Pros and Cons of Probate Investing

Real estate investing has been around for centuries, but probate investments may leave you scratching your head a little.  The Probate legal process of validating a will, paying debts including taxes, and distributing the remaining assets could take up to a year, often times what emerges is an opportunity to purchase the property from the person that’s left to handle the assets.

Probate Investing Benefits and Disadvantages

Photo: Simon Cunningham CC: Some Rights Reserved

There are many benefits for choosing to invest in probate; here are a few to consider:

Large Probate Inventory

While there are 13,000 monthly estate sales held each month in our country, there’s an average of 6 million properties in probate.  You may be thinking, single family homes, but these estates may include condominiums, townhouses, motels and even commercial real estate investment opportunities.

Motivated Sellers

It’s a buyer’s market when the sellers are motivated to sell quickly.  Most trustees have homes of their own when they’re left with a property, they must also sell the home and all its contents in a timely manner to pay off the debts associated with the estate.  Sellers that do not rely on professional probate real estate agents and estate sale companies to liquidate the assets are somewhat vulnerable, making it a buyer’s market.

Besides furniture, estates may include classic cars, fine jewelry, fine art and collectibles.  Millions of items are liquidated on a daily basis; it is always best to hire an estate sale professional that will setup, inventory, and price and sell the items at the highest value possible.  When multiple beneficiaries are involved, the liquidation professionals serve as a liaison between all parties involved including real estate agents, probate lawyers and family members.  If there are no professionals handling the sales, there’s a lot of deals to be had.

Getting excited? Not so quickly, no one ever said it will be easy, along with the benefits of probate investments comes a whole slew of disadvantages and risks to be aware of.

Probate Leads

There’s no easy way of finding probate leads online, it may require countless hours at your local courthouse, manually sifting through paperwork to find only one lead, and that’s not a guarantee you’ll succeed at turning the lead into a viable one.

Beneficiaries and Heirs

Executors are generally close relatives of the person that passed, they are mourning the loss and having to deal with the probate process which can be extremely sensitive, getting them to talk and agree to a sale is a difficult task that gets more complicated if multiple relatives are involved.  All beneficiaries must agree in order for the sale to occur.

Experts suggest that probate investing in an upmarket is a bad idea; they also recommend sticking with larger cities which provide you with more options.  Look closely at statistics to choose big towns that have a large percentage of elderly population and the real estate properties are in a flat or declining market.

Probate investing is a niche industry that has a wide range of criterias and risks, your best leads are found in the local newspaper, working closely with a probate attorney (s) or your local courthouse.

If you’re an executor, experts suggest relying on estate professionals to guide you through the process.  The benefits of relying on a professional will outweigh the costs involved, and protect you from savvy probate investors.

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