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…
… we can help.
We’re seasoned investors in Lehigh Valley real estate, and we’re looking to buy several houses each month in the Lehigh Valley PA 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 are some key factors to consider when deciding your next steps:
1) Ensure the Mortgage is Paid
This might seem straightforward, but if the property you inherited still has a mortgage (unless it was fully paid off, which is ideal), you’ll need to handle those payments if you want to keep the home. Some lenders will allow you to assume the loan, while others may require you to refinance. If you don’t qualify for a new loan, renting out the property might not be an option for you.
2) Managing a Rental Property is a Job
If managing tenants, handling repairs, collecting rent, and coordinating with brokers isn’t something you want to do, you can either hire a property manager or consider selling. Many people choose to rent inherited homes for extra income, which can be a smart move. However, be ready for the responsibilities that come with managing tenants and unexpected maintenance issues.
3) Owning a Home Costs Money
Most inherited properties aren’t in perfect condition. Significant repairs or upgrades are often needed. It’s wise to hire a property inspector to assess the house and provide a detailed report on what repairs will be needed over the next five years and their associated costs. Surprises can be costly, so it’s best to know upfront.
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 Lehigh Valley houses for cash, as-is.
5) If the Market is Growing Faster than Your Other Investments, Consider Holding On
Real estate can be a solid investment, but it’s important to compare the potential returns with other opportunities. We can help you analyze the current value of your property against the long-term benefits of renting. If there’s another option where your property’s equity can deliver higher returns than the local real estate market, it might be worth exploring. However, if the neighborhood is appreciating in value and you don’t have a better investment alternative, holding on to the property could be a wise decision. Knowing how to read the market correctly will help you make the most of your investment.
6) Keep Uncle Sam in Mind
Before making any decisions, consult with tax and legal professionals to fully understand the tax implications of your inheritance. Selling or keeping the property will have significant tax consequences, including property taxes, potential capital gains taxes, and other income tax considerations. A clear understanding of these factors is critical, as they will affect the overall cost of owning or selling the property.
7) Explore All Your Options
If you’re not sure whether to sell or rent, there are hybrid options worth considering. For example, a lease-option agreement can allow you to rent the property while simultaneously positioning it for a future sale. This gives you the flexibility to earn rental income while keeping the option to sell at a potentially higher price down the road. While these types of deals can be more complex, our experience in the Lehigh Valley real estate market can help guide you through the process and ensure you’re making a sound investment.
8) Compare Different Scenarios Before Deciding
To help you make an informed decision, we can work with you to evaluate various scenarios. This includes determining the value of your property if you sold it today without making any improvements, the highest market price you could achieve with renovations, and the projected financial benefits of keeping it as a rental. By comparing these options, you’ll have a clearer understanding of what makes the most sense for your financial future.