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 San Francisco Bay Area real estate, and we’re looking to buy several houses each month in the San Francisco Bay Area California 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’s 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). Some banks will allow you to assume the loan, while others may force you to refinance into a new loan. If you don’t qualify for a new loan, renting may not be an option for you.
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 a great strategy for sure. 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. 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 San Francisco Bay Area 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 Napa investment experience can help you win.
8) Compare a few scenarios.
We’ll help you determine prices for any property near Napa – 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).
Hello, excuse the windy day here in Napa. I just wanted to record a quick video about trying to sell a house which needs to go through a probate. If you’re recently had a loved one or relative who’s deceased, one of the very important matters that you’re going to have to deal with at some point is the probate of their estate. Now what that means basically is when a person passes on, they’re no longer there to sign paper when the property sells and legally speaking, that can create difficulties.
The solution for that is to go through, to put the papers and the property through a probate court and what that does is it appoints one person, usually a beneficiary under the will, it can be the executor or beneficiary who will then be the person who will be signing the paperwork so that legally the property can be sold. Until that’s done it’s going to create a delay and so it’s important that this is dealt with at some point. Generally speaking, within a year of the death of a person, it tends to be the normal time, some sooner or later depending on your circumstances.
It’s important to get to it at some point because nothing can happen with the property until there is one person who is legally appointed to sign and is able to sell that court. Now an attorney will be able to talk you through the process and to file the paperwork for you. We can help you with that process if it seems daunting. We can help you find an attorney. We regularly deal and purchase properties that are going through probate or haven’t yet. We understand the process so it doesn’t phase us at any level.
We find that those people who are taking a property through a will or have inherited a property need to get their head around what they want to do and it can be a difficult process. It’s important to know what the tax implications can be. Obviously you don’t take tax advice from strange people on the internet, so get your own accountant to advise you, but in general terms, if you inherit a property and you sell it, you will not be subject to capital gains tax, which is usually one of the bigger taxes to be afraid of when you sell a property.
That’s a huge benefit, so the recommendation would be to sell a property as quickly as you can, if that is your intent. If you do hold onto it and if development is made to the property, then you’re going to lose that exemption and your basis point, your basis on which the property will be valued will increase. It’s just one factor, there’s many other things that come into play. That tends to be the motivator that I have discovered that signals people.
Also we have found that where there are expenses to do with a property, I mean if you’re not a property investor or you’re not used to having investment properties, the idea of having a property which is incurring property tax, which needs an upkeep depending, it could be well kept or not, certainly if there’s code violations, if it’s not kept up to speed, all those things can kind of increase the cost of holding a property. Now it can be rented out, but that indeed brings you further down the road of being a property investor.
You can rent the property, it can bring in an income, but again, that brings with it a certain element of work that for many people that have just inherited a property or gone through death of a loved one is not something that they’re willing or able to deal with. We often find that they’re quite happy to sell the property onto someone like myself who’s a property investor and then we take on the burden of doing all that other kind of work.
If any of these things that I’m talking about resonates with you or is similar to something that you’re interested in knowing more about it, please feel free to drop us an email or contact us on the website. We’d be happy to talk you through what you need to do to. Also, if you’re interested in selling one of these properties, or you’ve got a relative who’s dealing with these issues, we’d be happy to talk to them.