I’VE INHERITED A PROPERTY!!! WHAT DO I DO NOW???
We hear all the time about investing and saving for the future but when an opportunity like inheriting a property falls into our laps, most of us have no idea what to do. Real estate investment is a world of many opportunities, but it’s rife with potential headaches and risk as well. At some point in your life, you may inherit a property, so what should you do? Like so many things in life, there is no simple answer and there are many variables when it comes to property: Is it a single family home? An apartment? A condo? Is the mortgage paid off? Is it simply a plot of land? Is it 1,000 miles away???
In our expert opinion, all of these variables are ultimately secondary. The most important issue when trying to decide what to do with your inherited property is you.
KEEP THINGS IN PERSPECTIVE:
First of all, you’ve inherited property which means you’ve been given an opportunity to enrich your financial life. Before you breakdown the property and its potential, you need to think about who you are and where you are in time. Are you someone who needs to pay off debt? Are you someone who needs cash now? If that’s you then the answer is crystal clear: SELL IT!!! Owning and investing in property is just that: an investment for the future, but it takes work and it doesn’t make as much sense if you’re someone who needs to settle up with the present first.
If you’re someone who is disinterested in the time and effort that is needed for homeownership...SELL IT!!! There is no rule that says you need to hold onto this property, especially if it’s a potential headache. Don’t let the opportunity drive your decision if it does not align with who you are and how you operate. Simply list the property with a realtor you trust. You can then take the money from the sale and put it to better use. Again, settle up with the present or put it to better use by investing elsewhere. College bills on the horizon? New car? Vacation? Some other retirement fund? Remember to keep things in perspective. This inheritance is a gift and you need to handle it in a way that drives the relationship between you and this opportunity in a positive direction.
OR KEEP IT AND CASH IN:
We may be biased, but property ownership with a rental stream is hands down one of the best ways anyone can invest their money...You just happened to enter this world through the back door. If keeping the property is something you’re interested in, renting it out (whether it’s a single family home, an apartment, or a condo) is a great way to receive revenue and pay off your bills at the same time. Multi-family homes will have the greatest returns, but they will also require the most management. By keeping the investment property you’ve inherited, you reduce your taxable income and now have a great equity source that you didn’t have before. That property is like a shiny new savings account that you may be able to refinance and take 80% out of, to invest further, or take care of some of the issues that might have had you leaning away from keeping the property in the first place. This may be daunting as a new property owner, but the payoff can be quite handsome, and there are qualified professional property managers that are available to guide you through this experience.
Ultimately, as a new property owner, you need to do what is best for you and your comfort level. Contacting The Property Management Authority® and leader in the industry in Southeast New England is a great first step if you need a partner in making the decision that is best for you and your family.
Mick Lefort is the Vice President of Operations for Nexus Property Management®. A National Property Management Franchise that manages all types of rental property from single family homes or condos to large apartment buildings and complexes.
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