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How to Create Passive Income Buying Foreclosures & REOs

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By : John Hanlin    99 or more times read
Passive income is income derived from real estate and business investments in which the investor is not actively involved -- in essence, investors are "silent partners".

Foreclosures & REO properties presently offer investors perhaps the greatest financial opportunities of our generation. However, buying foreclosures & REOs can be fraught with risk and stress if you do it on your own.

This article will explain a new method of investing in and buying foreclosures that can significantly reduce the risk and stress involved PLUS create extraordinary passive income!

And that is by investing with REO companies.

REO companies do all of the work for you. This includes buying foreclosures and REO properties, rehabbing these homes to "move in" condition and then re-selling them. They do this in bulk, acquiring up to hundreds of homes at a time. And the premier REO companies can process these homes in as little as 4-6 months. Then, their investors share in the profits! It is true "passive income" at it's finest.

Whether you choose buying foreclosures on your own or letting REO companies do it for you, it is still important to understand the fundamentals and what is involved.


Although they are actually very different, the real estate industry tends to loosely blur the terms "foreclosure properties" and "REO properties" and use them interchangeably. (I am guilty of doing this as well.) However, as an investor, it is important to understand the difference between the two terms. Here are simple definitions for each:

  • Foreclosure properties: Homes that are in a particular stage of the legal foreclosure process.

  • REO properties: Homes that have completed the legal foreclosure process, did not sell at the Trustee's Auction (also known as a "Sheriff's Sale") and therefore the property's title reverted legally to the lender or bank.


REO companies are businesses solely dedicated to buying, repairing and reselling foreclosures & REO properties. (Some call this "house flipping" -- of the legal variety.)

By investing with REO companies, instead of handling all of these tasks yourself:

  • Securing dependable financing and credit.
  • Searching for viable foreclosure properties to invest in.
  • Performing or contracting for necessary property repairs and rehab work.
  • Responsibility for delinquent property tax issues from prior owner.
  • Trying to find buyers (at a profitable sales price).
  • Paying carrying costs on property until it is sold (insurance, taxes, utilities, maintenance, etc.).
  • Paying real estate commissions, closing costs, etc. on sale.

THE REO COMPANIES DO IT ALL FOR YOU! Without the risk and stress of doing it yourself. In other words: this is truly "PASSIVE INCOME".
To learn more about investing with REO companies and how to create passive income buying foreclosures, click here:


John Hanlin is an Independent Investment Consultant specializing in low risk, high yield investments secured by real estate. He is a seasoned investor of over 25 years, manages the investors' website: and is the author of "The LazyMan's Guide to Understanding Foreclosures & REO Property Investment" available at

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