Probate leads for real estate investors are a largely untapped market. There are many coaches that teach people how to pull probate leads, but the process is harder than most think…so most give up almost immediately. There’s only 1 company in America that’s managing an army of people to pull these leads properly, and that’s US Probate leads. Don’t miss this educational and opportunistic show!
Mike: Welcome to the FlipNerd.com podcast. This is your host, Mike Hambright. And on this show, I will introduce you to VIPs in the real estate investing industry, as well as other interesting entrepreneurs whose stories and experiences can help you take your business to the next level. We have three new shows each week, which are available in the iTunes store or by visiting FlipNerd.com. So without further ado, let’s get started.
Hey, it’s Mike Hambright with FlipNerd.com. Thanks for joining us for our latest episode. We have a great guest today, that’s Leon McKenzie of US Probate Leads. And Leon believes — and a lot of investors believe — that probate leads are a great source of leads for real estate investors.
Before we get started with our interview today, I’d like to take a second to recognize our sponsors.
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Leon: There just aren’t that many people that are really working the probate process. Not too many people really understand it.
Leon: And it’s a little different from most folks.
Mike: I’ll tell you, Leon, in my experience, there’s a lot of real estate investing training that’s like that. It’s always made to sound easier than it is. And then people get out, and they have to realize how much of their time they’re investing, or how much money they really have to invest to get leads and buy houses and things like that. Then they tend to fail, which is why there’s such a high failure rate in the real estate investor… kind of from training and gurus and weekend boot camps and things like that, to an actual successful real estate investor, there’s a huge fallout rate.
Leon: That’d be a bad number to look at.
Leon: People really don’t want to see that. Because you’ve got some real disappointed people in that situation.
Leon: And when we put this company together, our background was engineering and large company work. And what we wanted to bring to this space was professionalism. And everything we provide, we’ll stand behind. We have very few folks that have really been disappointed with what we provide. We provide what we say, when we say we’re going to do it. I don’t know of any other company doing it. There is no other company doing it on a national level. So at the national level across the country, pulling this type of information, we’re the sole source for that. Which is… and that’s pretty unusual in any business space.
And we just grabbed it up, we started working it. And I think it was sheer tenacity. We weren’t smart enough to stop. So before… we just kept sending people back out, and hiring new people, and keep working it. But we’ve been at it now for about 10 years, and the whole… we’ve got a good handle on it.
Leon: We really can deliver, now, where other folks just haven’t even tried.
Mike: Yeah. It seems like your business model is really just… it’s more of an operational exercise to recruit people in markets all around the country that’ll go pull probates on… I assume there’s a couple day period a year, a month, when they go out and pull for the previous month. Does that typically happen?
Leon: Depending on the number of probates in the county. Chicago, as an example, we pull about 400 probates out of there.
Leon: So the person will probably go in maybe once a week and pull it. We consolidate it at the end of the month and send it.
Leon: Surprisingly enough, the number of probates available in individual counties isn’t as high as I would have thought when I first got into it.
Leon: We see about 125 probates per million population. And I assume that as the baby boomer generation gets a little older, that number will go up. And that’s in the more yuppie-type areas, like the Dallas-Fort Worth, Chicago, Midwest. You get up into the Northeast, that number could double. You might see 250 or so. You get down to Florida, where some of the older folks live down there, that number could triple, quadruple, or something like that.
Surprisingly enough, you get out to California, and that number goes down by a third. So we… and the best we can figure is the folks out there are probably a little more legally aware. There’s a lot of trusts put together and things like that. So you don’t see as many things go into probate.
But just the same, as a lead source, it’s probably the best lead source possible for residential real estate.
Mike: Okay. So in your business… given that it’s harder to pull probates in certain parts of the country, or certain metro areas, when you sell the leads… which you’re really not. It depends on how you define “lead.” But there are addresses that you could mail to people, or prospects you could mail to. Do you sell those at a higher cost in areas where they’re harder to pull?
Leon: We do. The way we look at the pricing is what is the location and what’s the demand in that location. We’re… we try to keep the number of people that are going to get our leads down. Like I said, there’s not a lot of folks that truly understand this model, so we don’t see as many folks as sign on board.
Across the board, what you’re going to find… we sell leads, 25 leads for $150 a month, 50 leads for $200, 100 leads for $300. And that’d be in any county in the country. But if you got into some of the larger counties, where there’s more data, then based on the location of that city and the ease of the data, the price may be a little different than it is for other counties.
I’d say in general, across the country, we’re fairly stable. I don’t think I thought that answer through as well as I wanted to. We’re probably pretty consistent throughout the country. But there would be areas… I mean, you could go into Houston, I think our leads are cheaper down there than they are in the north, the far northeast. And part of that is just simply the effort that it takes to go in and get it.
Leon: We use paralegals and attorneys. And they’ll go in, and in some cases we can get 200 leads a day, and then other cases we can only get 100 leads a day, simply because of the situation at the court.
Leon: So that’s factored into the pricing.
Mike: Okay. So who’s your typical customer, Leon? Is it a veteran real estate investor? Is it somebody that only does probate and just does this part time, or… I think you also sell leads, or you provide probate lists, to non-real estate investors. I think I remember talking about that before. Maybe credit card companies, or other folks that might want to be aware of probates that have been filed. Things like that.
Leon: We’ll sell generally to… actually, the way we got started. We had been with it for a while, and some banks and credit card companies hit us and asked us for the information. They use it for fraud purposes. So that gave us the… I guess, then, the basic number of people that we needed to be able to grow the thing, and to get the core team in.
So using that as a base, then we market to investors, real estate investors. And that’s our key target. Realtors will come to us, in many cases. And I think we’re starting to see more and more realtors learn a little bit about what we do. And they use it, obviously, for rental purposes. Our core business, though, is aimed towards real estate investors. That’s where we… that’s the target market that we went after, and those are the folks that generally come to us. They could be a neophyte, buying 25 leads a month, or it could be somebody that buys up four counties worth of data, and buys all the data in that county each month.
So I would say that we span pretty much the entire spectrum of folks that purchase our leads.
Mike: Okay. Okay. And you say you’ve… I think you mentioned, also, that you’re starting to move into the direction of not just providing raw data for people to mail to. You’re providing some training materials, and maybe videos or books on how… for people to get started in this space, as well. Is that right?
Leon: We have several books that we’ve written. We have books on just the basic process of probate investing. We have one that we’re really pretty proud of. It’s called “Communicating with the Executor.” I haven’t seen anything quite like it. It’s about 100 pages, and it has about 50 pages worth of letters and postcards and things like that, that you would send out. And what it addresses is how do you actually talk to that estate executor. What are you telling him? What are you trying… what message are you trying to get across? What are you trying… what shouldn’t you say, and stuff like that.
Leon: When you’re dealing in the probate space, keep in mind what has happened is somebody has lost a loved one, and you’re reaching out to that individual. And it’s a win/win situation, because what’s happening is that individual is typically in a situation where he needs to sell properties in his estate to be able to settle the estate. So he has some… he may have some preconceived notions as to what he’s looking for.
So we put books together. We got software that does CRM… has a CRM package. And we’ll allow an individual to actually go in and do drip marketing campaigns. So that’s… we can talk about that a little bit later, as to what we mean by that. We have mentoring programs set up for somebody that’s getting in. We have three levels of mentoring program, a silver, gold, and platinum. We have some webinars that are available on-site, and then we can customize some webinars. And then we also have seminars that we offer here in the Dallas area. And we have two levels of those, offered at some of the major hotels here for…
Basically, I think what you would find, if you went through the site, is anything that you would feel you needed to become a proficient probate investor, we have that type of information available for folks. I’m pretty proud of the stuff we’ve put together. It’s been over the years, it’s… and it comes from the fact that we work with an awful lot of folks out in the field.
Leon: And we have a chance to hear a lot of stories. So all those have been folded back into our materials.
Mike: Right. Right. And I think we’ve known each other for… actually, at least five years or so. So I… every time I talk to you, which isn’t real frequent, but when we talk, you’re always making progress, so I know you’ve been chipping away improving this program for years.
Leon: We feel good about it, and we feel like we’re reaching the threshold where we’re starting to become pretty relevant in this space. A lot of people have heard about us. We get calls from people all over the country now, and folks will say they saw us in the print media, they heard about us at an investment club. And that can be anywhere from Coeur d’Alene in Idaho down to Miami in Florida.
Leon: I mean, the word is out there that US Probate Leads is one of… is probably the company where you want to go to start your program at this level.
Mike: Right. Right. And now they’re going to say, “We saw you on FlipNerd.com.”
Leon: I tell you what. You can’t beat it. I said, thanks, guys. You’re going to be… have quite a reach with your program.
Leon: It’s an impressive start you got.
Mike: Good, good. Well, tell me this. So in the event where a married couple, one of the spouses passes away, do they typically still file probate, and you’re… you may be mailing to a lead that the spouse is upset because just because their spouse died doesn’t mean they’re going to sell their house? And tell me how that works.
Leon: Whenever you work in probate, and you send… and we will provide telephone numbers, if somebody needs telephone numbers. The only way we can get that is to go out and mine that off of public sources, because that’s not generally available at the… it’s not generally available from the probate court. But anytime you’re dealing in probate, where somebody has lost a loved one, then the timing is critical. It really is important. And you will run into those situations. And it could be a wife, it could be a husband or a spouse, it could be a brother. If you call them too early, you catch them at the wrong time, and you say the wrong things, then you could run into a situation where somebody’s pretty upset with you.
Leon: That is part of the process. And it runs people off from working in this space, to some degree.
Leon: What really happens, though… if you were to call that same individual three months later, six months later… and that’s the key to our program. We recommend that folks do their marketing campaign, that they do a mailing when they get the data, they do another mailing six to eight weeks later, then maybe do mailings at months three, seven, and 12. Keep something out in front of these folks. At some point in time, that individual is going to be in a situation where there’s going to be some pressure on them that they feel they need to sell.
And if you’ve done this properly, you’ve reached out to them, your… if, in fact, they did, if somebody did send a message saying, you know, “I don’t like you reaching out to me at this point in time,” and you handled that properly, that could well be a good sale for you.
Leon: And when you think about the amount of properties that are out there in probate. I mean, there’s $6 trillion worth of properties out there. $600 billion, I think, is the number that we finally came up with, available at any one point in time. The numbers are staggering. And there are folks that are in a situation where they’re going to want to sell properties in their estate.
So you just have to kind of navigate that mine field if you’re going to work in this space. The people that do that are the ones that are really successful with it. But I’ll be honest with you, guys who really are successful in this space are the ones who understand the drip marketing campaign, do continue to reach out to these people, have a good, consistent message to them. Probably are empathetic in the fact that there has been a loss situation here.
Leon: And can say the right things at the right time.
Mike: Right. Right. But just to clarify, though, just because somebody… a probate has been filed, doesn’t necessarily mean that there’s a house for sale. I mean, in a situation… I know if something were to happen to me, my wife’s not going anywhere. So is that right?
Leon: Well, that’s true. Generally see 70… in probate filings, about 70 to 75% of the filings will have residential property in them.
Leon: And it’s… and in some percentage of cases, some of those folks will not be willing to sell at this point in time. I would still say… reach back to that same person after a period of time has passed, life has caught up with them a little bit, and it may be a situation where the individual is thinking, “I really need to downsize, I need to get on with my life, I want to be closer to the kids.” You know, you don’t know.
Leon: And until you actually reach out to them with some kind of an ongoing program, you can’t tell. But it is true. And it’s just like any other sales situation. I don’t know what the… actually, what we have down, because I ran some numbers on it. Probably 10 to 15% of the folks… of the mailings that we do in a drip marketing campaign, we will receive return calls on. So that’s pretty high. I mean, there aren’t too many other lead sources that can make any kind of a claim like that.
Mike: No. That sounds very high. Yeah. Well, tell us a little bit about the business side of US Probate Leads. I know you work with… you said you work with your son. Did you guys start together from the beginning?
Leon: We did. We worked together since he was 10 years old.
Leon: I [inaudible 15:15] computer companies at the time, and he was… he was my go-to guy for my computer companies. But we’ve been together since then. And that’s something, as a dad, I’ve always wanted to do, is work with my children.
Leon: It’s a real neat goal, and to be able to be at a point where I am in my life, to be able to say that my son and I have put together something that we feel real proud of. It’s very satisfying, I have to admit that. It’s nice.
He handles the operation side. I do most of the talking in front of cameras and stuff like that. We’ve got to change that model, because he’s a better looking guy than I am. Just, the concept is how it works today.
Mike: Okay. And so how do you… tell us a little bit about your background. We should have started with this. But I know prior to doing this… you’ve always been a very kind of data- intensive guy. And why don’t you tell us a little bit about kind of where you started, I guess.
Leon: Yeah. I came out of the aerospace industry, actually. I worked with most of the big aerospace companies around the country. I did my… [inaudible 16:19] educationally, and picked up an MBA, and have a master’s in aerospace and celestial mechanics. So… and when celestial mechanics, when the market starts to die down, you start looking around. And, like I said, we got into investing, and owned a number of properties ourselves, and saw a concept that we thought made sense. So we shifted over into that.
I’m kind of a serial entrepreneur. I’ve had many other companies as… I’m a little older guy, so I’ve been around a while. We did some work with… we had a… when computers first came out, we did some training. Had a training company, Home Computer College, and then The Computer College. And then we went on to Golf Gifts. Put together an executive golf gift program that we sold, and made gifts available to older folks like myself. And then eventually ended up in this space.
I did a lot of work, in my formative years, working with major companies. I was with AT&T, IBM, and a lot of those folks, and used to serve as a senior project manager for them. Mostly troubled projects. If somebody had some serious problems, then I’d be kind of… dropped in, and my job was to straighten the project out, and then somebody called me to another location. You know, racking up a lot of air miles, and stuff like that.
Leon: It’s been a fun career.
Leon: This is a… I think most of it was pointing me towards something like this, you know, whether I did this specific thing or something else. But I’m really happy where we ended up. I think that this is something that my son will carry on long after I’m gone, and it’s going to be something that’s going to be a market… part of the market… you know, a market presence going forward, so…
Mike: That’s great. That’s great. Well, tell me a little bit about… what do you think is going to happen over the next say, five years, from a technology standpoint? Is this going to get any easier to pull probate leads, in terms of your competition, let’s say? Because I know there’s a number of things from even our title companies and things, when we buy and sell houses today, is significantly easier because some of the… at least the counties where I’m at have improved their technology. I know anytime you have a government entity, whether it’s city or federal, they tend to be way behind the curve. But how’s technology going to change things here?
Leon: It’s really surprising. You would think… I would have thought, 10 years ago when we put the company together, because the Internet had been… was pretty functional at that point in time. And why wouldn’t these little probate offices turn around and automate all their information, and why couldn’t I just pick it up off the Internet? Common sense says you would want to do that.
The court systems simply do not make that type of information available. And really… it’s kind of interesting. What you find is when you go into a courthouse, the lady who’s… and generally she’s been there for about 35 years. A gray-haired little lady that’s sort of running the probate office itself. The system that worked 35 years ago is perfectly appropriate.
Leon: I mean, they saw 35 years ago, they saw 75 probates, and today they see 90 probates. I mean, for them, the system that they have in place works fine. Why change it?
Leon: They just simply don’t make… they just simply don’t have the desire to change it. The court systems themselves do not want to make the information any more readily available than what it is. So I don’t see that changing. I think going forward that this is a market where somebody’s going to physically going to have to go in and get the information if they want it. That’s the only way it’s going to be retrieved.
Leon: Well, I couldn’t think of anything else in the… I couldn’t think of any other business model where that would be a case. Where technology wouldn’t just come in and swamp it. I mean, I could turn around and write software for all 3,100 of these things in the course of six months, and put a good system together that anybody could get anything they wanted. I mean, it’s possible to do it. But there’s a resistance to make that happen. And it’s just not going to happen.
So a company like ours that has the ability to have people to go in… that’s not a… that’s a non-trivial task, to build a team to be able to go into that many counties. I mean, we have hundreds of researchers today that go in, and getting the data back from them, and getting good solid data, and getting the right people in and stuff, that’s a bit of a task.
Mike: Oh, I get it.
Leon: And that’s something that we’ve worked long enough that we feel pretty comfortable with.
Leon: I really don’t see technology changing this particular space, which is surprising.
Mike: It’s one of those things, in the real estate investing space… and I’ve said this many times before, is that what creates a lot of opportunity for me, and apparently for you, is that technology is not being adopted fast enough in our space. There just tends to be a lot of fragmentation of information. And it’s a very inefficient industry. And that’s, in many ways, how we benefit, because we can… especially for folks that are willing to take some investment and work hard, you just have to outwork and out resource the next guy, which isn’t too hard to do, generally speaking.
Leon: And for an individual that sits at his computer, and he’s looking for leads… and, you know, you’ve heard. I mean, in the past, what, four or five years, some of the leads have started to dry up, with the foreclosure market [inaudible 21:27] up, and things like that. Where do people go to get leads? And I’ve seen people try a little bit of everything.
Leon: I mean, that’s kind of the… what makes the most sense for pre- owned properties? Well, a pre-owned property, where a Baby Boomer owned it, he’s not going to be using it going forward, that is an available piece of property. His kids have already moved on. They’re in their own properties and everything. All of a sudden, they have this extra house. There just isn’t anything better. I mean, it just… it’s just… it’s better… it’s probably the… well, I won’t say “probably.” I know it’s the best residential real estate lead source in the country. I mean, I know that. And going forward, it’s only going to get better.
And the baby boomer generation’s getting to an age where, in the next 20 years, there’s going to be a lot more properties turning over and stuff. And the guys that are positioned know how to do this, know how to reach out to these folks, have a system in place.
When you’re doing that… what I was calling the drip marketing campaign. If you do a mail… if you bought a subscription, and I sent you 100 leads today, and then you mailed, in three months, another 100 leads, well, you’re also mailing the 100 leads that you had from the start again, at that point in time.
Leon: And then, if you do mailings during the course of the year, by the time you get out to month 12, you’re sending out 400 letters. Now, all of a sudden… and you’re reaching people at different points in… that they’ve actually been in the probate life cycle. Now, all of a sudden, you have a program.
So I think it takes a little bit of time to get that geared up. But once you do, month after month, our data comes to you, and it’s ready and available.
And we were talking a little earlier, we’re in the process of putting together a turnkey system, where we can provide total support for somebody in this space. And I think that’s important for folks. Something where they can get their mailings handled by somebody else. The proper letters going out. And as they do that, then they’re… what they’re doing is working the leads. And that’s what an investor wants to do. He wants to have a good, solid lead coming in to him that he can actually work. And the key to that is finding a source somewhat like ours. And we’re pretty proud of the approach we’ve taken.
Mike: Yeah. Great. Great. Well, anything else on the horizon for you guys, Leon? Are you just going to keep improving your probate leads, or being a data guy? Or are you looking at any other sort of lead sources or opportunities in your space? The real estate space, I’d say?
Leon: I’ve looked at… you know, I mean, the other types of things might be… surviving spouses, or something like that. Coming up with a list in that space. There’s probably some other court- related things that we could do. There’s companies that do some of that, and those guys are proficient at it. I mean, there’s places you can go to get that type of information.
Leon: And I think what we do… we would be doing is diluting our market space. Today we have… like I said, we’re in about 1,000 counties today. Basically still have 2,100 to go after. So we’re okay for a couple years. We’ll stay busy.
Mike: Yeah. Do you only go into new markets once you have somebody that’s ready to buy leads, or do you have counties that you’re pulling in now in anticipation of hoping to get customers?
Leon: The reason I do is because of the banks and credit card companies.
Leon: They have need pretty much throughout the company. So that’s why I’m in 1,000 counties. That doesn’t mean I have 1,000 investors in those 1,000 counties…
Leon: …pulling the data out of that. So if you were to go across the… the way population centers work… I mean, you do that in terms of the… looking at what you guys do with your work. But if you took a state, there’s a… and take Texas. There’s probably five major metropolitan areas. And in those five major metropolitan areas… what’s that, Dallas, Houston, Austin, San Antonio area, the Valley, and El Paso, if you took those areas, what you’re going to find is that you’ve reached 80% of the population in that state.
Leon: If you go into one of those areas… take… well, take Houston as an example. 85% of the folks are in Harris County, in one single county.
Leon: In Dallas, you would find 85% in four counties. So by… with a 1,000 county hit, hitting most of the major metroplex areas in the country, we cover probably 80 to 85% of the population.
Mike: Right. Right.
Leon: [inaudible 25:38] call, and I did the other day from Hamilton County in Tennessee, which is in Chattanooga. I picked up a… I mean, there’s some smaller counties that we’ll… somebody will call us about. And we fortunately have folks that are close enough in… to that county that they can get over to the county to pull the data for us.
The key for us is to make sure the right person goes in to get the data.
Leon: I want to make sure the data I provide is accurate data. That somebody’s touched it that knew what they were doing. And even more so, I want to make sure that the person that goes in and gets the data is going to go back next month and get the data. Because the last thing I want is somebody starting and stopping.
Mike: Right. Right.
Leon: And people that try to work in this space, you know, maybe went through some of those classes and stuff, but… you know, they solved the problem by going out and hiring somebody. I got this figured out. That poor girl, she’ll go down, and she’ll sit there, “My God, what did I get involved with? I mean, this is really tedious.” So then the guy has to let her go, and he has to go find somebody else. We take all that burden away from people.
Leon: We [inaudible 26:38].
Mike: That sounds like a huge burden, too. I mean, that’s like herding… it’s got to be like herding cats. So I don’t envy you at all.
Leon: When we… I [inaudible 26:46] signed up for, if I knew what I was getting involved in. I mean, like I said, when I started, I thought I was writing a computer program.
Leon: But, you know, once we got into it, and got to playing with it a little bit, we saw it’s just… that’s not the program that you have to do to be able to do this.
And then it’s like, technology… now, that’s where technology’s interesting, because now we can communicate with people. You know, years back, the ability to be able to do the things we can, and the reach that we have today, is so much improved over what it was in the past.
Leon: Technology helps us in terms of being able to get out to work with people.
Mike: Right. Right.
Leon: And… but to build the type of organization that we have would be… that’d be pretty cumbersome for somebody to give it a try to, yeah.
Mike: I bet. I bet. Awesome. Well, we’re going to add links to your website, which is USProb… USPro… why don’t you tell me what it is, before I say it wrong?
Leon: It’s ProbateLeads.com.
Mike: Okay. USProbateLeads.com. And we’ll link to that below the video. And any other things that you might want us to post below there? If you’re interested in getting a hold of Leon at US Probate Leads, just visit the site, and there’s contact information on there, I’m sure. And Leon, thanks so much for joining us today.
Leon: I appreciate it. Thanks so much, and best of luck to you and FlipNerd.
Mike: Awesome. Thanks. Have a great day.
Mike: Thanks for joining us on today’s FlipNerd.com podcast. To listen to more of our shows and hear from incredible guests, please access all of our podcasts in the iTunes store. You can also watch the video versions of our shows by visiting us at FlipNerd.com…