How to Get Rich Buying Probate Homes
This article briefly introduces the probate course I teach one-on-one at PropertyOnion Academy. If you are interested in finding amazing deals, I mentor a handful of investors each month and I would encourage you to apply to be one of my investors.
Investing in probate houses presents a relatively unknown, yet extremely lucrative, opportunity in the Florida real estate market or really any market in the nation. Probate properties are homes that are part of a deceased person’s estate, and they are often sold below market value to settle debts or distribute assets to beneficiaries quickly. This introductory guide will provide you with an insider’s perspective on capitalizing on probate properties to build a profitable real estate portfolio.
First, what is probate, and why is it a goldmine?
For this article, the term probate is somewhat generic and covers a broad process. Probate is a legal process that occurs after someone passes away. It involves the court-supervised administration of the deceased person’s assets, including real estate, to ensure that debts are paid, and assets are distributed according to the law or the deceased person’s will. Not all homes see the probate process because of the owners pre-planning. Their lack of planning often creates problems, and those problems create opportunities for you to generate profits.
Developing successful strategies for what seasoned real estate investors describe as a Silver Probate Formula takes years of trial and error.
The Reasons Why Savvy Investors Target Probate Properties?
Investing in probate houses can offer several advantages for real estate investors to profit:
- Potential for Steep Discounts: Probate properties are often sold below market value, sometimes drastically, making them attractive investment opportunities.
- Motivated Sellers: Heirs or beneficiaries of probate properties often push for a quick sale to get their inheritance payout faster. The more motivated they are to sell quickly and settle the estate, the better chance of creating negotiation opportunities. The win-win is they get paid and you get a bargain.
- Diverse Property Types: Florida’s real estate market offers a wide range of property types, from single-family homes to condos and vacation properties.
- Less Competition: The probate market in Florida may have fewer buyers than traditional markets, reducing competition for properties. Most real estate investors overlook probate properties, focusing only on traditional MLS-listed houses. With fewer buyers bidding, you can act fast and negotiate better terms.
How to Get Involved Buying Probate Houses.
Developing successful strategies for what seasoned real estate investors describe as a Silver Probate Formula takes years of trial and error. Thankfully, ther are enough experienced and seasoned investors sharing the knowledge needed to make your very own business in a box.
First things first. To get started, correctly, you must follow certain steps. Understanding that this is a process will help you greatly. Don’t stare up the steps…step up the stairs to buying profitable probate houses.
*Understand the Lingo and an overview of Florida’s Probate Laws: Start by familiarizing yourself with Florida’s probate laws and procedures as they may vary from state to state. Probate laws and procedures are somewhat uniform. Understanding the legal framework is crucial.
*Identify Probate Properties: Look for probate properties in Florida through various sources, including county court records, real estate agents specializing in probate, and networking with probate attorneys. The question to ask yourself is, “What are you looking for?”
Here is the shortlist. Focus on where the best deals come from. Deals come from all segments. When marketing, seek off-market and pre-market opportunities. These are broken down into three categories.
- Abandoned Properties.
Sounds complicated? It’s not once you have a system working for you!
Over some time and with the experience of many deals, you will develop a checklist and format, so you don’t forget these important details.
*Pre-market. This is where your network benefits you the most. The phone rings. On the other, someone says, “Hey Bruce, are you still buying probate houses?” Yeah, baby!
*Pre-probates can be your best profit opportunities. Look for leads that are (1) Pre-Probate PLUS in some form of (2) Pre-Foreclosure. This is the sweet spot. The skill and tools of debt settlement are KEY to the very best deals. Even after the Probate has been filed, it’s never too late to find an opportunity to make a deal.
A “pre-probate” refers to a unique type of real estate lead that is typically found by merging death records with property records. This process helps to pinpoint individuals who have recently passed away and have properties registered under their names. The term “pre-probate” is used because these properties have not yet undergone the probate process, which is the legal procedure of settling the estate of a deceased person.
*Abandoned Properties. Another term for vacant homes that are, generally, in some form of poor repair and, often, a property tied up legally with someone who died. You can buy a list, or better, get in the car and go find your own leads. Seasoned investors call this ‘driving for probate profits.’ Sometimes, the very best deals have come from this very technique.
A property that is left vacant for years often has a story that could lead to profits. Someone has rights to that property.
*Research Properties: Once you’ve identified potential probate houses, research them thoroughly. Determine the property’s condition, market value, and any potential issues, like liens or overdue taxes. Over some time and with the experience of many deals, you will develop a checklist and format, so you don’t forget these important details.
An essential skill for every probate investor. At a minimum, you’ll need access to services to generate fast and accurate information. A cooperative title company is essential. You can research yourself OR order a title report directly through the Property Onion. For leads, regularly check public records, legal notices, and local property records to identify potential pre-probate and probate properties.
*Communication with the right people is essential: Property Onion provides an invaluable skip trace service that may give you critical information, like phone numbers, mailing addresses, email addresses, contacts, and more. Locating the exact people you need to find is crucial for this process.
Contact the Executor or Personal Representative: Reach out to the executor or personal representative of the estate if you find a property that you’re interested in. Express your interest in purchasing the property and inquire about the sale process.
Attend Court Hearings: In Florida, the sale of probate properties often requires court approval. Attend court hearings related to the property to stay informed about its status.
*Conduct Due Diligence: Perform due diligence by inspecting the property, obtaining a title search, and ensuring that any necessary repairs or renovations are budgeted for.
Be aware of potential pitfalls but keep pushing forward. The rule of thumb is “I’ll take it unless I change my mind.” During the due diligence phase, every now and then, a surprise comes up that is not a pleasant surprise. In that event, start looking for the exit.
This is a great business and a very good way to assist heirs, families, and beneficiaries, whilst helping yourself, too.
*Make an Offer: Once you’re satisfied with your due diligence, make an offer to purchase the property. It’s a totally different world when you negotiate with the executor or personal representative vs. an heir or beneficiary. In the end, the process is pretty much the same. Your attorney or real estate professional will be of great assistance at this point.
In most cases, negotiations continue right up to the date of closing. This is common in many. Others, not so much.
*Secure Financing: Ensure you have the necessary financing in place to complete the purchase, whether through traditional mortgages, private lenders, or cash. Probate investing is like any other aspect of real estate investing. For the creative investor, probate sometimes offers opportunities to partner with the heirs, purchase ‘subject to’ very low-interest rate existing loans, or benefit from purchase money financing by the seller (heirs/beneficiaries).
*Close the Deal: Work with your attorney or real estate agent to complete the closing process. This involves signing the necessary paperwork and transferring ownership.
*Manage the Property for the Best Cash Profits: After acquiring the property, decide whether to rent it, renovate it, or resell it based on your investment strategy and the specific property.
*Rinse and Repeat: Once you have completed your first probate deal, you will be back. This is a great business and a very good way to assist heirs, families, and beneficiaries, whilst helping yourself, too. While probate investing can be profitable, it also comes with its share of complexities and legal considerations. Seeking guidance from experienced professionals, such as real estate agents with probate expertise or attorneys, can help you navigate the process successfully and maximize your investment potential in Florida’s probate real estate market. Once your team is set, your job is to (1) Find, (2) Analyze, (3) Fund, and (4) Close your way to probate profits.
These are all the ways you can set out and purchase your own probate properties. Unfortunately, as with any new business venture, it’s a trial-by-fire enterprise. You will make plenty of mistakes on your journey down the road to riches. If you want to skip all the newbie mistakes and save yourself a lot of frustration and lost income and time, I can teach you one-on-one in my probate course.