An interview by Tony Starcevic: What happened to all the foreclosed properties when the housing market collapsed in 2008? Did the market recover in all sectors? What are some tips from a successful real estate startup? In this article you will find out!
REO rescue was founded at the end of 2008, early 2009 when the housing crisis in the U.S. was in full swing. Some twenty-eight old mortgage brokers with an entrepreneurial mindset had a vision of what a turnaround for the housing sector would look like in the years to come.
What is does REO Rescue stand for and how did you come up with the name? REO in real estate stands for real estate owned. It is a term used in the industry to describe a property that has been foreclosed on and then repossessed by the bank. We came up with this name because a lot of these buildings that were repossessed needed to be fixed up — so we coined the term REO rescue to go save properties!
How did you get started? Well, I worked in mortgage banking for a number of years after I graduated college and we saw things start to take a turn for the worse. I had money saved up and began to partner with banks to be their wingman at saving these properties. I also partnered with my best friend and we cleared out the basement of my house and set up an office. We began looking for properties that were in bad condition that we knew from our construction backgrounds that we could easily fix and flip back on the market under value yet still make a profit.
Were you able to flip houses like this in all sectors? No. Most of the work we did was in middle to low income areas. The upscale areas did take a hit as well but those properties rarely needed to be fixed up. Most sat on the market for an extended period of time.
What are some tips you can give for recent grads to get started in flipping properties? Educate yourself as much as possible. There are many free resources that are at your disposal. I recommend checking out the Bigger Pockets Podcast and also analyze different markets and what similar properties have sold for recently.
Are there any areas you recommend looking for cheap properties? Depends on where you are located. Not far from Chicago lies Detroit which is still untapped when it comes to redevelopment. Within the next few years, I can see Detroit start to redevelop and potentially become a booming market. All depends on the economy.
Closing words? Work harder than everyone else and you can get almost anything you want. Be smart when it comes to buying properties. Make sure that you factor in all your expenses and then some to make sure your margin has room for error. All rehabs you do will NOT go smoothly. There will be at least one problem that you face when doing fix and flips. Having large margins will make sure your fix and flip doesn’t go to a fix and flop.
Thank you all for reading this article I hope you enjoyed it and were able to take some of Joseph’s words of wisdom and apply it to your own life! Stay tuned for more articles coming shortly.
