Shadow Inventory ... A Secret Goldmine For Wholesalers!

The shadow properties also have winterized stickers on them with the name of the company that secured and winterized the property. The asset manager for the property contacts a property preservation company in the area to preserve and winterize the property. I know because I recently started a property preservation and maintenance company here in NJ ( hey if you can't beat em join em right?...lol) We get calls from agents as well as asset managers from the banks inquiring about our services. I suggest you call the maintenance company and explain to them you are interested in purchasing the property and would like the number of the asset managers. Many willingly give out that info.

Hi Carol and thanks for another bombastic post! I will definitely begin to look out for the "shadow" inventory here in Philly. I know you already have this area pretty much locked down...I mean between you and Larry F., but I don't need a huge slice to start. lol

Great to know you're still in the trenches even while you teach us and give such valuable info. Continued success to you and your team.

Ogal Gaines (your biggest fan)
LAGO Acquisition, LLC

In reference to my situation described in post #18, anyone have any ideas how to break the fax wall? No stickers on the house as they don't get winterized here because the temp doesn't go below 50.

They still have to get secured and maintained by a local company. The grass mowed, board up if needed, locks changed etc...

Banks don't leave their properties out in Dixie Land with no one maintaining them. They will get fined by the city if things get overgrown etc,...

I'm On It! But Keep It A Secret! Don't Tell Anyone Else! (Kidding!)

thank you Carol for this great information on shadow properties; I do see them around in my area, but I wasn't sure if we could approach the banks about them...or who to approach.

As Tom asks, how do you get hold of the right person??! I can see why dealing with a small local bank may be easier than dealing with a large bank...
as far as the Deutsche Bank... talk to them in german??

@ Mike-great links-thanks for sharing!

Learning and progressing every day,
Valerie

if anyone in sc/nc would like to team up, contact me with a personal message caroline

Being from Alabama, I take offense and "resemble" that remark about Dixie!LOL!!!

Seriously though, what a GREAT post and a HUGE potential source! Again, your willingness to share these nuggets is such a treat for us all. And you give clear detailed instructions/info to boot. Thank you!

I think Brad is right. I have a source (from a fellow DGer) on REOs and I previously requested pre listed props, but have yet to receive any. This is a great reminder to follow up.

I have a huge list, but every bank I call says 'go to our website and look at our inventory' or 'we don't give that information to the public and can't share anyone's names or numbers'. How do you get past the beaurocracy?

They still have to get secured and maintained by a local company. The grass mowed, board up if needed, locks changed etc...

Banks don't leave their properties out in Dixie Land with no one maintaining them. They will get fined by the city if things get overgrown etc,...[/quote]

No fines, I've seen occupied houses that look worse than this one. No overgrowth....southwestern landscaping, a few weeds... back yard is over grown tho....not boarded up....vacant for three years....no grafitti, no busted windows, no vandalism....no signs that say "no trespassing", nice neighborhood. I've partnered with one of the board members at a local REI club to see if we can get to the light at the end of the tunnel on this one.

Is just that! In my opinion of course. There may be 1 out of 5000 you can offer on unless you have $500,000 in liquid assets. No joke.
This is what I encounter. "Go to our website and/or contact our listing agent". The asset manager at the bank will not talk to me! Maybe they will at a very small bank that has 2 REOs. Not a way to build a consistent business.
Anyway I contact the agent, the agent is waiting on the listing agreement from the lender. They will call when they get it. They call and say "OK, we got the agreement, this is what it will be listed at they say when they call. The bank wants us to have it listed for 5 days or so before we take an offer". Let the bidding wars begin!
I will keep trying. I will truy some smaller banks and credit unions but so is every other investor. (old strategy) ANYONE that gets and closes an REO directly from an asset manager at a major bank, please let us know. If you show them the $500,000 that does not count!

Maybe I am wrong, but I think this is reality.

Michael Mangham
MD Home Acquisitions LLC

great post Carol am looking into it am alredy working with an RE agent and I think some times they can get past the wall we just need to point them in the right direction and let them do the work for us.

Brad,

I think what your talking about are working the "Tapes" ? Those are "packaged" or bulk REO's. I've heard and know of a few who have worked with some on these types of deals... they are a lot more intensive but there is A LOT more money to be made there... but working with Tapes your moving more into advanced side of things. The numbers your usually working with are a great deal larger than working on individual REO's... that's for sure.. lol

How about if I drive back up to the office and stand outside about 11:30 with a sign that says "Free lunch if you work at Deutsche Bank"

If the banks are requiring such a huge sum just to see and offer on the properties before being listed, maybe you could partner with a few other pro investors like yourself, and maybe raise a million cash?
Just a thought.
I would also like to hear if anyone breaks through the brick wall and starts moving REOs from major banks.

RENinja

Ruben,
If I were to form a syndicate of multiple cash investors I would pursue multi family (over 50 units) commercial investments. Owner finance. This is still about 2 years away for me. I would rather have 50 units under one roof than spread out over several cities. That is just me, there are plenty of people that have huge single family portfolios. The money (it is not IF) I was talking about is required to purchase REOs in bulk from the major lenders. This is where 99% of the REOs are. REO tapes that make it to the "public" are usually a waste of time. Everything good has already been purchased.

Tom,
I have not tried the sign thing yet! Let me know. Try it at Bank of America, I think they hold a very high percentage of all REOs.

Every one,
I think you better get good at evaluating deals and getting agents on your team before you tackle talking to asset managers. NOT ALL REOs ARE DEALS!!!

Your best deals WILL come from unlisted motivated home owners with out question. (BANDIT SIGNS!!)

Happy investing!!

Michael Mangham
MD Home Acquisitions LLC

This is the agency that has the listing directly from the lender. These are the guys that communicate directly with the asset managers at the bank. Having an agent that puts in an offer on an REO that is not the DIRECT listing agent can be a waste of time. Your agent is in the middle of the communication between the LISTING agent and the bank. This is not nearly as effective as going directly to the agency and their REO listing agent(usually the owner)and submitting your offer through them. They are in direct communication with the asset manager and not a 3rd party agent.

I do 2 to 3 of these offers a day, this is what works best in my area anyway. I have been hearing for 3 years how the banks HAVE TO release their shadow inventory. I think it will remain a trickle of releases. If it changes I will be ready to jump right on it!

Any questions? Give me a PM. How do you find these listing agencies?

Michael Mangham
MD Home Acquisitions LLC

Your goal is a great one and is mine as well. The very first real estate investing strategy my dad introduced me to was investing in apartments and multifamily properties. My goal is to use the funds I accumulate in flipping to invest in multifamily properties(twenty units or more) and then trade up to seventy-five unit or larger properties.
I wish you great success.

RENinja

CAROL - Thank you so much for taking the time to detail this process. I accept the challenge called out at the end of your post!! I've read this thread and its so easy to get off on other ideas and tangents that may not be the most productive use of time and only lead to frustration. I had to go back and reread your original post to get my self calmed down and refocused on how to sensibly apply the info. THX

MICHEAL ... thanks for the down to earth comments and redirecting us back to keeping it all simple and getting those bandit signs out there. So, while putting out the bandit signs I'm also looking for the shadow inventory.

Also, about a month ago there was an article in our local paper about shadow inventory. This was after I had first heard of it via CAROL and the RBBP mentoring call. I had told one of my buyers about it after that and then the article came out and WOW, I scored major points for knowing this info first.

Thank you for always sharing and helping us stay on track. Many continued blessings!

I have talked to my Broker and he tells me that he can get Off Market Bulk Reo from the bank..But like you said all the Properties you get are good.He told me that if you pick up 10 Properties you have have 3 that are worth anything

I have a question about the lock box and getting access to the house. What if the bank wants to send a representative. Do you take your buyer and introduce as your partner. Do you forsee any problems with this?

Thanks again Carol, there are plenty of Shadow Inventory properties around me.
Looks like a way to really ca$h in.

So are you saying the buyer would want to be into the property for 70k AFTER it's been all fixed & all fees have been paid & it is worth 100k & would sell fast at that price.My example below..
58k PP
2k My FEE
10k Repairs
100k price that will sell FAST..So "normal" ARV would be 105-109k..Am I getting the numbers right??Let me know!

I did not say it was going to be easy getting these properties. On the contrary it is going to take some work to get to the right person and get a deal made. But trust me when you begin to research and find the right people to contact it gets easier.

As far as Deutche Bank I would contact Fannie Mae since their properties are insured by Fannie Mae. You can also have your agent go to http://www.homepath.com/realestateprof/index.html to make an offer the property of interest.

I am researching various contacts that may help you and will post them as soon as I have some.

I think I have stirred the REO pot and the banks are probably wondering what the heck is going on with so many of you calling...lol... I LOVE IT!!!

If it was easy, everybody would be doing it.

I have absolutely no experience dealing with the banks. I normally strictly work with FSBO's however I have always wondered about bank owned properties that are just sitting there waiting to be listed years down the road. I know many many of these properties in my town. I look up the bank that owns the mortgage.

My goal is to contact what person at that bank to even begin speaking about the property?!?!?

Thanks,

Sean

In the last couple of weeks I've found a few of these "shadow" REOs and called on two of them. One was quasi owned by US Bank and the other by Bank of America.

When I called the US bank 800# the first time I was told they had no info on the property and that I should find the most recent deed to find the current owner. I found the deed which showed US Bank National Default Servicer purchased the property at auction in April of this year. I was told on my second call to US Bank that the bank doesn't actually own the REO and that I should wait for it to be listed.

My call to Bank of America (800 # found on the window) was even more interesting. The gentleman told me BOA has no history of foreclosure or late payments on the house. He encouraged me to contact the owner and then gave me the BOA REO website. I told him I had already sent the homeowner a letter and that it came back as VACANT.

I agree with what others have already said. These houses are "shadow" though I believe someone has the 'key' to these houses. We just have to find out who that is. I'm going to keep digging and I'll post my results.

To everyone's success!
Fish

Carol:

Once again your genius shines through. Here in Virginia, other investors [besides myself], our realators, buyers, and sellers have been racking our brains to devise a way to circumvent the bank's "no assignment" clause in property sale contracts. That is, the banks here stipulate that once a property is sold to us [the wholesalers] that we cannot sell it for at least sixty days to another buyer. In effect, the banks have barred contract assignments. Since the banks were not earning the bulk of the profit, they took the main method for investors to be able to profit away. If Mama ain't happy, ain't nobody gonna be happy!
However, your suggestion to place the property into an limited liability corporation [LLC] would do the trick. As an investor, I would be able place the property into a corporate identity. There cannot be a contractual prohibition by the banks to bar me from selling the LLC to another person. That I believe is against federal law, of course-I would have to confirm that.
But, I must thank you again.

George

Wow if that works to sell the LLC, instead of the property directly that is an awesome use of an LLC and I had better think more on that. Always good things to learn on this site. Tammy

Carol! but on the profit percentages (30%) for the rehabber. an arv of 220k you think the rehabber will want/expect to make 60k?? That's really high. I would think if the rehabber makes at least 20k on ANY deal, that is good.