Copyright (c) 2009 Duncan Wierman

As the U.S. economy struggles to make a comeback, the real estate foreclosure market is still a ripe place for wealthy investors to do what they do best. Unfortunately, foreclosed homes are at an all time high, thus creating an environment for savvy investors to make a tremendous profit. Because there is such an expanding surplus of foreclosed properties, a new investment opportunity known as bulk REO investing has gained popularity as many scramble to seize this very lucrative investing moment.

REO stands for Real Estate Owned. Bulk REO investing may be a relatively new description, but it is based on an old concept: buying multiple foreclosed properties. To understand how this investing niche works, it’s important to first understand a little about the foreclosure market and why it’s such a rewarding opportunity for investors.

When a property owner fails to pay their mortgage payments, the bank or lender that owns the mortgage takes possession of the property. Depending upon who the lender is, homeowners are sometimes able to modify their loan payments in an attempt to catch up on their arrearages and continue to occupy their home. However, with a record number of jobs being currently being lost and a trend that has left many homeowners actually owing more on their homes than the properties are currently worth, many property owners are either unable to negotiate new terms with their lender or they do not feel that the home is worth the current mortgage price and they simply stop making their payments. The ensuing foreclosure process ultimately means that the property reverts back to the lender in these cases.

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In real estate investing, it will always help of you had access to REO listings. If you haven’t heard of REOs and you’re an investor that only means two things. One is you have been living in a cave for years now and two; you are missing a very rare opportunity to rake in huge money through these properties. Just why is this three-letter acronym important for you? Read on and be enlightened.

REO stands for real estate owned by lender. Real estate owned properties are very hot in today’s market. They are literally selling like hotcakes. There are various reasons why investors are snapping up these properties, which are also known as bank owned homes.  They are preferred properties because of their convenience and prices. To understand why they are convenient and cheap, it is imperative to understand house a house becomes bank owned.

Houses that are found in REO listings are properties that were repossessed by lenders from home buyers who were not able to update mortgage payments. The properties have already undergone a short sale and a foreclosure auction. And because they have gone through foreclosure, their titles are now clean of liens and claims. Investors like this feature because it lessens the paper work they have to do. Buying bank owned homes, as far as the title is concerned, is like buying a new home.

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What are the different types of real estate investing opportunities?

While the rest of the economy is in shambles, and record numbers of foreclosures make headlines, real estate investors are earning thousands of dollars by buying and selling homes. How is it possible? It seems that real estate investors know a thing or two about systems, strategies, and styles of investing that the average homeowner does not. If you are a budding real estate investor and you’re looking to invest in homes but don’t know how, here are some of the basic strategies that investors are using.

SHORT SALE: A short sale is when you purchase a home because the bank is willing to sell it for less than what is owed on it. This happens a lot because banks know that they cannot collect their entire lost amount if they have to bring a house all the way through the foreclosure process. So you can buy a home for less than what is owed, and re-sell it someone else for a profit.

REO: REO stands for “real estate owned” and this is when the bank has taken ownership of the property. When you buy the property, you are not buying it from the homeowner but rather from the bank. The banks will often let homes go because it costs them thousands of dollars to re-list and sell homes and they don’t want the non-revenue-generating real estate on their books.

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