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It may surprise you, but many real estate investors have made money by investing in real estate in probate. So how does this work, you might ask. It is much simpler than you might think to successfully make profit in probate real estate investing.
Let's start with a basic look at how probate real estate investing works. When someone dies, all of his or her assets and debts are left behind, and are put through the probate court system before being distributed to the heirs. For example, Lillian Jones dies and leaves her mortgage-free home, its contents, some medical bills and a credit card balance to be handled by her heirs. Many times, the heirs will need to quickly sell the home and its contents in order to honor obligations to doctors, hospital, and the credit card company. Situations such as this often result in homes priced below the normal fair market value of the home in order to speed up the sale. The heirs are usually willing to sell for less so that they can pay off the debts, close the estate, and obtain their share of the proceeds.
If you buy the house below market value, you can usually turn around and immediately resell it at market value for a small profit. If you are able to do this many times, the small profits will quickly add up to a tidy sum. However, if you are willing to hold on to the property for a while, and put some hard work into it, probate real estate investing can quickly become even more profitable.
Homes purchased through probate estate sales are often older homes that may have lacked basic maintenance, sometimes for periods of several years or more. If you have the funds up front to invest in some materials and the skills to do much of the work yourself, there is a veritable fortune to be made in doing some cosmetic renovations to homes like this before reselling them. Often things as simple as new carpet, repainting the exterior, a bit of landscaping, and swapping out some old paneling for new drywall will significantly improve the marketability and potential for profit on the home.
Probate real estate investing can be quite lucrative, as long as you make sure of the value and condition of the home before committing yourself to its purchase. Like any other form of real estate investing, the buyer should always look for structural, electrical, and plumbing issues that might not be readily apparent upon walking through the home. But if you take your time and try it you may find this a truly worthwhile investment option.
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