The goal of any real estate investor is to find profitable leads to generate long term wealth and a steady cash flow. Finding properties that will provide a rapid return on investment can be a challenge, however. If you’re paying close to market value for a property, then it could take several years for it to turn a profit.
Probate properties are an often-overlooked form of investment. Probate is the process that takes place after a person dies without a properly executed Living Trust. The deceased’s assets and liabilities are gathered, and the heirs are informed of their position with regard to the estate. The people executing the estate must pay the liabilities, and distribute the assets. Sometimes, there are not enough liquid assets to pay off the liabilities, and that’s when real estate is sold in order to pay the liabilities.
Probate is a good investment opportunity because the people executing the estate are looking for a quick sale, and unlike foreclosures and short sales, where you could find yourself dealing with troublesome sellers or distressed properties, probate sales are generally hassle free.
If you’re looking at dealing with probate, you should understand these key terms:
- Intestate: If someone dies without leaving a will, then they are ‘intestate.’
- Administrator: A person who is appointed by the courts to deal with the estate of someone who died intestate.
- Executor: A person, or entity, that was appointed in a will, to take care of the estate of the deceased.
There are a huge number of probate properties changing hands in the United States, and they offer valuable opportunities for investors of all levels, whether that’s someone looking to purchase their first home, or someone looking to supplement their income through rental property, or even through flipping property.
One of the best places to find probate leads is the local legal newspaper. Most legal newspapers have a legal notice section (often searchable on their website) that includes probate estate administration notices. It will take some patience to search through the notices and find properties, but it is worth doing.
There are some subscription services that will send you information about probate properties. This can be a convenient way of finding out about new properties in your area, but you should be aware that there will be many other people signed up to those lists as well. If you have the time to do your own research, then you may be able to find properties that the list makers have missed. Alternatively, you may be able to get in there and make an offer before the lists are published, beating the competition.
Probate is a good option if you are able to move quickly, and you have money on hand to invest with. If you are building up a portfolio of properties, then cultivating relationships with a few probate attorneys could help you find out more quickly about future investment opportunities.