Understanding Probate Properties for Real Estate Investing

Probate properties are often overlooked by real estate investors because the process for buying the property is unique. Don’t be intimidated by the process. Instead, take the time to learn in order to make a profit and gain another avenue for real estate investment deals.

There are two important things to understand with probate real estate investing. First, the property is tied to a death, and it is critical to be sensitive and respectful. Second, probate properties take more time than some other forms of real estate investing, like wholesaling. If you are interested in probate properties for your real estate investing portfolio, you must be patient with the process.

What is a Probate Real Estate Property?

Probate is a legal process that takes place after someone is deceased. The probate process compiles all of the deceased person’s assets to ensure all outstanding debts are paid and any remaining assets are distributed to heirs in accordance with the will.

For real estate, properties may be sold during probate as part of the distribution process. When no will or heirs exist, the state sales the property as part of the probate process. When heirs are present, they may not have the resources or desire to take possession of the property and instead prefer to sell the property. The main takeaway is that probate real estate occurs because the individual who owns the property dies, and the proper legal process must be followed, which is probate.

How the Probate Investing Process Works

If you’re interested in adding probate real estate to your investment portfolio, start by learning about the process. First, you must local probate properties. You can pay for a list of probate properties; however, it’s not hard to locate probate properties for free. Probate properties are listed in county records, most often at the local courthouse, although some counties have the records available online.

The record includes the address for the property, along with the names of the deceased, administrator and beneficiary. Since this information is publicly available, you now have the information needed to reach out to the beneficiaries to share your interest in the property.

One of the most critical parts of the process is to show respect and your condolences before you share your interest in the property. Not showing proper respect not only hurts you, but can damage the reputation of the industry.

It is okay to point out the benefits of selling a property to a real estate investor. You want to be respectful while communicating clearly about your desire to purchase the property. When the correct process is followed, probate real estate investing is a win for all parties involved.

Benefits of Investing in Probate Properties

Investing in probate real estate properties offers many benefits. However, the main con with probate properties is the long timeframe to close the deal. Probate investing deals require patience.

1 – Motivated Sellers – For probate properties, the sellers are often motivated to sell the home quickly. Whether it’s the state or the heirs, the seller most likely wants the property to sell as easily as possible. If you are buying the property with cash, share that information with the seller.

2 – High Percentage of Clear Titles – A high percentage of properties in probate don’t have a mortgage. Buying investment properties for cash without any liens, is a great way to make money.

3 – Properties Priced Below Market Value – Because of the nature of probate properties, the price is often competitive and below market value. The heirs may prefer to receive the cash instead of the responsibility of the property. Also, the seller might not want to have to conduct repairs before they sell the property, making the price more attractive instead.

4 – Low Competition – The competition with probate properties is low. Many real estate investors don’t understand or aren’t aware of probate properties. This works to your advantage with the low competition.

How to Make a Profit with Probate Properties

The goal with any real estate investment deal is to make a profit. Probate properties aren’t the best choice if you’re trying to make money quickly. However, if you’re interested in a longer term but lucrative investing opportunity, probate properties are a solid addition to your investing portfolio.

The way you make money is to buy the property at a lower price and then sell it for more. Of course, you may need to make improvements to the property before you make money. Probate properties are good for many types of investments, including flips, rental property or even to resell to another real estate investor.

Before you make an offer on a probate property, do your research. Understand what must be paid to clear the property, like the mortgage, back taxes, past due utilities or other liens on the property. Be smart with your investments.

Invest in Creative Real Estate Opportunities

Don’t be scared to think outside of the box with real estate investment strategies. Position yourself to benefit from a variety of investment opportunities. Probate properties make a good addition to a real estate investment business plan. While they may take longer to close, there’s also usually less competition, eager sellers and money to be made.

Learn more about probate properties and other real estate investment strategies by exploring the large selection of articles, webinars, eBooks, videos and workshops available. Start today to deepen your portfolio and grow your profits.