Emco Group seeks investors to be able to continue purchasing property below market costs. We seek to give our investors a 10%-12% return of profit as well as a percentage of partnership in the property they have invested. Each deal is case specific and subject to the purchase price and the percentage that the investor inputs into the property.
Emco Group LLC seeks to purchase REO’S, foreclosures, shortsales and notes.
What is an REO?
Real estate owned known as REO is a class of property owned by a lender, typically a bank, after an unsuccessful sale at a foreclosure auction. If there are no bidders that are interested, then the bank will legally repossess the property. This is usually the case as the amount owed on the home is probably higher than the value of this foreclosure property. As soon as the bank repossess the property it is listed on their books as REO and categorized as an asset (non-performing). Usually REO properties will need work such as $5,000-$7,000 of expenses to improve and rehabilitate the property.
A bank, or mortgage lender, does not want to have a house or property on its books for long. Banks want to make money and want to invest money to make more money, as is the nature of the “world of finance”. Any house that the bank owns represents a future, potential financial investment that could be generating a profit if it invested into the stock market. Thus, as a house sits unoccupied the bank is not making any money from it and therefore it is in the best interest of the bank, or mortgage lender, to sell the house and invest the money.
Benefits Of Buying REO’S:
1. To generate a quick sale the banks work with a prospective buyer, and because of this there are many benefits to buying a REO property. Some of the major benefits are shown below:
2. Savings of up to 20% off home market values
3. Generating a quick sale for the lender is of paramount importance. Some large lenders have entire departments specifically for this type of work and therefore want to move through the backlog of properties as efficiently as possible. Added to this idea all of the problems that having a property on its balance sheet can lead to for a bank (as outlined above) and the lender will always offer a lower purchase price for the property, sometimes as large as 20% off the comparative market price of the property.
4. REO’S are the most simple way for first time homebuyers and experienced investors to buy properties
Due to the need for a quick sale the lender usually covers all taxes and other problems, such as evictions etc. making the purchase as straightforward as possible for the homebuyer.
5. Prospective buyers have immediate access to a property for inspections. All homebuyers have the right to have a house inspected by a qualified assessor or appraiser. Sometimes the sellers may only allow the inspection at certain times, due to commitments and other factors. These problems, and various others, are not of concern with a REO purchase and therefore make having an appraisal carried out easier and faster, than would normally be the case. EMCO will have an inspector go to the property before closing on it
6. No back taxes or liens to worry about
Basically this benefit means the following: No tenants to evict and no financial instrument secured by the property. This is good as it avoids all of the possible hassle and stress of hiring a company to evict any tenants. Negotiable rehabilitation costs, interest, closing points, loan amount, etc.
All of the above factors may be important to the buyer and therefore, as the lender wants a quick sale, all of the costs, interest etc. can be negotiated, usually for better terms than in a normal purchase and almost 100% risk-free
When a bank repossesses a home it always provides a good, clear title. What this means is that when you buy the house you know that it is yours and not someone else’s i.e. there is no ambiguity about the ownership of the property.
What is a Foreclosure?
Default on mortgage payments to the bank will result in a foreclosure. At this point, the bank claims ownership of the property and homeowner is evicted. Looking at the benefits of the REO purchase and what you are liable for in a foreclosure sale may leave a person wondering what is the point of a foreclosure sale, as the negatives seem way worse than the positives, especially when compeered to a REO sale. Whilst this is true and is a valid point, one of the main benefits of a foreclosure purchase is that buying from foreclosing lenders often means that they will offer easy financing to quickly get rid of a property they don’t want to own. If the property is in especially bad condition then they may even give a very favorable price.
However, since what is owed to the bank is almost always more than what the property is worth, very few foreclosure auctions result in a successful sale. This type of purchase is more favorable to investors rather than homebuyers because normally the tenants will wish to live in the house and pay rent, rather than move (as they may not have the finances) and so buying a foreclosure property may be a good start to renting property, as you already have tenants. The foreclosure of homes is very common due to a loss of job, divorce, family death etc. thereby causing the owner to default on payments.
Why invest in a short sale? In order for a homeowner not to enter the foreclosure process they have the option to sell their home below market value assuming they have equity in their home. In the short sale process one will have the opportunity to work directly with the seller, inspect the property and work with the BPO.
Buying non performing notes:
- We get notes at 20-25% of market value
- It helps the homeowner in the modification process
- It can assist a home owner receive a deed in luei
- It assists in the short sale process
- Gives the homeowner the ability to get “cash for keys”