If you’re tired of driving for dollars and endlessly searching for leads on investment properties, moving into probate real estate may be a good solution for you. It’s an ever-growing market with a lot of profit potential. Below you’ll learn the ins-and-outs of building an investment portfolio using probate real estate and how to get started building your leads funnel.
What is Probate Real Estate And How Does it Work?
Probate is the legal process of distributing a deceased person’s properties and assets to their heirs. It includes their own home and any real estate that has their name on the title, whether the property is solely or jointly owned. It also includes all of the other assets like personal property, bank accounts, and investments.
The distribution process is supervised by a probate court. The process may be lengthy which is one of the downsides because of the massive amount of paperwork and the need for attention to detail. Everything in the process must be appraised, executors named, titles researched, creditors notified and paid, and finally, the heirs will receive their inheritance, and will become the new owners. This is where the opportunity lies for real estate investors.
Not everyone wants to inherit a house. The property could have infestations, it adds another set of property taxes and bills to pay, as well as keeping it up. The house may also have structural issues, or be packed full of outdated and non-valuable furniture or clutter. Not to mention dealing with an HOA if the property falls under their realm.
Another reason properties get sold in probate is if you have multiple heirs, and nobody can make a decision on what to do with it. Many heirs would rather sell the property and walk away with money than deal with the headache that comes with a single asset divided among multiple heirs. That is why savvy investors use probate properties to build their lead funnel and portfolio.
When the heir or heirs sell to an investor or wholesaler, they can turn a quick profit, and the investor can have a new project to rehab and sell or use as a rental property. You are eliminating stress and hassle from the seller, and getting a property you can flip to sell, or rent if it is in a college, military or vacation destination.
Why Probate Property Leads Can Build Portfolio Stability
Learning the process of probate and what could happen is your gateway to this source of deals. It also prepares you for obstacles like unknown heirs laying claim and title issues. Once you have this part down, you can use this knowledge to build a solid funnel of leads that stabilizes your portfolio since inheritances don’t follow any seasonal trends or fluctuations like the rest of the market.
People are continuing to live longer, but not everyone updates their home – especially when they’re older and on fixed incomes. When an outdated home hits the market, it cannot compete with smart homes, houses built using new materials, or with options that contain eco-friendly and cost-saving features. This has created an influx of “undesirable” homes given to heirs who may or may not have any interest in owning additional real estate, which gives you a golden opportunity to buy cheap and flip.
You might be surprised, but the best time to look at probate is when you are at your busiest. The time frame from death to market is long, so while your current projects are underway, you need to begin working these deals. Negotiating a probate deal during your busiest months may mean you can secure the property and rehab through the colder months and be ready to sell when the market heats back up.
Another benefit of investing in probate real estate is the visibility you stand to gain in neighborhoods that may have other homeowners or heirs looking to offload unwanted properties. By simply putting up a sign in the front yard of a property you are rehabbing in one of these neighborhoods can relay your message to the neighborhood that you buy houses “as-is” and can alleviate the headache of owning an unwanted property. It may also be a good idea to have a brochure box with handouts so that neighbors can keep you in mind if they will be entering the probate process in the near future.