Positivity, creativity and a little thinking outside the box can open up a whole new world of opportunity inthese current economic times. There is a saying that many seasoned investors know, “You make yourmoney when you buy property, not when you sell it”. This simply means, If you don’t buy smart, youcreate a risk of not only decreasing profits once you decide to sell, but also run the risk of coming outupside down on your property. This is a fear many have right now in our current market. Investors have held off on purchasing a property due to all the overwhelming reports of property values depreciating atan alarming rate. You can’t seem to turn on the television or pick up a paper without reading about howgrim the state of the economy is in. This fear alone, I feel has caused the market to come to what some would describe as a screeching halt.

The good news is that bank owned real estate (or REO’s) is emerging as the answer to turn bad economic times into your gain. REO’s are allowing investors to finally buy smart and shelter themselves from the pain of buying high and selling low which we all know is not the way to play the real estate game. This new emerging type of purchase not only is great for investors, but it assists banks in stabilizing the loss on their books, shelter’s their exposure and allows lenders to be able gain the opportunity to provide financing to new clients. This cyclical event will in turn, I believe, help stabilize the economy.

Bank owned properties (REO’s), have been through the foreclosure process and have reverted back to the lender with clean titles. Banks usually list their REO properties under market and even in many circumstances, under assessed value just to get them off their books as quickly as possible. This is a clear reason to take a close look at these properties. The banks have usually written off a substantial portion of the property as a loss and are looking to just get them out of the red or to be rid of them altogether. Many of these properties are great investments, but have gone into default due to various reasons such as the previous owner over extending themselves on other projects, losing their employment or some other outside scenario in which caused them to be unable to make the debt service payments. Long story short, the property may be cash-flowing, but went into foreclosure due to the previous owners own personal financial struggles. Don't assume that a bank owned property is a bad property, and as hard as it is to believe, many of these banks may even offer financing incentives to use them as the mortgage lender making the deal even sweeter.

Below is a foreclosure timeline to get some idea of how long a lender has already been losing money with a property by the time you even see it as an REO. The chart below which was obtained by Realtytrac.com shows that by the time a property becomes an REO, it has been a non-performing asset for going on 6 months. This is just another reason why they have the motivation to make a deal.

If you don’t think lenders are wanting to get properties off their books, check out Countrywide’s website. They have their entire portfolio of REO residential properties on there to look at and you can use their search engine to make it even easier for you . If that doesn’t convince you, try goggle-ing REO’s and you may be just as shocked at I was at all the listings.