So, you’re saying, “I Inherited A House, What Do I Do?”
Well first off, we’re very sorry about your loss! Inheriting a property usually comes with some mixed emotions and can be a challenging time for you and your family, not to mention trying to figure out what to do when a family member leaves you a property.
If you are met with the reality, “I inherited a house, what do I do?”, first know that you do have some options. You may be wondering, “Should I rent it? Or sell it?” and if so, how do I even sell it?
The good news is that you do have a lot of options. However, you might not know exactly where you should start… but that’s where we come in!
We are seasoned real estate investors that work in the Kansas City market and we buy houses every month from people that have inherited properties they may not be sure what to do with. From those experiences and from helping different people in different situations, we started to see some trends, and so here are some helpful insights that can hopefully help you, too:
I Inherited A House, What Do I Do Now?
Here are some important points to consider that will help you in making the best decision for your situation:
1) Take care of the mortgage.
This might be a no brainer to some, but if you were left a property that was still in the middle of a mortgage, then that mortgage (along with the house) is now also your responsibility if you decide that you want to keep the house. There are some lenders that will give you an option to assume the loan, but others might require that you refinance the loan to take over payments. If it turns out that you do not qualify for the loan, then renting it out might not even be a feasible option.
2) Get a good property manager.
If you decide that you want to rent out the house, be prepared that you will need to deal with brokers, handymen, collecting rent from tenants, and all other sorts of tenant concerns. It important that you develop a plan to handle all the things that being a landlord will throw at you. The best way to handle all of this is by hiring a property manager. But, as with all things in life, you get what you pay for when hiring a property manager so it’s important to hire a well established and well-recommended company, otherwise, you are just further complicating the matter.
3) Owning properties requires cash.
It’s pretty rare to come across a property that has been perfectly kept. The majority of inherited houses will require at least one kind of major improvement.
It’s a good idea to hire a certified home inspector so they can give you an accurate synopsis for what exactly the house needs and what you can expect to spend within the next five years to properly maintain the property. You want to minimize the number of surprises because those can get very, very costly.
4) Selling your house at top dollar is expensive.
If you’d rather not make the necessary repairs or do any of the updates that it will take to get top dollar for your house, there is another way out. We buy Kansas City houses for cash, as-is.
5) If the market continues growing, consider hanging on to your investment.
Sometimes it’s a little uncertain to understand exactly where the real estate market in Kansas City is heading. As experts, we’re able to assist you with analyzing the value of what your property is worth today compared to the long-term benefits of renting. There might be some situations where the equity in your property can be used in a way to outpace what is occurring in the market. If there isn’t anything else you need the money for, and the market in your area is still rising in value, then you should definitely try to hand on for the long term benefits.
6) Uncle Sam will want a piece of the pie.
Make sure that you understand the tax and legal ramifications of your newly inherited property before you take any sort of action. There are huge income tax consequences that can seriously have an impact on the costs of owning an investment property. A good place to start when researching is the Jackson County Property Tax website.
7) Weigh out all of your options.
In some situations, we might be able to assist you with structuring a “lease-option agreement” – which can allow you to rent the property out AND sell it at the same time – meaning you can literally have your cake and eat it too. However, their sorts of agreements are certainly complicated, but that is why you have pro’s like us on your side to help you.
8) Make some comparisons.
All of the options we have covered are valid and should be weighed against each other for what will work best for your particular situation when you are saying “I inherited a house, what do I do?”. If you need some help weighing them against each other for the house you have inherited, then let’s talk!