First, we’re so sorry for your loss. This can be a very challenging time for many reasons, and dealing with property ownership is tough at the best of times.
You’re thinking, “I inherited a house, what to do with this house?” Should I rent it? Should I sell it? How should I sell it?
There are a lot of options available to you, and each option you choose will have different steps involved. Below are some tips to help you navigate the process.
I Inherited A House, What To Do Next?
Here’s a few important considerations to help you make the right decision:
1) Make sure the mortgage is paid.
This may sound obvious, but if the person who left you a property also had a mortgage , you have to pay it (assuming you want to keep the property). Some banks will allow you to assume the loan, while others may force you to refinance into a new loan. If you don’t qualify for a new loan, renting may not be an option for you. Alternatively, your inherited house may not have a mortgage, and if so, that’s great! Many mortgages have escrow accounts that pay make tax and insurance payments for you, but not all have this. So, whether you have a mortgage or not, be sure to find out when and how to pay your home insurance and property tax bills.
2) The investment is only as good as the manager.
If you decide to keep your inherited home as an investment property and rent it for extra income, this can be a great strategy. One of the keys to having a successful investment property is having a good property manager, whether that means hiring a management company, or doing it yourself. If dealing with maintenance, tenants, and rent collection isn’t the best use of your time, hire a professional to help. If you want to manage the property yourself, try to prepare yourself for all the potential hassles that may come.
3) Property ownership costs money.
It’s rare to see a building that’s been perfectly maintained. Most inherited houses need major improvements.
Consider hiring a professional property inspector to give you a detailed rundown on what you’ll need to do within the next five years, along with estimated costs. Surprises are very, very expensive. Whether you decide to keep your new house, or try to sell it, you’re going to want to know what issues need to be addressed at the property.
4) Selling a property for top dollar costs money.
If you don’t want to deal with making repairs, updating kitchens, improving landscaping and overall cleanup, don’t worry. We buy Northern Kentucky houses for cash, as-is. What we look for in every deal we negotiate, is how to make a win-win deal. This can be achieved in many ways, and we know we can find it in every situation.
5) If the market will continue to grow faster than your other options, hang on to the investment.
We can help you analyze the value of your property today versus the long-term benefits of renting. If you can use the equity in your property in another way that outpaces the performance of the real estate market, you should. Banks love to loan money on real estate, if you have a good amount of equity if your new home, there’s a good chance you can access a big portion of it. If you don’t have anything better to do with the money and the neighborhood is rising in value, hang on – real estate can be a great investment if you know how to correctly read the market.
6) Uncle Sam wants a piece of the action.
Don’t forget to discuss your inheritance with tax and legal professionals before you take action. There are major property and income tax consequences that will dramatically impact the cost of owning your investment. A knowledgeable tax professional can help you save a lot of money. Whether you decide to keep or sell your inherited home, a portion of your proceeds are due to the government. Find a good Tax pro to help you minimize that amount of tax due.
7) Consider all your options.
In certain situations we may be able to help you structure a lease-option agreement that allows you to rent and sell at the same time – capturing the best of both worlds. These kinds of deals can be complicated, but our Walton investment experience can help you win.
8) Compare a few scenarios.
We’ll help you determine prices for any property near Walton – if you sold it today without doing any work, the highest price the market will bear, and the projected value of keeping it as a rental (along with the costs).