The home you’ve inherited can be an emotional piece of property. Perhaps it’s now yours because a beloved family member recently passed away. Maybe it’s the home you once lived in yourself.
An inherited home gives you several opportunities, and you’ll have to decide whether you want to sell it and be done or hold onto the asset and rent it out. The best decision will depend on your own financial circumstances and goals. Do you want to earn as much as you can on a sale right now, or do you have long term real estate investment plans?
Here are some of the things you need to consider before making your decision.
What Can You Earn by Selling the Home?
The real estate market is pretty hot, and if you’re looking for an easy way to make some money, selling might be your best option. You’re likely to get your asking price.
Do the math, however, to figure out what kind of equity is in your inherited home. By selling the property, you won’t have to worry about it anymore. You’ll be walking away from the maintenance, insurance, property taxes, and other responsibilities that come with taking care of a home. But, you’ll have only one opportunity to make money. That’s when the deal closes and you sell. Figure out whether the amount you’ll actually earn after the mortgage is paid off will make selling worth it.
Will You Ever Need the Home for Yourself?
You don’t want to live in the home you’ve inherited right now, but might you need it later? This is also something to consider. Real estate in Volusia County is pretty valuable, and if you think you might need a home when you retire or when you decide to move out of wherever you’re living now, it’s not a good idea to give up this piece of property. You’ll be better off renting it out until you need it.
Reasons to Rent Out Your Inherited Property
Selling brings you instant income and the relief of any responsibility you have for the property.
Renting it out has its own unique advantages, however. If you’ve been thinking about investing in real estate but never had the capital to get started, this gives you an opportunity to enter the market as an investor. You already have the property. You can leverage this asset later to acquire additional investment properties if you want to.
There’s also the matter of rental income. Earning a rental payment every month isn’t a bad way to supplement your income. If the home is paid off, nearly every dollar is pure cash flow. Even if the home is not paid off, your tenants will contribute to the mortgage and the insurance and the property taxes, leaving you with an asset that’s growing in value.
Many people decide to keep their inherited homes as rental properties because of the tax benefits. You can take advantage of several write-offs when you own rental property, including:
- Depreciation
- Mortgage interest
- Maintenance
- Professional services such as property management, accounting, and legal fees.
When you work with an experienced property manager, you won’t have to worry about some of the risk that’s involved with rental homes. Your management company will find and screen tenants, respond to maintenance, and take care of all your accounting and tenant relationships.
If you’re still making up your mind about what to do with your inherited property, we’d be glad to talk through this with you. Contact our team at Oceans Managing Group at (386) 255-8585 or email with any questions or concerns you may have at info198@oceansluxuryrealty.com.
