Did You Recently Inherit Property? What Are Your Next Steps?
Inheriting property from a family member’s estate can be both a blessing and a burden. On one hand, it seems great to inherit a house, especially if it’s already fully paid off. It is a huge financial asset. You can consider moving into it. You can consider renting it out and earning some extra money. You can consider selling it and using the profits for something else. These are all good options for an inherited property.
At the same time, not all inherited property owners are ready to deal with the extra house that they now own. In fact, it often becomes a major burden (both financially and emotionally) for some homeowners. The property may be located in a different area—perhaps in a completely different part of the country. That makes it inconvenient to manage cleaning it up, getting it renovated, selling it or renting it out. The property could need a lot of work, and maybe you don’t have the time or money it will take to get it ready for rental or resale.
The longer you hold onto an unwanted inherited property, the more of a burden it can become. You also have to figure that even a house that is fully paid off will still cost you money to own. There will be property taxes, estate taxes, utilities, insurance and general upkeep. These expenses do add up. If money is still owed on the house, then that mortgage debt now falls on your shoulders.
With these concerns in mind, let’s look at three common scenarios for people who have recently inherited property.
If the house is in your area or in an area you like, you can always consider moving in. Perhaps the property is an upgrade over what you currently own or you are in a rental right now. Maybe the mortgage situation (especially if already fully paid off) is better than your current mortgage debt or monthly payments. Moving into the inherited house may make perfect sense. In this case, you will need to clean up the property as needed. It’s usually a good idea to make repairs and renovations before you move in, at least if you have the time and money to do so. Otherwise, make this inherited property your own new home!
Rent it Out
Another common solution is to rent out the inherited property. This is something that seems to make a lot of sense, even if some money is still owed on the home. You can rent it out, collect rent each month (as long as the house is occupied) and supplement your primary income. However, anyone who has owned a rental property will tell you it’s not as easy as it sounds. You do have to worry about extended vacancy periods. You may have to hire a property management company to handle tenant screening, rent collection and other day-to-day needs, unless you intend to do all that yourself. You may have renovations to make before it is ready to move in and then deal with ongoing maintenance and repairs.
It’s important to crunch the numbers and understand the full commitment of time and/or financial obligations that come with owning and managing a rental property. If it makes sense for you, then owning an income property can be a great supplemental moneymaker. If it doesn’t make sense, you may want to sell it before it becomes too much of a burden.
Flipping the house can also be a good profitable solution for an inherited property. Take the time and spend the money to renovate the house and get it ready to sell on the open market. Do what you need to do in order to maximize its resale price potential and curb appeal. Hire a real estate agent and list it on the open market to find a good buyer who is willing and able to pay top dollar. It will take some more work and cost you more upfront, but flipping an inherited property can net you a nice chunk of change. If you are fully committed or try to cut too many corners, however, a lot of things can go wrong. You must go into a house flip with a solid plan to make it as profitable as possible.
Sell it Right Away
Last but not least, you can sell it right away to a cash home buyer or a real estate investor. With this solution, you don’t have to worry about making repairs or the costs of ownership. You will be able to sell the property very quickly and pocket any earnings. You may not get as high a resale price compared to making renovations and listing on the open market, but you actually may come out further ahead depending on how all the numbers add up. Most important, it gets you out from under the burden of unwanted property ownership.
A quick cash sale is often a good idea for someone who owns a property in a different state or region and taking care of it is too much inconvenience. Or, it may also be smart when the house is a big time fixer-upper that needs a lot of work. It may also be something to consider if there is still mortgage debt to worry about and you don’t have the money to hold onto it for very long. Even if the property is owned outright, a quick cash sale can be beneficial in certain situations. Or, you can look into other creative seller financing situations depending on your homeownership situation.
The point is, you have options and PropertyLark is here to help. We are a full-service real estate sales company. We specialize in cash home purchases and other financing arrangements, but we can help you explore all your selling options when dealing with an unwanted inherited property. Fill out the contact form to the right and get started.