Bulk REO Financing

Ok guys I know what you are thinking... Not another one!

I am not referring to some 500M tape of fiction, but a 47 unit block that is being unloaded by local banks here. My group will pay cash if needed, but would prefer to fund 50% of the acquisition with Hard Money for a period of 12 months at the latest. The effective ltv would be approximately 25% on the portfolio. Bid price on the lot is $10 million, we are looking to put up $5 million cash and get a loan for the other $5 million. The question is does anyone have any funding sources who would be interested?

Email me directly if you do to discuss this further.

timothyhills@comcast.net

Regards,

Tim

Although not sure where you're located, 50% ltv should not be a problem with a strong local community bank.  Have you considered looking into partnering with local Housing Authority or State under Neighborhood Stabilization Plan/Community Development Block Grant?

Best way is to find a local wealthy investor to partner with, I just helped someone do so as its the only way to get it done. I've seen to many companies say they can finance bulk reo, or large local packages, and have yet to see proof of a transaction. Or even a strong local bank, just don't talk to the normal lo inside, try to set a meeting with the VP or head banker etc.

edit - opp, I guess forget the local bank part since these are props from local banks lol.

Thanks for the feedback, I have run into many of the same issues Chris. We can pay cash, although would prefer to limit our exposure if at all possible. I am loooking at a Commercial Line of Credit with a local Private bank as an alternative to the all cash transaction. I think this route might be best for my group. Will let you all know how it turns out. 

Thanks,

Tim

Chris,

Thanks for that information. I couldn't agree more. I wanted to put my two cents in for the reader to review at their discretion.

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I'm sure you've struggled to find useful information on the subject of bulk REOs. If you read online information and know how fraudulent much of it is and you'll just have to laugh. If you've been chasing your tail trying to get the right deals, read this. I want to offer a few of my own ideas. If you have any questions, feel free to ask.

1) Firstly, there is no such thing as "bank direct" bulk REOs. Banks do not have real estate departments designed to move large packages of homes. The banks have an exit/holding company that sells their REO packages for them to weed out the real buyers for them. Each lender has between 3-5 companies they outsource who do this for them. Due to SEC laws, these companies cannot legally publish their deals in the public forum. Either you know someone in one of these holding companies or you do not but there is no chance you would find them through an online search because that goes against their legal limitations. Unfortunately, most people desiring these properties have no such way of generating these contacts even if they have done all their research and due diligence.

2) If you're buying exit/holding company direct, then you're paying 30-35 cents on the dollar for a package or you're getting it somewhere else. I have seen packages in the 70 cents on the dollar range. If you are doing that, an investor like me buys it and resells it to you thus making a ridiculous return in a short period of time and is then free from the package.

3) True exit companies sell whole pools of packages. Their is no customizing your package. Customizing is only true if you are buying your REO packages on the retail market. Again if you've found a real seller and are purchasing at more than 30-35 cents on the dollar, your package is not holding/exit company direct. You get what they have for sale and if you do not like it, you do not bid on it or you offer very little for it. Furthermore, if your package has a set price, it is not a direct source. With a direct exit/holding company source, you bid against other investors and the highest bidder wins. However, because these are not listed in public forums, typically the premium contacts win bids in the 30-35 cents on the dollar range. There is just simply not much competition for real contacts. There is only competition on the retail level for people trying to broker packages and so on and so on. If you are buying retail, then your resale market is much more difficult and you need a very strong resale program.

4) There is no such thing as a "tape". It is a made up broker word. Exit/holding companies produce deeds and keys to properties. You bid on the properties. Upon notification of a successful bid, you have one week or less to close. They give you the deeds and you do with them as you please. No where in there does a "tape" exchange hands.

5) For some reason most investors think California and Florida are the best areas. Because these have the highest retail levels of competition, they are actually the worst. As the saying goes "Buy low - Sell high". If you're looking for just California or Florida, you cannot buy low making them much lesser returns. True packages contain assortments of properties all over the country. However, we have no problem breaking down our California and Florida properties as "tapes" and reselling them to buyers who think they are more profitable than they are. Even with true exit/holding companies, there are higher bids to buy exclusively California or Florida packages. Do not get sucked into the trap. If Walmart has a sale on toilet paper, people come in just to buy it 50 cents on the dollar. If real estate does the same thing, people get scared. Do not fall into this trap. The better your purchase price going in is, the less relevant the local market conditions are. In many ways, the best deal is anywhere you can get a great buy at, irrespective of that local market.

6) Lastly, if you are looking to exploit my holding company sources then we can work together. I do not in any way represent the company I work with, thus I am not bound by any of their legal limitations. However, if you've done any research online, my contacts are nearly impossible to make. I don't give them up and I'm sure you can understand why.

The only way we can work together is if we do a joint venture. I only get paid if you do. Thus, if I have no real contacts, I cannot get paid. I do not broker deals, even though I could with the pricing I get. Every aspect of my transaction with my exit/holding company liens against my credibility. Thus I cannot afford to shop packages and have them fall through. Most brokers are using your funds to then shop as a retail level deal. I use your funds to buy deals and we share in the returns. If I didn't follow through with my purchase, I lose my credibility with the exit/holding company and the game ends. Thus, I only work with serious investors.

I have put together a few very unique things in this business for your benefit as an investor.

I have a private hard money lender who lend our purchase back as a blanket mortgage AFTER purchase. Literally, you put up the funds have them back in less than 30 days. You are still able to benefit from the residual returns. In the meantime, your capital risk is non existent. We buy with equity purchase and thus this leveraging is possible.

In the niche market of bulk REOs, I have found a specialized company that will resell the entire package for us in less than 120 days. They simply offer retail pricing to other retail level investors. We can reinvest new capital very soon afterwards but you are not obligated to do so. Without leveraging, our current clients are seeing their funds doubled in less than year. With leveraging, we can far exceed those returns. It's your choice.

I reiterate once again, every aspect of my transaction with my exit/holding company leins against my credibility. There are no misteps allowed in working with us. Therefore, proof of funds statements, LOI, NCND and all the other broker arrangements are not relevant for our transaction. You must be willing to move your real money into an escrow company of my choosing (the cheapest one for doing this) and sign a joint venture agreement. If you are at that point, let's do business. I recommend getting started with a smaller package in the $1-5 million dollar range to allow us to prove our worth as a company.

You can view a brief presentation on youtube at the link below. Please make sure to play in high quality (below the video frame click "high quality").
http://www.youtube.com/watch?v=X4pENzZUE5w

I can be reached directly via my signature below.

Best regards,

Frank Fihn
Fihn & Associates
Toll Free: 1-877-837-2652 ex703
Email: frankfihn@gmail.com

Check with Dave Kendall or Kyle Hufford.