At Real Estate Investing for Women (REIW) we believe a diverse real estate investing portfolio builds more wealth and opens more doors for investment opportunities. Probate properties offer another avenue to locate and buy properties for your real estate investing business. Many real estate investors don’t understand or aren’t aware of probate properties, which reduces the competition to buy.
What are Probate Properties?
The probate process occurs after a death to handle the remaining assets of an estate. This legally-required process evaluates the deceased person’s assets and their outstanding debts to determine the asset distribution. The probate process identifies and pays debts owed by the decreased. Then, the heirs receive the remaining assets in accordance with the will.
Part of the probate process is the evaluation of owned real estate properties. When no will or heirs exist, the state sales the property to cover debts or simply to liquidate the asset. Even with named benefactors or heirs, the state may sell the property to cover debts. The heirs may also decide to sell the property if they don’t have the resources or desire to take possession of the property.
In other words, real estate investors may purchase probate properties when sold by the probate court or the property’s heir. It is legal to purchase probate properties for real estate investment. However, keep in mind that probate involves a death. As an investor remain professional and sensitive to the situation.
Why Probate Properties Make a Solid Investment
Like other types of properties that involve the courts, including tax delinquent and foreclosure properties, probate properties often sell for less than the actual value. In many cases, the court or the family want to transfer ownership without the hassle of making repairs or preparing the property to sell.
Any time you buy a property for less than the actual value, the potential to make a profit goes up. Also, once you acquire the probate property, you can manage the property how you choose based on your portfolio and the local market. Is the property right for short-term rentals? Would the property make the most money as a fix and flip? The goal is to acquire properties that leave room to make a profit in the most beneficial way for your real estate investing business.
Probate Properties Require Patience
Unlike wholesaling, which offers a quick real estate investment option, probate properties take more time. The legal process means procedures exist, including set timeframe for debt collectors and heirs to claim the property. Also, when you are dealing with a death, emotions play into the deal.
As an investor, exercise patience and compassion. Yes, this is a business transaction. But, pressure on the seller can hurt your reputation and shut down the deal. Probate properties make good investments, but only with the proper communication and understanding.
Understanding the Probate Investing Process
The first step when exploring any new real estate investment strategy is education. Learn about the process and pitfalls for each type of real estate investment. At REIW, we offer access to our community of likeminded women to answer questions and share experiences. This helps guide you through new investment opportunities.
Start by locating a list of probate properties. Some counties list probate properties in online county records. This makes probate real estate a good virtual investment strategy. When not listed online, the record is still available at the local courthouse.
The record lists all the vital information about the property. This includes: the property address, names of the deceased, probate administrator and any heirs or benefactors. Probate information is publicly available. Once you’ve evaluated the property, you may reach out to the heirs to express your interest in purchasing the property.
Remember to offer your condolences before you ask to buy the property. Whether you reach out by phone, email or traditional mail, don’t act aggressively with probate deals. It won’t help you, but it can hurt your chances of purchasing the property.
Once you’ve contacted the benefactor, talk through the benefits you offer by purchasing the property. For example, you may buy the property as is and for cash. You could even offer to clear out the belongings of the deceased. Make the process easy for the benefactor to want to sell the property to you.
Benefits of Probate Real Estate Investing
Even though probate real estate deals take longer and require patience, they still offer a solid investment. For probate properties, motivated sellers often want to sell quickly and easily. Communicate with the seller the ease of selling to a real estate investor versus a buyer that plans to live in the home and may have a longer list of requirements.
Did you know that a high percentage of probate properties don’t hold a mortgage? A clear title makes the buying process easier. You don’t have to deal with a mortgage company or other debts. This is a win for the heir and the investor.
Sellers for probate properties usually will sell at a competitive price that is below market value. Many heirs prefer to inherit money instead of a property, especially if they already own a home or live in a different area. Because the seller likely doesn’t want to prepare the property for sell or meet the requirements of an inspection, the price is lower.
Build Your Knowledge of Diverse Real Estate Investing Strategies
Are you interested in creative real estate investing strategies, like probate properties, but don’t know where to start? At REIW, we’re here to help. We offer a variety of services, including free online resources. We also offer online and onsite events and training to help strengthen your investment skills. Contact us today to join REIW!