How to Invest in Bulk REO and Non Performing Notes

Do you know how you can profit from bulk REO and NPN's (non performing notes) and what the difference between them is? If you are a beginner to real estate investment, understanding the differences in bulk REO and NPN's can help you determine the best way for you to make the most profit.

For one thing, bulk REO investing is becoming more popular as more banks are packaging their real-estate-owned to get foreclosures off their books. As a real estate investor, it is possible to get 50% off of the normal prices on these homes that might just need a little cosmetic work or minor repairs. You can make large profit quickly because risk is spread between real estate that has actual value and you might be able to have limited debt exposure because there are many investors that are willing to back those that are able to gain access to bulk REO sellers.

In fact, there are many people that make commission money by acting as the broker between banks and investors and this leaves no risk. When you consider 1% to 3% commission on a million dollar bulk REO package, you can see how you can make a lot of money overnight.

When considering the difference between bulk REO and NPNs, you have to be familiar with how you can make money with non-performing notes, also known as NPNs. A non-performing note is a mortgage that is at some stage of foreclosure, but not yet in the REO category. When a homeowner is obviously headed to the foreclosure stage, you might be able to make money by investing in NPNs, but the profitability and way you make profit with bulk REO and NPNs are dependent on the particular situation.

There are those that will sell these notes at deep discounts and it is possible to buy them and sell them quickly for profit. If you take this approach to dealing with NPNs, it is possible to make money quicker, without dealing with the homeowners that are behind on payments. You might be able to invest in a million dollars worth of NPNs for 20% of the unpaid principal balance, also known as the UPB. You would then sell them at 30% of the UPB to make your profit, for example.

There are a number of ways you can invest in NPN's, including the "cash for keys" strategy or the "reduce the loan principal balance" strategy, but there are some that think the differences between bulk REO and NPNs are a matter of how "hands on" or involved you want to be in the transactions and the amount of risk you are willing to take on. It is possible to make handsome profits with bulk REO and NPNs, but you need to know what you are doing.

When it comes to investing in bulk REO and NPNs, you need to get the help you need to become an expert bulk REO and NPNs investor. As these real estate investment strategies become more popular, you can choose the right niche for your short term and long term real estate investing goals, but having real and reliable sources for your bulk REOS or NPNs are an important first step you will need to address.