Typically, one receives an inherited home from a deceased relative. Inherited homes can be a great opportunity for the inheritor, but sometimes the home can also pose a problem. Many inherited homes have not been taken care of and need many upgrades. When money needs to be put back into the home, it is likely that the inheritor will sell the property if they do not have the time, money, or means to renovate the home.
What then should you do with your inherited property? In this video, Sam and Matt break down your options for your inherited home.
1. Rent the home
One thing you can do with an inherited property is rent it. You should approach this option carefully, as it can have many drawbacks. There are many expenses that come with maintaining the property you rent. You have to pay for renovations, vacancies, and property taxes, just to name a few. It’s estimated that about half of the revenue you earn from renting out the house will be put back into the house to cover these costs. For example, if you make $12,000 per year in rent, you will have to pay approximately $6,000 for remodeling, vacancies, and property taxes. While you may make a small profit over time, you will still have to put significant funds into making renovations, and you will need to keep paying property taxes.
Not everyone is cut out to be a landlord. If you’re an experienced landlord, this option may make sense for you. But if you’re a first-time landlord, it’s likely that you won’t be profiting off the home and you’ll only be able to break even on cash flow. If you’re considering renting out an inherited home, think carefully.
2. List it with a real estate agent
Another thing you can do with an inherited property is sell it with a real estate agent’s help. There are a few benefits to selling the home through an agent. They can help you hire home appraisers to determine the value of the home. An agent will also help you stage the home and help you through the closing process. Listing your home with an agent works best if the home you inherited is in good condition and ready to sell.
One drawback of selling through an agent is you will still have to pay commissions and closing costs for the home. These fees take away from the potential profit you could make off of the house. It makes sense to sell an inherited home with an agent if the home has been well cared for, but if the house needs many repairs and renovations, it may be on the market for a long time. It’s also possible to sell the home yourself, by owner. You will still have to pay closing costs, but you won’t have to pay a commission to the real estate agent, increasing your profit.
3. Sell it for cash
You can sell your inherited property for cash and make a fast profit. Not only will you be able to make some money off the inherited house, but you also won’t have to handle the repairs. This is often what many people who have inherited homes do. It’s the fastest and easiest option because many cash buyers can close in less than a week and make the process simple. If the home is seriously in need of repairs and if you don’t have the time, money, or expertise to do it yourself, selling your home for cash is likely the best option. A cash buyer can fix up the house and make it new again.
4. Flip the home yourself
If the home you inherited holds sentimental value to you and you have the time, money, and expertise to remodel it, flipping the home yourself may be a good option. This option will help you make the most dollar for dollar profit, but it’s definitely not an easy process. It takes a lot of time to flip a home and prepare it for selling, but if you have the time and money to do so, it may make sense for you to do this.