Using REO Listings in Real Estate Investing

Using REO Listings in Real Estate Investing

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.

But what real estate investors really like about these real estate owned properties is their under-the-market value. The logic behind this is simple: banks don't want these properties in their inventories. First of all, banks are not naturally inclined to selling houses; their business is lending. Second, huge REO listings could backfire on banks. These inventories could affect their ratings and how people perceive them as lenders. Take note that REOs could give the impression that a bank is not careful in screening loan applicants, who later on defaulted on their loans.

Bank owned homes are also hot because they can be used in various real estate investing methods. One is rehabbing. In this method, the investor will buy an REO, make the necessary repairs and improvements to raise the property's value, and then sell it at a high retail price. Or, the investor could also choose to use it as a rental property. Since prices of REOs are hugely discounted, the waiting time for the return of investment in rental properties is greatly lessened.

Want to search for REO listings? Go to RehabList.com and find properties in your area today.

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