Real Estate can be about creating long term wealth or cash flow. No matter which way you go, the big question is often, “What is the best, most profitable real estate buying strategy?” There are many but the best I’ve found in over 25 years of real estate investing is Probate. Let me take this opportunity to explain why Probate is a tool that every real estate investor must have.
Probate: defined as a process that takes place when a person who has assets passes away without a perfectly executed Living Trust. All assets and liabilities of the estate are then gathered and the heirs notified of their position in the estate. Then the legal process of paying the liabilities and distributing the assets will take place. There are several misconceptions about the Probate process that are dispelled in the Professional Real Estate Investor Class. But simply stated, the assets (including the real estate) often have to be sold to pay the liabilities. That’s where Probate becomes synonymous with “bargain real estate.”
When we hear words such as REO’s, foreclosures, and short sales we think about distressed real estate that may be purchased for a bargain price. When we hear the word Probate, the first thing that comes to mind most likely is an estate or asset protection, not bargain real estate. Probate investing isn’t about racing all the other investors to the deals; it’s a legitimate method for buying real estate below fair market value, without competition and being of service to the estate at the same time.
Why would you choose to chase foreclosures when Probate offers more opportunities with much less competition? Why would you choose to pursue properties people don’t want to vacate when you can focus your attention on properties that people actually want to and must sell?
Perhaps the most ironic concept about Probate is that it’s simple, very simple. People who don’t understand how Probate really works will tell you how difficult it is. But buying real estate out of Probate is actually quite simple, predictable and less time sensitive than many other buying strategies.
There are a couple of key terms you’ll need to understand when dealing with Probate.
Testate – Refers to someone who dies leaving a will.
Intestate – Refers to someone who dies leaving no will.
Executor – The individual or entity appointed in a will by a deceased person to take care of his/her property after their death. Also called a personal representative.
Administrator– A person given authority by a proper court to manage and distribute the estate of a deceased person when there is no will.
With millions of Probates every day just in the United States, there are opportunities at every level of investing. You can be a Probate Real Estate investor at whatever level you’re comfortable with. Buying your first home, supplementing your income by quick turning properties, buying your first rental property or using this strategy to become a fulltime real estate investor. Whatever your choice, Probate will serve you well. Not only will you find opportunities that can’t be found with any other method of purchasing property, there are also the hidden treasures of art, jewelry (my personal favorite), cars, collectibles, antiques and I could go on and on.