Bryan Ellis is widely recognized as a expert in the fields of real estate investing and internet marketing, so it’s no wonder he’s regarded as a founding thinker of the new phenomenon of Virtual Real Estate Investing. I recently spoke with him about this topic:

Landlords, rehabbers and foreclosure investors, take notice – you may soon be focused on the new concepts of Virtual Real Estate Investing. Everything from using the internet as an avenue to make more money in real estate to online games such as SecondLife seem to be included in the popular definition of this term. And the pure financial potential is staggering.

In order to figure out the truth of the matter, I sought out Bryan Ellis whose experience in the fledgling industry is truly impressive.

“I began using the term ‘virtual real estate investing’ in the late 1990’s when I realized the clear similiarities in profit strategies, regardless of whether the real estate in question is ‘virtual’ or ‘physical’” said Ellis.

One example of the parallels between virtual and physical real estate Bryan Ellis cites is the similarity between the monetization of domain names versus physical property. He points out that control of a domain name or even a specific web page is much like controlling a real estate property: “those assets can be monetized in similar ways: By selling them for a profit, by leasing them, by offering advertising, etc. It’s not even necessary to own a website in order to profit from it.”

Bryan Ellis points to the example of websites like HubPages, Squidoo, Google Knol, etc. “Each of these services allows any person to write an article or create other type of content, and then allows the author to share in the revenue generated on that page. It’s almost as if you’re renting retail space in a highly desirable shopping district, only you get the benefit of a ‘great address’ in the form of a well-known domain host like Google.com but without paying a single penny in rental fees. It’s a win-win scenario.”

I must admit: Its easy to see the parallels. For example, if you’re the owner of a desirable property, its desirability is (in a business context) largely due to its being in a location that is of interest to others. Similarly, ownership of a desirable domain name is valuable for the same reasons. Regardless of the type of asset, you can sell or lease or use any number of strategies to turn the assets into cash.

In our next installment of this series on virtual real estate investing, Bryan Ellis will share the internet analogies to the physical concept of real estate development.

The Rise Of The Bulk REO Investing Concept

No generation in American history has ever experienced the number of foreclosures and defaulted mortgages as is happening now. Yet well-funded investors in real estate are seizing upon this opening to profit from an profoundly profitable new opportunity.

That opportunity is called Bulk REO Investing, and the potential is huge. Consider with me, if you will, the fundamentals of the Bulk REO business.

As a home owner misses a payment or two, the lender sends the predictable barage of threatening letters and warnings. The official foreclosure proceedings begin subsequently, as directed by the lender. The ‘pre-foreclosure’ time starts with filing of foreclosure paperwork and concludes at public auction.

Foreclosure is completed when the defaulted property is auctioned. If there are no buyers for the property at auction, the property is returned to the lender. The designation of ‘REO’ (Real Estate Owned) is then attached to the foreclosed property.

Lenders have no interest in owning property, and thus usually opt to list their REO properties with a local real estate broker in hopes of a retail sale. Yet with increasing frequency, REO properties are being sold for pennies or dimes on the dollar. However, the purchase of a ‘package’ (or group) or REO properties is the trade-off for receiving such great prices.

There is huge profit potential in these REO packages for qualified real estate investors. One of the best ways to take advantage of Bulk REO Investing opportunities is to partner with a well-regarded source of funding. Some sources of funding for these transactions are: personal funds, hard money lenders, commercial lenders and non-conventional sources such as private investors and hedge funds.

Note – One of the nation’s leading experts on bulk reo investing is hedge fund manager Salvatore Buscemi. Sal Buscemi recognized the irrationality of the real estate boom of the late 1990′s and early 2000′s and capitalized on this by forming his very well-regarded hedge fund, Dandrew Capital Partners.