First, we’re deeply sorry for your loss. This can be an incredibly challenging time, and managing property ownership can add to the stress.
If you’ve inherited a house and are wondering what to do next—whether to rent it, sell it, or how to approach the sale—you have several options to consider.
We’re here to help. As seasoned investors in Boise and the Treasure Valley area, we buy several houses each month. We frequently hear from individuals who have inherited property and are seeking to sell. To assist you in navigating this process, here are some tips to consider.
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.
If you inherit a house with a mortgage, here’s what you should do:
Understand the Mortgage Terms: Review the documents to understand the terms and conditions, including the outstanding balance, interest rate, and monthly payments.
Contact the Lender: Contact the mortgage lender to inform them of the homeowner’s passing and discuss the options available for handling the mortgage.
Continue Making Payments: Until you decide on a course of action, continue making mortgage payments to avoid foreclosure and additional penalties.
Assess Your Options:
Assume the Mortgage: In some cases, you may be able to assume the mortgage if you’re willing and able to take over the payments.
Refinance the Mortgage: You might refinance the mortgage to better fit your financial situation.
Sell the Property: If you prefer not to keep the property, you can sell it. The mortgage will need to be paid off from the sale proceeds.
Rent the Property: Alternatively, you might decide to rent the property out, which can provide rental income to cover the mortgage payments.
Consult a Professional: Speak with a real estate attorney or financial advisor to understand the implications and best course of action based on your situation.
Review Estate Tax Implications: Be aware of any estate taxes or fees that might affect the property’s value or the estate’s overall financial health.
Handling an inherited property with an existing mortgage requires careful consideration and planning to ensure a smooth transition.
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 an excellent strategy. You just need to be prepared to manage the property and the hassles that can accompany 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 Boise 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.
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 Boise investment experience can help you win.
8) Compare a few scenarios.
We’ll help you determine prices for any property near Boise – 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).