Hope your week is going well. Although it is my favorite time of year, when cool weather should be here, it certainly does not feel like it yet!
The broad umbrella of Real Estate Investing could be carved into many, many different niches, and one of those that you might find interesting and rewarding is what is referred to as "Probate Real Estate Investing".
What is "Probate"? Probate is the legal process used to distribute estate assets of a person who has died, as per the Stockmarketsreview.com website, in an article written by Simon Volkov, a California real estate investor who specializes in helping individuals with probate real estate investing.
This specific investment strategy involves buying real estate held in probate, and as Volkov writes, "In the best cases, probate takes about six months to settle", with the possibility of "complex issues or family disputes surround the estate", which can drag on for years. How can Probate Real Estate Investing (REI) help? It can help the heirs liquidate Real Estate before the probate settles.
The question is; "Why would heirs need to liquidate real estate holdings"? There could be many reasons, as Volkov says, and adds that one of the most common reason is that "the estate has insufficient funds to maintain the property." For example, the estate is responsible for making payments for property related expenses, i.e. Mortgage Payments, to avoid foreclosure. In addition, these expenses include homeowner’s insurance, property taxes, utilities and possibly even homeowner’s association dues. Out-of-town heirs need to maintain the property, but cannot from long distance, so often the estate will hire outside help, such as landscaping and pool maintenance).
Real Estate Investors - Perk up your ears....
As Volkov writes; "The majority of heirs do not know they can sell real estate holdings during the probate process." However, as he adds, "Some states require court confirmation prior to selling probate property." (and reminds us that "experts recommend working with an attorney when buying or selling real estate suspended in probate"). Probate real estate investing is a special niche not many investors know about, writes Volkov. Untapped market?
What do you need to begin? Know your market, know the judicial process, and head to the local courthouse, as Volkov suggests, to see where probate cases are handled, since probated estates are public records and can be viewed by anyone. He suggests checking the info in the decedent’s last will and testament (Volkov says that this will include contact info for the estate administrator, along with the "decedent’s wishes for distribution of assets and personal belongings."
The will also contains property info, and he suggests a search of the deed records, in which you can check the chain of ownership, and if there is currently a mortgage on the property (If so, the estate may need to sell the property quickly, says Volkov). Initial contact will be made with the estate administrator. This can be done by phone, mail or in-person, and Volkov reminds us that you must be respectful and offer condolences.
Footnotes on Probate REI:
* The estate administrator is authorized to make decisions on behalf of the estate.
* If multiple heirs are entitled to the property they must all agree before the sale.
* Delays can occur if court confirmation is required.
Overall, some fantastic info from Mr. Volkov. This is something that is not heavily capitalized on currently by Real Estate Investors, so if you give it a try, please give us some feedback.
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Have a Great Week, and Happy Rent-to-Owning !
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TAGS: #Probate #RealEstateInvesting #estate #heir #foreclosure #REI #will #testament #deed #mortgagenote