THE BIG PICTURE
STRATEGIES: PROBATES
Probate Investing Primer PROBATES CAN PROVIDE AN ADDITIONAL PROFIT CENTER FOR YOUR BUSINESS AS WELL AS MORE FREEDOM AND FLEXIBILITY IN YOUR INVESTING.
by Leon McKenzie
L
ike every industry, real estate has been going through a transforma-
tion 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 supple- ment 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. 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 prop- erties as only being homes, many different types of items can be included in a probate. If WHATARE PROBATE PROPERTIES?
the individual has owned a business, vacation home, boat, RV, artwork, antiques or even rental property, these items may all be includ- ed 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 diffi- cult as it sounds because there are estate brokers, antique dealers, art galleries, car auctions and others that can be of imme- diate help in this process.
now looking to probates is that there is a very good chance to do well in this mar- ket—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
PROBATES LEAD TO PROFITS The reason that so many investors are
46 | think realty magazine july :: august 2016
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