Probates can provide an additional profit center for your business as well as more freedom and flexibility in your investing.
Like every industry, real estate has been going through a transformation over the last few years. Where it was once possible to find many properties to purchase and either rehabilitate, sell or use as rental properties for cash flow, it can now be quite challenging. Approaches that used to work to identify new opportunities are in some cases “drying up.” No longer can you count on foreclosures and short sales to round out your portfolio. Investors have found that they need to be more creative and find additional approaches to supplement efforts in the traditional markets.
While many of these doors have closed, others have opened. A select few investors have learned the probate industry can provide a great opportunity to create a real estate business that will flourish during this time. Getting started in probates can be a great way to create profitability in your business and give you more freedom and flexibility than with the more traditional real estate sourcing approaches.
What Are Probate Properties?
Probate properties are basically any that have been left behind upon the death of a family member. These properties are then listed in a probate and filed with the local court system. Homes and other items can be part of a probate and are generally sold in order to pay legal bills, taxes, back medical bills, credit cards and funeral bills.
While many people think of probate properties as only being homes, many different types of items can be included in a probate. If the individual has owned a business, vacation home, boat, RV, artwork, antiques or even rental property, these items may all be included in the probate proceedings.
The successful probate investor who is interested in buying and selling real estate will have a plan in place to acquire all the property in the estate and then dispose of it. This can be a lucrative process and will be, in the eyes of the executor, more than a “one-trick pony.” This is not as difficult as it sounds because there are estate brokers, antique dealers, art galleries, car auctions and others that can be of immediate help in this process.
Probates Lead to Profits
The reason that so many investors are now looking to probates is that there is a very good chance to do well in this market—as long as you are knowledgeable about the subject. With executors feeling pressured to sell property in order to pay bills and meet the required filings by the court, they often are willing to sell a property for 30 percent to 50 percent below market value. This is due to their need to generate cash quickly as well as their need to finalize the probate.
Executors have other reasons for offering discounts. In fact, many executors live away from the property in question or they may even be out of state, so taking care of property can be a real challenge. Hiring people to mow the lawn, plow snow and check the home to ensure it is in good condition can not only be a hassle, but also can cost a lot of money. Quick closings that generate cash for their estate is something that executors are looking to do.
Executors also understand that the property they are selling may need work. Given the fact that many homes that end up in a probate need updating, most executors are willing to take a lower price for the property if the buyer or investor is willing to purchase it in as-is condition.
Know Who Can Make a Deal
With a probate, there is only one individual who can make a deal with you to purchase property, and that is the executor. The executor—typically a family member, attorney or accountant—is the person charged by the court system to sign on behalf of the individual who has passed away. That means he or she can negotiate deals and can work with you to create a deal.
How Do I Find Probate Leads?
There are many ways to find leads when you start your probate business. Typically, you can find all the listings that you will need at your local courthouse. Given the fact that probate filings are public record, you can go to the court and look up the listings in your area. That said, it can be a time-consuming process, and you will have to spend precious time searching through documents rather than actually looking at properties.
There are also lead services. These services have trained personnel who go out to the courthouses in the area and gather the leads that have come in. They format these and provide them as a paid service that will deliver them to your inbox.
How you choose to get your leads depends on how much extra time you have. Going to the courthouse can provide you leads for free, except for the cost of your time and gas money to travel there regularly. Most professional probate investors take the time to invest in a lead service that will deliver information right to their email on a regular basis.
Staying in contact with executors on a regular basis is the No. 1 task that will take your business to the next level. Planning a mailing campaign that goes out every 30 days means that even if executors aren’t ready to sell at the moment, when they are, they will have your information at the ready. While you can send letters detailing your interest in the property, using other forms of mailers may be a better fit. Postcards are inexpensive and are easily readable by an executor. Instead of having your letter sit unopened, a postcard that broadcasts your contact information and your interest in the property might be a better fit.
No matter what communications tool you choose, make sure to get those mailings out to every estate executor with the clear message that you have an interest in working with him or her to “cash out” the property. Every probate is different, so you could get an immediate call, or it may take time for executors to get back to you. In any case, you will know they have your information handy.
When an Executor Makes Contact
It can be difficult to get contact information from executors, so when they do call, text or email you, make sure to answer your phone in person and make every effort to get in touch with them as soon as possible. You can set up a time to learn about their property and let them know a little bit about what you do and how you can help them. Perhaps you can pay cash, buy quickly or buy “as is.” Regardless of your particular “value proposition,” this is your opportunity to let them know how the two of you—working together—can get them the money they need to help settle their estate.
Visit in Person
Once you get in touch with the executor and determine which properties are of interest, take the time to drive out and look at the property in person. Just as with traditional real estate, good buys in probate real estate are based on location, location, location. While you may only be able to do a brief exterior inspection, you will be able to see quickly whether the house needs a new roof, new exterior paint or work to improve the condition of the landscaping. The status of these items will give you a good idea of how the interior may look, though that will require an interior visit to know for sure.
Note the location of the property. Is it near shopping, schools or new construction? Is it in a neighborhood where many homes have been renovated recently? You can check approximate home values by looking up the area on the internet to see the prices that are being asked. While this isn’t an exact comparison, it will give you an idea where the homes are selling.
If the property seems like one that you are interested in pursuing, then you can get back with the executor and make additional arrangements.
Working with the ‘Right’ Team
When you start your probate real estate business, it is important to begin your program with the support of a professional probate team. Finding a source that can provide you with leads and other products and services will help you ramp up quickly, find properties that fit the profile you are seeking and then profit from those properties.
US Probate Leads offers comprehensive support to probate real estate investors, whether you are just starting out or you have been in the business for a while. You can find a wide range of tools that can help move your business forward. We offer webinars and seminars on a regular basis to explain the process of probate investing, as well as to give you tips on what to look for and what to avoid when evaluating a property. We also offer software tools that can help you to schedule your communications. Having this part of your business automated will assist you in getting those mailings out on a regular basis.
The cornerstone of our business is our leads service. We have a trained team of lead specialists who go to virtually every courthouse in the United States to gather the newest and most viable leads for your probate business. These leads are then provided to you on a regular basis and are sent right to your inbox. Having access to a professional lead service can help you find properties quickly without having to spend your valuable time at the courthouse looking through the leads.
For investors who are really serious about their business, our team also offers individualized mentoring programs. These programs are designed to help you learn the nuances of the probate real estate business and earn you profits as well as expose you to the newest techniques of investment.