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. Family can become difficult to deal with because everyone has their own idea of what should be the next course of action. Off the top, the best thing to do is be patient and take the time to reflect.
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?
Tons of options open for you, but…… we can help.
We’re seasoned investors in Oakland real estate, and we’re looking to buy several houses each month in the Oakland and surrounding area. Every month we get calls from those who have inherited a house and are looking to sell the house… so the info below are some tips to help you navigate the process. Knowing that you are dealing with a company that specializes in this particular aspect of real estate buying, will alleviate a lot of worry for you and your family.
I Inherited A House, What To Do Next?
Here are 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 (unless it had no mortgage and was paid off, which is great!), you have to pay it (assuming you want to keep the property). This will be the simplest step in “I inherited a house what to do.” Some banks will allow you to assume the loan, while others may force you to refinance into a new loan. The big hurdle with this is your own personal credit history, if you don’t qualify for a new loan, renting may not be an option for you.
2) The investment is only as good as the manager.
If dealing with brokers, maintenance, tenants, rent collection and all the nuances of property management isn’t the best use of your time, hire a professional to help you or cash out now. Some people who inherit homes decide to keep the house and rent it for extra income. That’s 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. Even if you decide to hire a management company, even they can be incompetent. This would be a double whammy for you, bad tenants and bad management equals thousands of dollars down the drain.
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. When the cost of everything that needs to be repaired is revealed this is a time when you might realize that you need the services of companies like Home Scout Investing.
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 Oakland houses for cash, as-is. Not to mention the cost of listing with an agent. They have fees they charge, most charge an average of 6%. Then you have closing cost and transfer taxes that the buyer most of the time wants you to split with them. If your agent is not a savvy negotiator then more times than not you will have to pay that additional cost.
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 Berkeley investment experience can help you win.
8) Compare a few scenarios.
We’ll help you determine prices for any property near Berkeley – 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).