Friday, April 30, 2010

Probate Versus REO Business By Gary DiGrazia Sr

I have had many questions regarding my Probate Real Estate business and how it compares to REO's. This is a great question so I want to spend some time on this. As a Probate Agent for the last 23 years I have also done REO's and my point is you don't have to choose one or the other as they both have the same result; earning a commission!

Probate Real Estate Investing or only acting as a Probate Agent is a year round good or bad market business and this is a key point. The REO's come and go and YES there are always REO's but not like we have seen where agents are doing 50 to 200 deals a year, expanding to teams to handle all the workload. This is a great place to be but what you have to realize is when you do this kind of production you do nothing else. Of course you are making BIG money but when the REO market ends which it will, what happens to your business then. If you are smart and place most of the money away for passive income then working REO's hard for 2-5 years could set you up comfortable when it's over and you have your monthly nut covered once we return to a normal market. The point is many agents who have a huge REO business right now will be hurting when it's over if they don't plan and use the money wisely. Many agents today with huge productions did not have this kind of production before the REO boom and have not built a steady business. Once we return to a normal market they will have to start over and could be in for a surprise. Don't take this wrong as I also have REO accounts but I manage them to complement my entire business. My REO's is about 30% of my business, Probates are 50% and the other 20% is my general client business (past clients, referrals). I'm using my REO business to enhance the retirement portfolio while my probates and regular business maintain my lifestyle.

Probate Real Estate and being a Probate Agent is steady business year in and year out. It is not conditioned on the market like REO's as there is always business. It doesn't matter if we are in a sellers market or buyers market when working Probates as this is Free money and the estate wants to close this probate and distribute the net proceeds according to the decease requests as soon as possible. Some will keep the properties but this is where we build our farm for future business. Probate Real Estate as either an investor or Probate Agent is a Six Figure per year opportunity most investors and agents are not looking at. Also, my probate system takes about 5 hours per week to do and now I don't do it personally as my team members do the research but even if I still did my own tracking it would only take about 5 hours of my time per week. How much time do you spend on your REO business. If you are doing 50 plus deals per year I would imagine it's 6 days a week about 10 hours per day to stay on top of this REO routine. I know I have been there and I let half the accounts go so I could have my time back and keep a balanced business.