In my opinion, this is by far the easiest way to make money off of bulk foreclosure packages.
It’s way easier than buying them with the intention of keeping them for yourself.
Don’t let the word “broker” make you alarmed; you don’t need a license to broker these deals.
As a broker, you’re acting as a wholesaler does on SFR deals. The only major difference is you’re moving bulk packages of properties.
In other words, you’re the “middleman.”
The whole transaction is funded by the end buyer; you don’t need any money out of your pocket.
As a broker, you can work for the buyer, or you can work for the seller of the package.
You can make money by charging points, or you can make money off of the spread.
Working for the Seller by Charging Points
When you work for the seller, you make your money from helping them find a buyer.
Let’s say you helped someone sell a $500,000 bulk SFR package. You could charge them two or three points (i.e. “percentage” points).
So once the deal closed, the seller would pay you $10,000 or $15,000 for finding a buyer for their package.
By the way, with these deals, the seller isn’t always a bank. The seller could be a private equity fund, a hedge fund, or some private investor as well.
Traditional Wholesale Approach
You could also take the traditional wholesaler approach, and put a markup on the price with the seller.
So on that same $500,000 package, the end buyer would pay, say, $525,000, and you’d make the difference ($25,000) at closing.
Working for the Buyer
As I said, you can also work for the buyer.
In this approach, you find someone that’s interested in buying a bulk package.
Then, you find out what they’re looking for, and charge them a fee for helping them find exactly what they’re looking for.
Buy them Cash
Of course, if you personally have the cash, you can just cash-out on a bulk package yourself.
As they say, cash is king. And as a reward for having the cash, buying one of these packages gives you a lot of options.
For example, you could:
- Mark some of them up a few thousand dollars sell them to other investors by putting little-to-no work in them.
- Rehab and resell some or all of them to retail buyers.
- Fix them up, put tenants in them, and sell them to other investors as “turnkey” rental properties.
- Fix them up and sell them to retail buyers that want to live in the homes.
- Flip them to wholesalers, who can then wholesale them to other investors.
I could go on-and-on, but you get the point. Those with the cash get more options, and have more profit potential.