REO Real Estate Investments Through Social Media Connections

There are many real estate investors who have in foreclosures, as the primary method to look for money in this economy. And these days, there are so many foreclosed properties, you can just go to a select number of lost real estate of difficulty. One of the best ways to invest in foreclosures is to avoid the pre-auction and, instead, to buy property free and clear to the auctions directly from banks and other financial institutions. These bankshundreds of thousands of its properties (internally as non-performing assets), and wants nothing more than to take these properties in their books. Most investors and bankers refer to these REOS unwanted assets (real estate owned).

The central challenge is to make these properties, without finding ourselves in competition with thousands of other investors. If a large bank like Bank of America wants to sell these REOS, usually you hire a real estate agent in the real estate market. At this point, if theBroker is in the picture, the opportunity to purchase an REO at an affordable price is very low. This is because the property is professionally tested by the Bank mandate, the property market, as many investors and home buyers as possible. It's not a great situation for you!

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On the other hand, some smaller banks to keep news of such impaired assets to himself and a few other insiders. The possibility of obtaining a large amount of an REO from a small bank in a small town are just much bigger,given the less competition you may face. So the key question is how to find such small banks, and how to approach them as a professional investor or a first time home buyer. Let's use the social media website such as LinkedIn to help us with our investment approach. A great business networking website such as LinkedIn allows you to find and connect with hundreds of bankers and VPs in such institutions. However, to be successful in using social media for your REO investments, you must follow these simple rules:

You must create a great profile for yourself. Your profile should be very professional, so that it would give you an instant credibility in the eyes of bankers and other VPs in these financial institutions. The first thing they do when you approach them on LinkedIn is to glance at your profile. Yes, sometimes in life the first impression is all you need to fail or succeed.

Just ask yourself if your profile will give this banker a great first impression or not. Your profile should help you establish rapport, trust and connection with all your other contacts on LinkedIn. So no short cuts here- spend as many hours as you need to make your profile look great- without lying about, or inflating your credentials of course.

Use the search feature within LinkedIn to look for all those who work in the financial industry. What I love about LinkedIn is that you can search for individuals, companies, industries, geographic locations and even jobs.

As an example, when I look at my own contacts on LinkedIn (used the contacts link to view the list of all my direct connections), I can see that I have certain number of contacts in the "financial services" industry, certain number of contacts in the "real estate" industry, and many more in the "banking" industry. In the banking industry as an example, there are so many individuals who are at the VP level or higher. Of course, these are my immediate contacts. There are hundreds to thousands more who are members on LinkedIn, but are not my direct contacts. Every one of these contacts can refer me to the right individual in their bank who is in charge of selling REOs.

Of course, if you are not connected to such individuals, you can always use LinkedIn's great system to get introduced to your target person through people you already know. I always make introductions between these bankers and my investor students when I know my students are serious, honest, and would act professionally. You can even pay a small fee directly to LinkedIn to introduce yourself to your target banker. Seriously, you can pretty much connect to anyone if you are persistent and act professionally.

The next step is to approach your connection in the banking industry and ask her for a referral to the right individual within her bank to help you with your REO investments. Remember - the way you approach the banker and the language you use is very important. If you do it right and sound both knowledgeable and professional, the banker will most likely help you.

Here is a sample of what you can say to this person- but don't just copy what I write here. Feel free to use your own language and experience:

Dear Mr./Ms. XXXXXX,

I am a real estate investor in ______________ area who is looking for _______________ properties in or around the city of ______________________. My investment partners and I are looking to purchase your institutions' non-performing assets with reasonable offers. We will be able to close the transactions fairly quickly.

Could you kindly refer me to the right person at your bank who coordinates the marketing of your non-performing assets? I'd like to thank you in advance for assisting me in this matter.

Regards,
John/Jane Doe.

Now let me explain a few things about the message above. The first tip is to use the right language and choose terms like "non-performing assets" instead of "properties". These 'insider' terms will show the banker that you are a seasoned investor who knows about banks and REOs, and have had prior experience dealing with bankers. The second thing is that you should be more precise about your investment requirements. For example, you can get specific and mention that you are looking for an office building, strip mall, apartment building or other forms of real estate. By specifying what you want, you set yourself up for success.

The banker would then know that you are not just an amateur calling and asking for anything that is available! A professional investor always focuses on certain areas of investments based on careful research, market analysis and specific goals. After all, bankers would rather work with professionals who know what they are doing. The last thing they want is to finance and sell their non-performing assets to someone, and then be forced to foreclose again from the new clueless buyer!

You may also want to mention your investment partners if your credit rating is not good, and/or if you lack adequate finances for a down payment. Remember, you do not need lots of money and a great credit profile if you can find a great deal. Investors with money and perfect credit are out there if you can show them that as your partner, they can buy a property for 70 cents for each dollar, or even less. The next step is to contact whoever your LinkedIn banking connection asked you to get in touch with. In this case, you'd have a great advantage as compared to all your competitors. When you call the person in charge of the bank's non-performing assets, you can 'smart it up' a bit and say that the bank's Sr. Vice President asked you to call him/her. This 'instant credibility' will open the door for you, while your competitors will still have to resort to cold calls (like the vast majority of investors).

The person in charge of REOs will treat you well and listen to you if he/she believes you were referred to him/her by a superior. For this reason alone, when I connect with financers, I do my best to connect with bankers at the VP level or higher. I want these high-level bankers to open the gates for me and act as a reference.

Negotiate well and submit a reasonable offer. Nothing turns off a banker like an amateur investor who offers an absurdly low offer on any property. The bankers may accept loss on a REO in this market, but the market will eventually dictate the reasonable price range for various kinds of real estate. Even in the case of REOs, the old concept of supply and demand still applies.

A social media website will not buy you a property. It will simply help you establish relations with people in your chosen industry, and in a level and geographic area that was just not possible until a few years back. Once you establish a connection, you are on your own. So act wisely, and make sound investments! No get rich quick possibilities here.

REO Real Estate Investments Through Social Media Connections