Buying REO Foreclosures - The Best Way to Invest in Real Estate

An REO is real estate owned by the bank. The term REO can be defined as a specific type of property, but in real estate this acronym actually indicates that the property in question has been foreclosed on and has been taken back by the mortgage lender or trustee.


Over the past few years, buying
REO foreclosures has gone though a dramatic change and has witnessed a steep rise in sales. In comparison to other forms of real estate investments, bank foreclosures are creating many new wealthy investors due to the potential return on investment these homes can generate. In addition, the number of bank foreclosures has increased dramatically in numbers which allows buyers to hand pick properties that meet their specific needs and investment purposes. In the marketplace today, investing in REO foreclosures has become a lucrative business for real estate investors.

Benefits of Buying REO Foreclosures
Buying REOs can be a very lucrative investment opportunity and a great way to get the best deal on a new house. There are a variety of benefits to buying REOs including:

Minimum Risk - Among the different types of bank foreclosed properties - pre-foreclosures, foreclosure at auctions or HUD foreclosures -- REOs offer the buyer the least amount of investment risk. REOs are generally properties that have survived a foreclosure auction and now belong in the lender's inventory of non-performing assets. The banks maintain these properties and generally are free of liens and other encomberances.

Availability - Compared to other foreclosure properties, REOs are easier to locate. All you need to do is to contact a mortgage company or bank. They will provide you with a list of REOs in your area. Many banks have their own REO Departments and agents that will work with you directly to find properties available.

Below Market Value - One of the prime benefits of buying a REO property is most REO properties are available at below market value. The reason for this is that the bank is liable for the taxes on the property and they generally prefer to sell it to you at below market value and get it off their books.

Great ROI-Return on Investment - Reselling a foreclosure home can provide a great return on your investment. You may not be interested in buying a foreclosure property for yourself, but you still have the option to make a profit by reselling it. After all, this has been the most frequent practice used by many real estate agents to generate income. Moreover, a little renovation work can further add to the value of the property and generate higher returns.

Buying foreclosure properties is one of the best ways to generate profit in the real estate market today. However, before you finalize your purchase, make sure you do your due diligence and research the property so you feel comfortable with the purchase. It's important to research as much as you can about the area, current housing prices, planned developments, proximity to stores, the town, etc. This research can save you many headaches and problems down the road.