and want to maintain their privacy. Still, these distressed homes can easily be identified in a number of ways and homeowners approached directly. Additionally, realtors may have pocket listings on these pre-foreclosure homes and even existing REOs, either because they are protecting client privacy or they want to keep all of the commission to themselves. So building relationships with local real estate agents can be a smart move, even if you don’t always enjoy working with them.
Finally, truly advanced and forward thinking investors are now going even further in their mission to jump the lines of competition and beat others to the best deals by taking these properties down as non-performing mortgage notes. Wholesaling mortgage notes themselves can be a very profitable business by itself, though in some cases it can also pay to choose select properties to foreclose on or to approve short sales on for providing quick paydays with big lump sums of cash.
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