Buying Deceased Estate - Pros, Cons and Gotchas

Hi Guys,
I'm new to investing and to this forum. I had a bit of a search but surprisingly couldn't find the topic I was looking for...
Anyway, among other strategies I am looking at off-market. In some of the things I've been reading it talks about deceased estates being a good strategy and I hadn't really given it much though, opting for a simpler solution to start with. However, today while I was getting a list of owners for potential deals, I came across deceased estates, it got me thinking;

1. What are the pros and cons in purchasing deceased estates for investment?
2. What are the gotchas and dangers to be aware of?
3. How would you recommend best approaching the executors of the estate? For other properties, I'm sending a friendly personal-styled letter. Should I vary this approach?
4. Have any of you used this strategy and how did it pan out for you? Would you use it again?

Any help would be greatly appreciated!!
Shawn.

 

The gotchas are definitely the ghosts of people who passed away in the house. Up all night and can't ever get them to leave or pay rent.

 

Did the person die in the house? Theres another thread somewhere that suggests a lot of people wouldn't buy, rent or live in a house someone has died in (knowingly).

 

Pros:
- price
- potential for renovation
- potential for development

Cons:
- competition with other buyers who have the same idea as you do

Illegal mods done by the owner is the only danger I have come across.

I have bought 2. One at auction, one listed on the open market. I don't know if you can do off-market deceased estate.

I have bought 2. Worked out well. I would do it again. As mentioned above, that is on the open market.

 

One place I bought in Melbourne the agent disclosed the previous owner had died in the house. None of the property managers I subsequently hired disclosed that to any prospective tenants.

 

Assuming you've seen the original 1982 Poltergeist, assuming it's not built on cemetery, it should be OK...

 

Mine became a deceased estate just before settlement - held up settlement for a few more weeks but that was all technically.

 

1. Pros - Could be cheaper in price but if on the open market makes it hard to be cheap. Cons it has a stigma associated.

2. Normal DD - I guess also make sure there is no odor left around or worse the body if they died there.

3. Approaching the executors is to me a bit slimy (or seem to) and you might put them off as they are going through the grieving process. I would be just waiting for it to hit the open market.

4. No but have considered purchasing one previously but we never got to contract.

 

Thank you everyone, I really appreciate the feedback.

 

This got me thinking... deceased estate doesn't indicate the previous owner died in the property. I was thinking of the Melbourne property I bought where the owner died in the property. The only item left was a red armchair that the previous owner supposedly died in. That old red chair haunted the house for about 4 years.

The place I bought in Perth was a deceased estate but the previous owner did not die in the house.

 

I'm too superstitious to knowingly buy one. My loss I guess

 

You wont get them any cheaper in a warm or sellers market, in fact the beneficiaries may bicker and hold things up, or have higher expectations.

Normal market forces will determine things, if it is a buyers market though, you could do well if the only interested party and the decision makers are not emotional over the property.

I have been trying to get a place that is/was a deceased estate, but the person is emotionally attached to the place still, place passed in at auction long before I looked at it, has not taken any offers seriously IMO, at some point they will let go, so yeah, you can waste your time as well.

 

When the old boy found out about that, I assume his kids are going to learn a harsh lesson about presumption when they find out about both his new big reverse mortgage and his exciting times at the TAB...

 

The main issues I think would be repairs and renovations needed.
The owners in the last years of their life may have been physically and/or mentally frail and the house went into disrepair.
Also the place may be a time capsule - it may be just how they liked it straight out of the 50s and 60s (shag pile carpets baby) but that's no state to put it on the rental market

 

I had a friend back in the 90's buy a deceased estate, the house had been there years and was in the front of a Cemetary up at Sandgate in Newcastle NSW .

You could be washing the dishes in the back kitchen and could see the graves of the people through the window as he only had a small wire fence up as his back fence.
It was so close i could even read the names of the deceased as i stared out the back kitchen window.

 

by the sounds of it I'm sure his kids were disappointed as well that he did not go six feet down so they could make money from his property.

I would buy deceased estate as long as there was no crime like a murder in the place. I think it is law that agents have to disclose that anyway on a sale.

 

This scene from the Simpsons comes to mind - 1:57

 

Common strategy for me as lots of the sales agents I know dislike marketing them, plus sibling children are often arguing and just want their money. So they call me for a quick outcome off market...most times the original owner has been in nursing home for last 6 months and house has been empty or lived in by other family most recently. They often present badly, need cosmetic work and represent sound investments as are often solid homes in quiet streets but are not necessarily bargains, just fair deals once the rectification work is factored in. There are also websites that list them directly if you have a look around.