Inherited parent's home. Rent or sell.

[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.

Agree. Sell. But put the money into the market over a period of 12 months.

[Anonymous]

I know people are saying sell, and that may be the best option. But a few things to consider.

- some lower income neighborhoods are part of larger redevelopment projects by the city. You should check to see. It may be worth waiting to sell if new amenities are coming in soon.

- there may be local programs to help you fix up the place. Sometimes it is only owner occupied. But you should check.

- renting to housing choice voucher recipients CAN sometimes be a great benefit to landlord. They let you rent it at fair market value (which is sometimes in the nose for what you need, sometimes a little less). The municipality guarantees the rent. There are many studies which show hcv recipients are no worse a tenant than any regular tenant. (Oftentimes single moms.) and the municipality often gives various incentives to landlords who participate fully. Plus most cities/municipalities have a known voucher roster (too many holders, not enough properties) that they publicize to their voucher holders be an option for finding a tenant quickly. My friends have participated in this program with success in order to hold on to properties that were increasing rapidly in value over the next 5-7 years.

[Anonymous]

+1 sell. I wish we had sold our condo years ago, and that is a small unit near a metro station. The mental overhead just isn't worth it. Dumping the money into an index fund would have been 100x easier.

I especially wouldn't want to be a landlord for a place that needs lots of repairs. So much headache.

I'm sorry for your loss, OP. Best wishes.

[Anonymous]

I'd sell since you are not local. It would not be worth the hassle vs. investing.

[Anonymous]

Sell. It is tough to be a non local landlord.

[Anonymous]

Sell.

We have a rental property in a desirable area that's local to us. Demographically the area has fairly constant influx of professionals, making it an attractive rental market. It's such a hassle being a landlord though, even under these circumstances. If we had invested the proceeds from the sale years ago we'd have come out much further ahead.

[Anonymous]

Not an expert but OP should look into capital gains tax issues... if you hold the property as a rental you might lose the stepped up basis from the inheritance.

[Anonymous]

I had the same question about a decade ago - as an only child too. My parents had lived there 50 years and it was the only house that we had ever shared. I really want to keep it - but I lived 1000 miles away. So I sold it. But if I had lived closer - maybe 100-200 miles away at most - I think I could have made sense of renting it. As it was, I had to sell in the bottom of the real estate cycle. Oh well.

[Anonymous]

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

I rent a townhouse now from a small time landlord. He tells me he watches YouTube videos to learn how the fix things. He already has a job that takes him out of the country frequently. I do worry that he’s jerry rigging the problems. A bunch of things needed fixing when I moved in and he was quite annoyed by it. Said he always inspection. Then I got notice from the city saying they were doing an inspection soon. He high tailed it over to fix stuff. Unfortunately the inspector found 3 things that needed addressing. I gave landlord heads up then scanned and sent him the actual report.
It all makes me feel like somehow it’s my fault. Renting is new for me. Last time was in 1988. After divorce was sick of home ownership nightmares so I thought I’d give myself a bit of a break. It’s not really been one.

[Anonymous]

Anonymous wrote:Hijacking this thread b/c I will likely have this scenario (god willing not any time soon! But, at some point (not soon!!) I guess). The home I would inherit is paid off and in nice part of San Diego (worth 1.5 million or so). Sell? Rent? keep as second home??

I would only keep it if I thought I would use it regularly or move there in the relatively near future. However, California tenant protection laws make renting there especially problematic (make sure you can get your house back when you’re ready). Selling and investing and buying when you’re ready could still make sense of its going to be decades — you’re really only saving transaction costs.

[Anonymous]

I would sell this one to get the benefit of step-up in basis and a tax-free sale.

Vette your real estate agent very carefully. They will often try to convince you to take a low ball offer from a local developer before ever putting it on the market. I see this happen all the time with heirs from outside the area who inherit the home.

The only way I'd keep a home I inherit is if its in a very desirable area where I want to vacation, potentially might move to one day in the future, or if it's already generating good cash flow with a stable tenant.

Trying to set up a new rental home remotely in a low-income area is a recipe for disaster. You will need to spend money to get it into service, plus give away 10%+ to a local management company. Doesn't sound like its worth the headache given the low rents in the area.

[Anonymous]

I would sell. Being a landlord in a different city will require a lot of work. I would maybe rent if I was in that city, but never somewhere else.

[Anonymous]

100% sell. It will be tax free. Don’t do major repairs.

[Anonymous]

Another vote to sell.

[Anonymous]

Im renting my moms house out for a net profit of 7k/month and I still urge you to sell (we should have back in 2021, and put nothing into it). You have a gap between tenants, and there goes your profit. You have bad tenants who dont leave and you have to hire lawyers to evict, there goes your profit, etc, etc.

My sibling has now agreed that if our current tenants leave, we will sell. We were waiting until mom's passing due to cap gains (the house was purchased in 1972 in what is now a very HCOL area so the gains are significant) but every day I think about how a fire could wipe away the home, we could get tenants who refuse to leave or pay or trash the house; etc. etc. Not worth it.