You can use BULK REO pools to sky rocket your real estate investing business in many ways.
Go here and check out this quick video before you even read the rest of this article.
http://rapidreiresults.com/bulkreo
I did not come up with the term “Toll Booth”. I learned it from a marketing mentor by the name of Dan Kennedy many years ago. I believe he learned it from someone else as well and it’s a great concept.
I have a quick question for you.
Have you ever thought about why the banks are so stupid and do not just GIVE you their properties to sell? Well, not give them, but create a significant discount right off the bat so you don’t have to go back and forth with them for several months. You know, the type of a discount where you can make money and they can get it off their books quickly…
I mean, wouldn’t it be easier to sell something if you had multiple properties, be that residential, small apartments or commercial properties. Well, you can with BULK REO pools and you need to be the owner of the pool to get the full benefit of this.
If you regularly pick up a package of properties, then you could march all of your buyers or potential tenants through all of the properties and surely they would find one that fits what they are looking for, especially if you target your marketing effectively.
Realtors know this, that’s why most of them strive to get as many listings as they possibly can. Right?
It makes sense too! If they have the most properties listed, they become the toll booth for the buyers to get through. It doesn’t matter if the buyer is working with another Realtor either. That’s why they have the MLS right? It’s called broker reciprocity for a reason. They hope to reciprocate that “Love” to another broker at some point and expect the same from another.
Now… the smart ones get as many listings as possible and get as many buyers as possible and show them their properties first. This is especially true in the commercial market. Many commercial properties don’t even get floated out to the public. Why? Because, if people get wind of a potential sale in a commercial building, tenants are more likely to move out. Not good for the value of the building. As Net Operating Income goes down (as tenants move out and are not replaced) the calculation of the value of the property plummets as well.
So, these commercial deals often remain hidden from most people’s view.
Another thing the really smart one’s do is they offer an added incentive to any broker that brings them a buyer.
You can do this too as an investor!! You could offer a Realtor and added incentive to bring you a buyer.
You could also offer an added incentive to the actual buyer.
What would it really “COST” you to throw in a brand new HD Flat PANEL LCD TV? $500-1000. What if it kept you from holding that property for another 1-3 months? Did it cost you anything there?
Try this on for size. The next time you have a property to sell, put an ad out that states “Free HDTV with Purchase” and see how many more people you get to call or e-mail you. If you were with me for the SIMS promotion several weeks ago, you know I gave you a link to watch the “Property Launch Formula”. That is one of the key concepts discussed in there. Adding incentives to get people to your buying event. It’s called event based marketing… but I digress.
So, suffice it to say, becoming a “toll booth” for your specific real estate niche is a really good position to be in.
I regularly do this with lease option buyers in my area. I have about 1500 of these that have registered on my site this year. The only problem is, I can’t help all of them.
It takes time to talk to all of those people. So, I have much of that part of the business automated. They register on my website, they read my automated e-mail sequence, they look at the properties online and find out where the properties are and go look at them before they ever call me. They can call me and some do because they would rather do that, and that is fine. Sometimes they do that just to see if someone will actually answer the phone. I typically make them go to voicemail at first though. I’ve probably lost a prospect or two here and there because of this, but that’s OK. I choose to do that rather than be on the phone with people 24/7. That’s part of a lifestyle choice I have made.
Back to our discussion about the banks being stupid though.
I have news for you, MOST of them are not stupid!! They are just as concerned about the real estate market as you are. They really do NOT want to own this real estate.
BUT… they have a catch 22… and it is a BIG one!!!
If they take all of the REOs they have on their books and just shove them all on the market at the same time, the real estate market will plummet again… and it would likely happen very quickly. They are trying to help keep prices up as close to the REAL value as possible… not the INFLATED value… the real value based on the cost to build and the “Normal” amount of demand.
So, what are they supposed to do?
Well, in my search for this answer, almost 2 years ago I was introduced to a concept that I knew SHOULD exist but didn’t know how to do it or if it really did exist.
It’s known as Bulk REO trading and Bulk Note Purchasing.
It really is a cool concept and does allow you to become a toll booth. It’s off the radar of most investors because it takes some finesse to get into it. I bought a course from a big hedge fund that was looking for people to bring them deals. I went through all of it and started to implement a bunch of it last year. To my amazement, bank executives really would talk to me. They did their due diligence on my company too.
It was a very interesting experiment. I call it an experiment because it’s a business model that I did not pursue much but I did get a hold of several tapes to review and submitted a few to the hedge fund I was working with at the time. Sometimes you get distracted by something and you have to refocus on your core business. That’s what I had to do at that time so I put it on the shelf but I’m confident it works and I am still contacted occasionally by people that have tapes they are selling, all from the efforts I put forth a year ago. In fact, the frequency of these contacts is starting to heat up and I am preparing to get back on this train because I think it will be a very lucrative route for the next few years. It also fits in very nicely with the commercial deal funding I’m working on right now. It’s another piece to the ever growing puzzle that is real estate investing.
If you would like to hear more about the tapes I come across or more about BULK REO investing or BULK REO Trading, join my list for this topic at the link below.
I don’t have a pool for you to look at the moment I’m writing this, but that can change and you don’t want to miss these deals. I’m talking some properties as low as $5K – 10K.
http://rapidreiresults.com/wordpress/bulk-reo-package-available/
None of the stuff I submitted worked out for their portfolio… well, actually one did, but it worked out for someone else. I don’t know if they ended up buying anything or not from that REO pool, I just know that another student had submitted that same tape to the hedge fund, which kind of blew for me, but I just moved on. It was the first bank I called too! I really couldn’t believe that I developed the relationship over the phone and through e-mail and managed to get a crack at their BULK REO pool. It had some very good potential deals on it too. Nothing I wanted to own at the time because of location, but very good stuff.
That would have just been beginners luck right if I had gotten that first deal right there?
Of course that first Bulk REO Deal one wasn’t going to work out.
It was NOT beginners luck though. I know the right people to contact, not the names but who to ask for, I know what the key words are that they need to hear to know what I’m talking about, and I also know how to ask the right questions in the right context. Then I stayed in touch with this banker until the tape was ready to be released so the banker would not forget about me.
That experience inspired me to keep after it though. Found a couple more banks with pools and started to do my own analysis of the tapes because I knew the hedge fund I was working with would not be interested, but my partner and I may have been.
Back to the topic at hand. Can you see how getting a pool of REO properties in your inventory would make you the toll booth? What if you grabbed a Bulk REO pool of 30-40 properties, half rented already so you know you have some revenue coming in, the rest needing some varying amounts of repairs before they could be rented, or you could wholesale them.
So, you have 15-20 properties you could dispose of via fast sale or rent and get some immediate cash and you get a nice little rental portfolio, all in the blink of an eye or build a massive wholesale buyers list because you have actual product for them to look at. Of course, blink of an eye is a relative term. It’s faster than buying 30-40 properties individually, but still has standard closing time frames, but then it’s all done, instant empire. Well, not quite an empire, but you see where this is going right?
You are probably saying, yeah, but I just need the funding.
Well, stay tuned this week. I’m going to give you some more ideas for funding.
The example above was the size of one of the pools I looked at last summer, and that was the scenario. The one’s that needed work though needed a lot of work and we were not willing to spend that much time managing that project. It could have been a very good deal though.
One funding option, I have the funding for you, at least a portion of it. Now, this is not 100% financing and you do need to qualify for it, but it’s better than the alternative. Just let me know if you are qualified and want to explore this. YOu need to have a good exit plan though… ie. this is not for a newbie. If you are a newbie, you better have someone on your team that is NOT a newbie and has ample experience in real estate, not necessarily BULK REO, but at least some form of purchasing distressed real estate. As the deal size gets bigger, yes, the experience level WILL be a factor.
I also have some cool resources for you to check out starting tonight at midnight EST. That’s the earliest I can share it with you. It will teach you more about the Bulk REO market and how you can get involved in it.
I will further share SOME of my own experiences with you even though they are limited, and give you some recommendations if you want to check this asset class out.
So, ask yourself, who has the toll booth in your market? Is there a dominant wholesaler who always has tons of properties? Are they buying them one by one? Want to become like that person very quickly? Join my BULK REO INVESTING and BULK REO Trading newsletter list below.
http://rapidreiresults.com/wordpress/bulk-reo-package-available/
Good luck in your pursuit of BULK REO investing if that is a niche you decide to go after.
