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 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…
There are also tons of pitfalls! Stressful times can also be the most difficult times to make big decisions… we can help.
We’re seasoned investors in Raleigh real estate, and we’re looking to buy several houses each month in the Raleigh NC 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?
I remember early in my career, I had a mentor that warned me about making decisions when upset. If you have just experienced a loss its very difficult to make an unemotional decision, so I recommend carefully weighing all of your options first.
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). We bought an inherited house in North Raleigh that had a large mortgage on it and was in arrears when the estate attorney called me. The property avoided foreclosure because we were able to close quickly.
Some banks will allow you to assume the loan (this is becoming more rare nowadays), while others may force you to refinance into a new loan. If you don’t qualify for a new loan, renting the property may not be an option for you.
2) The investment is only as good as the manager.
If dealing with tenants, maintenance, rent collection, trust accounts, profit and loss statements, and all the nuances of property management aren’t the best use of your time, hire a professional to help you or cash out now. Some who inherit homes decide to keep the house and rent it for extra income, which can be a great strategy for long-term wealth. 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. The most expensive repairs often have to do with the roof, foundation or crawl space, and HVAC system. Surprises are very, very expensive!
4) Selling a property for top dollar costs money.
Typical closing costs in the Raleigh NC area can be anywhere from 6% – 10% depending on local market conditions. If you don’t want to deal with making repairs, updating kitchens, repairing roofs, HVAC systems, improving landscaping and overall cleanup, don’t worry. We buy Raleigh houses for cash, as-is.
5) Uncle Sam wants a piece of the action.
Have you ever heard the phrase: “The only two certainties in life are death & taxes?” Unfortunately, there is a lot of truth to this phrase. 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.
6) 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 Garner investment experience can help you win.