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 even during the best of times. So take it easy on yourself, as this is a challenging time for you.
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 here, and it may be overwhelming and/or confusing…
… we can help.
We’re seasoned investors in NJ real estate, and we’re looking to buy several houses each month in NJ. Every month we get calls from people that have inherited a house and don’t know what to do… so we’ve put together a short list that hopefully will guide you through the near future.
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). 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.
2) The investment is only as good as the manager.
If dealing with realtors, maintenance, tenants, rent collection and all the nuances of property management isn’t your cup of tea, hire a professional to help you or cash out now by selling. Some people who inherit homes decide to keep the house and rent it for extra income. That’s a great strategy. However, you need to be prepared to manage the property and the hassles that can go along with tenants and toilets. It isn’t all rainbows and unicorns.
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 home 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 New Jersey houses for cash, as-is. This means that you don’t have to concern yourself about cleanouts or repairs. Take what you want, and 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. The market has taken a turn. And things are softening. So if you are thinking about selling, the property will need to be in tip top shape to garner the most dollars.
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 NJ investment experience can help you win.
8) Compare a few scenarios.
We’ll help you determine prices for any property near that you are holding – 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).