Inherited parent's home. Rent or sell.

[Anonymous]

My mother passed (I'm an only child) and I'll inherit her house. The house would need fairly significant repairs (cosmetic and, likely, substantive) to sell for max value or rent to a tenant. The neighborhood would be considered poor but has been turning around quickly.

I could sell and likely net ~$150K or rent and net ~$1,000/month in rent (after paying for repairs using the house's equity) with the ability to sale later and collect (completely speculative) appreciation.

Would you sell or rent the place? Any proceeds from a sale would likely just be invested. Same with any collected rent (accounting for building a maintenance fund).

I'm leaning 90% towards selling but acknowledge I may be missing something in my thinking. What would you consider in making a decision?

[Anonymous]

This is not helpful with information about the zip code and mortgage balance and repairs

[Anonymous]

Do you want to be a landlord?

[Anonymous]

I would say rent, BUT I've never been a landlord before and haven't heard good things.

[Anonymous]

Sell. Why would you want to be landlord esp in a poor neighborhood

[Anonymous]

Anonymous wrote:This is not helpful with information about the zip code and mortgage balance and repairs

No mortgage balance and the house isn't local. It's in one of the poorest zip codes in a major Southeastern City

[Anonymous]

Sell. Recession maybe coming. Very good time to put money into the market.
With the recession and slightly rising unemployment, less qualified tenants may not be able to pay. Qualified tenants want a nice house.

[Anonymous]

Anonymous wrote:Do you want to be a landlord?

Not particularly but I'd be willing if it meant a larger "windfall".

[Anonymous]

I’d sell now. What if the local market takes a turn for the worse?

[Anonymous]

Sell! I would hate to be a small time landlord.

[Anonymous]

I inherited several rental properties and decided to sell. I did the math on the rental income, minus expenses (maintenance, insurance, taxes, business registration fees, etc) and compared that to the return I could expect from investing the capital otherwise and it was a no brainer. On top of that, you have the hassle of dealing with tenants or paying a management firm to do it. I decided that if I wanted to make investments in real estate, I could buy REITS and leave the management to professionals.

The person who bought the houses did very well, but they bought in a market (Southern California) that saw a huge run up in value. My math showed that real estate can be a good investment if you are heavily leveraged and your rent covers yours payment and expenses *and* you're in a market that is appreciating. That was easier with 3% interest. With today's higher rates, I've seen lots of professionals saying they're having a hard time finding rentals that pencil out.

[Anonymous]

Anonymous wrote:Sell. Recession maybe coming. Very good time to put money into the market.
With the recession and slightly rising unemployment, less qualified tenants may not be able to pay. Qualified tenants want a nice house.

This isn't something I thought about but I think you make good points.

[Anonymous]

Anonymous wrote:

My mother passed (I'm an only child) and I'll inherit her house. The house would need fairly significant repairs (cosmetic and, likely, substantive) to sell for max value or rent to a tenant. The neighborhood would be considered poor but has been turning around quickly.

I could sell and likely net ~$150K or rent and net ~$1,000/month in rent (after paying for repairs using the house's equity) with the ability to sale later and collect (completely speculative) appreciation.

Would you sell or rent the place? Any proceeds from a sale would likely just be invested. Same with any collected rent (accounting for building a maintenance fund).

I'm leaning 90% towards selling but acknowledge I may be missing something in my thinking. What would you consider in making a decision?

Assuming the $150K is after you've spent the same amount of money on repairs as you would if you were to rent, that's an 8% rental return. Do you really want the hassle of being a landlord? Also, look at what you can get if you were to sell the house as-is.

I don't know how wealthy you are, but $150K is not a lot of money for many people around here. If the house is close enough, why not fix it up just enough to be used as a family vacation spot?

[Anonymous]

Sell.

[Anonymous]

Sell hands down