First, we’re so sorry for your loss. Losing a family member is always difficult and unfortunately it can be a very challenging time for many reasons, and dealing with property ownership is tough at the best of times.
If you happened to inherit a house after the passing of your family member you are likely asking yourself numerous questions. Questions such as, “I inherited a house, what to do with this house?” Should I rent it? Should I sell it? How should I sell it? Do I need to fix up the house before I sell it? Do I need to hire an agent? Should I try to sell the house myself? These are just a few questions that are likely to come to mind if you inherit a property.
You have a ton of options open for you, but…what route should you choose? What is the best solution?
Fortunately as a licensed agent and also a local Kansas City real estate investor… I can help.
We’re seasoned investors in Kansas City Metro real estate, and we’re looking to buy several houses each month in the Kansas City Metro Kansas/Missouri 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.
I Inherited A House, What To Do Next?
Here’s a few important considerations to help you make the right decision:
1) Pay the mortgage.
Often times when you inherited a property you are also inheriting a mortgage that goes along with the house (unless it had no mortgage and was paid off, which is great!), you have to pay it (assuming you want to keep the property). You need to contact the bank as soon as possible to find out all of the information needed to pay the mortgage. Some banks will be easier to work with than others, some banks will allow you to assume the loan, while others may force you to refinance into a new loan. It’s not uncommon for people in this situation to not be able to qualify for a new loan, if that’s the case renting the home out may not be in the cards 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.
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.
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 Kansas City Metro houses for cash, as-is.
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.
I don’t know anyone that enjoys paying taxes and having to pay inheritance tax is another unfortunate thing you have to deal with when you inherit a property. Make sure that you discuss you inheritance with an accountant and attorney before you take any 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 Tonganoxie investment experience can help you win.
8) Compare a few scenarios.
We’ll help you determine prices for any property near Tonganoxie – 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).