Probate Sales
I have a friend who has purchase a couple of properties through probate sales. It worked out well for him, buying properties sometimes for 50% market value.
As I have a legal background, I was thinking in getting involved in these. Does anyone have experience in this area? Please provide the number of years experience, positives & negatives, methods, and steps of purchasing properties through probate sales. Also, any tiips or tricks are welcome.
Thanks,
Jon
I have no experience but likewise have considered it but have not to date. You might google JG Banks, one of the supposed gurus. Recently saw an ad on TV. The course leaders in a wholesale course I attended in the last year raved about their ability to garner killer deals via this method. Best to you.
Marlene,
I guess it all depends what you consider to be the value of your time. Gary DiGrazia material was not written for total beginners, if that is what you call a bit unorganized. He makes his living, doing the exact thing he teaches and I found his arguments to be quiet forthcoming. To those who already have basic RE knowledge, his material spells with total absence of hip how he gets property 30% bellow MV or under listing contract, which allows him to win both ways. If one prefers nicer covers and prettier looking material, Jim Banks, one time Probate investor and CA Broker has his material available at 4 digits price. What’s important in this business is to have persistence and a good negotiating skill or you’ll likely waste your time, regardless of the source of the material. How long have you been chasing Probates in San Diego aria? Any luck so far?
I have ready access to local probate files, but am not sure how to make initial contact with the heirs. (Most local cases do not use a probate attorney).
For those of you who have worked probate, what does your initial contact involve? How do you approach heirs with sympathy, but still let them know you are interested in purchasing? Are you just working through attorneys? Would you just by-pass those cases that do not involve an attorney?
Actually, it is a good idea to avoid attorneys, because they are most often paid in percentage of the value of the estate and most of them have their preferred agents whose interest again is to get the highest price. Hard to find use for a reason, Gary DiGrazia’s course addresses this and other crucial questions in details. If you are serious about pursuing probates, spending $300-$400 on turn key operational course is money well spent considering the time and money it can save you on the longer run.
This looks like a good opportunity with the owner financing. I would try and find a partner. Make a business plan and show the worth of the property after rehab. An ideal partner would be a big contractor that would coordinate all the work for you and place a mechanics lein on the property. Agree to give some of the profits in (excess of his normal charges) from the sale to the contractor in exchange for waiting to get paid until you sell. Or you could find a money only partner, form a joint LLC and give them a % of the ownership and agreed upon % of profits after sale. Looks like enough profit here to get some interest.
Bob,
I have done these deals this size in Texas with investors due to lack of the $950K lying around at my house and they have worked out well for me so far.. it sounds like a solid deal with potential depending on where it is.
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[ Edited by commercialking on Date 05/24/2006 ]
Bob, so how did this turn out? Did the deal work for you?
The deal died because someone else came along and offered more money before I could get an agreement signed.
There is a lot of dilapidated properties in your aria, you just got to drive around and take notes on the regular base. The problem with decaying “alligators” though is that most of the good commercial lenders will not touch them due to inherent risk of default. Getting insurance on 50% vacant building may also be a challenge… To get a clear picture, as part of your due diligence you would also have to check with your local building and safety to find out what kind of violation it has accumulated.
Dealing with “nightmares” require special kind of therapy and I hope you have at list some kind of experience in construction management or my advise to you would be, proceed with caution and think twice before you attempt to remodel 40+ units relying on contractors or someone called Jose and his cousins. The job is not a joke! Anyway, If you get another deal in need of extensive repair, I know a HM lender who on occasion may do a short tern loan at a fair rate, if the property is in good aria. Shoot the property info, parcel number or address and I’ll run it by him. Upon completion of the rehab, you would have to refinance but then, that should not be the problem.
[ Edited by REOCON on Date 07/02/2006 ]
thnx guys for all the info...we have some sfrs we could use for credit lines to put down on commerical properties...i guess that will be the better way to go...i here there are some good books out there i think i will read also
This is what Commercial Lenders expect:
http://www.thecreativeinvestor.com/webinars/lending/index.html
Joel,
I went to that link several times and could only get the first two seconds of the MP3 audio file.
Is all the information in the Powerpoint? If not, any suggestions on how to run the audio?
Thanks,
Chris
Quote:
On 2006-05-14 12:28, ypochris wrote:
Joel,
I went to that link several times and could only get the first two seconds of the MP3 audio file.
Is all the information in the Powerpoint? If not, any suggestions on how to run the audio?
Thanks,
Chris
????
What most RE Course originators won’t tell you, the strategy they teach are market specific! When the market conditions change, the levers of acquisition change along. What never change though are the basic RE principles and you should learn them first.
For quiet little money, you can buy RE principles book applicable to your state at any Barns & Nobles store even this afternoon. You can also quiet inexpensively attend local RE license school classes where in the meter of months you’d lay out the foundation to which you can then apply creativity in each segment of the process.
Cutting corners works on occasion but more often, those who do that end up confused, always feeling there are bits and peaces missing. Now you know why.
Answer/s to your first question (and much more) could be found on: http://www.housingnyc.com/. As a meter of principle, evicting a tenant in NYC runs close to impossible, unless they stop paying rent for example …but don’t despair. Ask around who is the best eviction lawyer firm in the city then check with them what options do you have. A crafty attorney can be quiet helpful.
As far as how you can find cash flow deals in the city, let me ask you something; Did you ask the same question any broker who specializes in multifamily niche? Also, why the deal has to be in the city? 2) Relative to the building you are looking at, who owns the land under it? Maybe you can buy a land lease vs. the building itself. Where is it located? Can it be converted to co-ap or condo? NYC is a specific type of animal. To make money in NY RE you have to look for hidden opportunities; for example in potential zoning variances, or within the art of assemblage. You can also sell air rights if someone next door wants to build a skyscraper, etc, etc, etc. Weather a deal has a cash flow also depends on how much money can you put down. If you are hoping to get a seller to carry 20% so you can finance 80% and have the cash flow, you are banging on the wrong door. In case you have a good chunk of cash, start looking in Yonkers, Brooklyn or LI to improve you odds or, get more experienced partner at list for your first deal. Good luck!
You failed to say what is there now? Are you building a new structure, adding sft-age or simply rehabbing? … In simple terms, it is up to you to play with variables; determine NOI then divide it with desirable CAP and you’ll get the value. Or hire appraiser and let him do the work. With “so many” choices, you’ll certainly know what to do next
And feel free to enlighten us on market condition in your aria, we are quiet anxious.
What is the prevailing CAP rate in your aria?
You are paying for water with a restaurant-tenant? Seems like this could be quite an expense...
[addsig]
a good appraiser will use any applicable approach to value. Depending on the age of the building, that could include cost, sales, and income. If its old, probably just sales and income. Make sure your considering all expenses before capitalizing the income (taxes, insurance, management fee, utilities, repairs, site maintenance, reserves for replacement, professional fees (legal, leasing commissions to agent, etc.) and on and on. Then capitalize the indicated NOI, and woola, value. Finding good mixed use sales will likely be challanging. Since the property is going to be completely rented, the income approach sounds to be the most applicable and reliable.