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 likely thinking, “I inherited a house, now what to do next with it? Should I rent it? Should I sell it? How should I sell it?”
There are several options available for you, but… which is best for you?
We can help!
We are local seasoned investors in Louisville real estate, and we’re looking to buy a few houses each month in the Louisville KY area. Every month we get calls from those who have inherited a house and are looking to sell it, and we can confidently 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 payments are up to date.
This may sound obvious, but if the person who left you a property also had a mortgage (unless it had no mortgage and was paid off, which is great!), you have to make the monthly payments to the mortgage company. 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.
If you decide to sell, the mortgage will be paid off at the closing, so there’s no need to pay it off in advance of the closing. In fact, sometimes this can delay the closing if the bank that held the mortgage is slow to produce the deed or otherwise provide proof that the mortgage is paid off.
2) The investment is only as good as the manager.
Some people who inherit homes decide to keep the house and rent it for extra income. That’s can be a great strategy, for sure. You just need to be prepared to manage the property and the hassles that can go along with tenants and toilets.
If dealing with maintenance, tenants, rent collection, repairing damages, turnover, and all the nuances of property management doesn’t sound fun to you, it might be best to just hire a professional property manager to take care of everything for you. If you’d rather not deal with any of this, it might be best to sell the property now and cash out.
3) Property ownership costs money.
It’s rare to see a building that’s been perfectly maintained. Most inherited houses need major improvements. Major expenses are typically roofs, heating & cooling systems, water heaters, and appliances. If these aren’t in good shape or updated and you plan to keep the house, set aside plenty of money to make these needed 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.
4) Selling a property for top dollar costs money.
If you don’t want to deal with making repairs, updating kitchens and baths, improving landscaping and overall cleanup, don’t worry. We buy Louisville houses for cash, as-is. Leave what you don’t want and don’t bother cleaning either. We’ll take care of the rest!
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. 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.
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 Louisville investment experience can help you win.
8) Compare a few scenarios.
We’ll help you determine prices for any property near Louisville – 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).