Sell or rent? Estate question.
February 22, 2013 5:24 PM Subscribe
Should I sell or rent an inherited house?
My father will leave me his house and all his assets. He is still alive, but he is 88 and has cancer. I live and work 5,000 miles away. I am 55 and cannot retire for about 10 years. I have a tenured professorship, so I do not want to give up my job. I will get a pension.
If my dad dies before I can retire and take over his house, what should I do? Sell the property or rent it (using a property management firm)? I have no sentimental attachment to the house or property.
The estate will have no outstanding debt, but the house does have a small mortgage (20 years into a 30-year mortgage, originally $80,000).
The house is in a very prosperous area of Florida, on an acre of build-able land.
I cannot afford to pay the mortgage without the rental income.
Have you been in this situtation? What do you suggest? My father has a lawyer and accountant handling the estate.
My father will leave me his house and all his assets. He is still alive, but he is 88 and has cancer. I live and work 5,000 miles away. I am 55 and cannot retire for about 10 years. I have a tenured professorship, so I do not want to give up my job. I will get a pension.
If my dad dies before I can retire and take over his house, what should I do? Sell the property or rent it (using a property management firm)? I have no sentimental attachment to the house or property.
The estate will have no outstanding debt, but the house does have a small mortgage (20 years into a 30-year mortgage, originally $80,000).
The house is in a very prosperous area of Florida, on an acre of build-able land.
I cannot afford to pay the mortgage without the rental income.
Have you been in this situtation? What do you suggest? My father has a lawyer and accountant handling the estate.
I cannot afford to pay the mortgage without the rental income.
Sell it. Not even up for debate. If you're renting, you have to be able to absorb some unrented time.
posted by Etrigan at 5:42 PM on February 22, 2013 [2 favorites]
Sell it. Not even up for debate. If you're renting, you have to be able to absorb some unrented time.
posted by Etrigan at 5:42 PM on February 22, 2013 [2 favorites]
I would definitely sell it. Renting can be so stressful. Also, once you sell it, it's over and done with, you have the cash, you can use it or invest it how you see fit. You never have to think about the property again. It will be much more peace of mind than calculating how to make the most money in the long run and have it be a continuing stress. (Which is how most people operate, but I think this approach is overrated - better to be out of debt and have peace of mind).
posted by beccyjoe at 5:53 PM on February 22, 2013 [2 favorites]
posted by beccyjoe at 5:53 PM on February 22, 2013 [2 favorites]
Sell it. If you want to be a landlord, use the money to buy a rental property where you currently live. Or preferably, invest the money you get from the sale and supplement your pension with it.
posted by plonkee at 5:54 PM on February 22, 2013 [3 favorites]
posted by plonkee at 5:54 PM on February 22, 2013 [3 favorites]
Sell it. I watched my in-laws go through tremendous grief when they inherited a piece of vacation property and they tried to rent it because they couldn't afford the upkeep without doing so. Even though one of them lived relatively close, it was still a terrible stress for them as they worried about maintenance, upkeep, finding renters, dealing with renters, hiring cleaning staff at turnover, dealing with damage caused by renters, paying taxes, etc.
Especially since you have no sentimental feelings towards the property, you say you cannot afford the mortgage payments without rental income, and it seems like you have no siblings or other interested parties to negotiate with, sell it and be done with it. In the long run, it'll be fewer headaches, if my in-laws are any indication.
posted by absquatulate at 6:01 PM on February 22, 2013
Especially since you have no sentimental feelings towards the property, you say you cannot afford the mortgage payments without rental income, and it seems like you have no siblings or other interested parties to negotiate with, sell it and be done with it. In the long run, it'll be fewer headaches, if my in-laws are any indication.
posted by absquatulate at 6:01 PM on February 22, 2013
Sorry about your father.
I am going to go against the flow.
You have time on your side, so do some homework. Firstly, are you sure you can't handle the payments - an $80k, 30 year mortgage isn't a big payment, but YMMV.
Second, you are in something of a bind, being so far away, but I presume you visit regularly? I would await your next visit, and when you do, carry out some research about the local rental market and the viability of renting; similarly, do the same research on selling. DONT let on to real estate agents or others you consult just how far away you live - the implications of this are for you to assess, they may use this info to twist their advice to you. If you need this sort of advice, go to someone separate.
Buying and selling has significant costs, and if you can avoid these you are ahead.
On the other hand, a quick sale, with the proceeds invested in your super say, may be a better result - especially if you inherit sooner rather than later (sorry, I am sure you don't want this).
So my final suggestion is that you look for a financial advisor from where you pay tax, to get a handle on the investment (as opposed to real estate) perspective.
posted by GeeEmm at 6:30 PM on February 22, 2013
I am going to go against the flow.
You have time on your side, so do some homework. Firstly, are you sure you can't handle the payments - an $80k, 30 year mortgage isn't a big payment, but YMMV.
Second, you are in something of a bind, being so far away, but I presume you visit regularly? I would await your next visit, and when you do, carry out some research about the local rental market and the viability of renting; similarly, do the same research on selling. DONT let on to real estate agents or others you consult just how far away you live - the implications of this are for you to assess, they may use this info to twist their advice to you. If you need this sort of advice, go to someone separate.
Buying and selling has significant costs, and if you can avoid these you are ahead.
On the other hand, a quick sale, with the proceeds invested in your super say, may be a better result - especially if you inherit sooner rather than later (sorry, I am sure you don't want this).
So my final suggestion is that you look for a financial advisor from where you pay tax, to get a handle on the investment (as opposed to real estate) perspective.
posted by GeeEmm at 6:30 PM on February 22, 2013
The issue would be closer if you lived 15 miles away. Given the 5,000 mile distance, I agree strongly with the sell recommendation.
posted by yclipse at 6:31 PM on February 22, 2013
posted by yclipse at 6:31 PM on February 22, 2013
Houses like this are liabilities. You have to also consider when renting you frequently have to replace appliances, paint things, repair damaged walls, pay for plumbing services, furnace maintenance, etc. Think about everything that hasn't been replaced in the last 20 years by your dad: hot water heater, furnace, washer / drier, dish washer, stove, fridge, microwave, exhaust fans, thermostats, GFIs, etc. If you don't have a slush fund to handle these things, sell it. Unless you can rent it for a lot more than the mortgage and you can rent it right away. Talk to a property management company; they're good at telling you how much you can get and how long it will take to find someone.
posted by jeffamaphone at 6:58 PM on February 22, 2013
posted by jeffamaphone at 6:58 PM on February 22, 2013
We are going through this right now with our family home. The area the house is located in is also desired - and will have a completion of a major public transportation expansion completed in about a year. Unquestionably, this will increase the property value.
Selling when our dad passed a way a year and a half ago would have been SO SO much easier in the short term, but my siblings and I are very confident that renting for 5 years or so is the right path, and then we'll likely sell the house. It's been pretty hard for us to get to this point, but hopefully we made the right decision.
I would keep in mind the condition of the home, how extensive/costly repairs may need to be before rental. Additionally, there will be a time where no matter what you decide, some time will have to be taken to empty out and pack up the house. Even though I have 3 siblings, it took me 4-5 months to do this, since I did about 95% of it on my one. Repairs (some that needed to be done no matter if we sold or rented, in order to retain some semblance of the property value) also took a few months. But we are also lucky that we had some funds from our dad's estate that we could complete the necessary repairs and inspections, and was not a financial strain on us personally.
Finally, we have a (hopefully great) tenant who's application we're approving this week (with the help of a management company).
You can hire someone to help you clean out/pack up your dad's house, but there will still be some overlap in which you'll be responsible for the mortgage, utilities, property taxes, etc.
I'd do some numbers research on your dad's home - what are the taxes like, what are houses of the similar age/size/condition/location renting for, and what kind of management organizations are available for you to use - and what their fees are at this point in time. Will the mortgage be really burdensome on you. Factor in the math, think about the time aspect of getting the house ready, and see if it's worth it to you.
posted by raztaj at 7:06 PM on February 22, 2013
Selling when our dad passed a way a year and a half ago would have been SO SO much easier in the short term, but my siblings and I are very confident that renting for 5 years or so is the right path, and then we'll likely sell the house. It's been pretty hard for us to get to this point, but hopefully we made the right decision.
I would keep in mind the condition of the home, how extensive/costly repairs may need to be before rental. Additionally, there will be a time where no matter what you decide, some time will have to be taken to empty out and pack up the house. Even though I have 3 siblings, it took me 4-5 months to do this, since I did about 95% of it on my one. Repairs (some that needed to be done no matter if we sold or rented, in order to retain some semblance of the property value) also took a few months. But we are also lucky that we had some funds from our dad's estate that we could complete the necessary repairs and inspections, and was not a financial strain on us personally.
Finally, we have a (hopefully great) tenant who's application we're approving this week (with the help of a management company).
You can hire someone to help you clean out/pack up your dad's house, but there will still be some overlap in which you'll be responsible for the mortgage, utilities, property taxes, etc.
I'd do some numbers research on your dad's home - what are the taxes like, what are houses of the similar age/size/condition/location renting for, and what kind of management organizations are available for you to use - and what their fees are at this point in time. Will the mortgage be really burdensome on you. Factor in the math, think about the time aspect of getting the house ready, and see if it's worth it to you.
posted by raztaj at 7:06 PM on February 22, 2013
trying to rent from 5k miles away is going to be a huge hassle, and if your mortgage is that small, then rental income generated probably isn't enough to warrant hiring a management company near where the place is located. but if the rent is high then look into hiring a management company because you cannot easily be a landlord from that far away.
IMO you should sell this property and invest the money near home somehow. keep making the mortgage payments for a few months if you can, meanwhile clean the place up / make whatever repairs need to happen / look for a real estate agent.
posted by zdravo at 7:27 PM on February 22, 2013
IMO you should sell this property and invest the money near home somehow. keep making the mortgage payments for a few months if you can, meanwhile clean the place up / make whatever repairs need to happen / look for a real estate agent.
posted by zdravo at 7:27 PM on February 22, 2013
What is the house valued at today?
My personal opinion is that you should never sell land, but keep it and rent it, because eventually that mortgage will be paid off and you will just be coasting. But it also depends on what the difference is between the mortgage payments and what you'd be paying in rent.
posted by corb at 5:30 AM on February 23, 2013
My personal opinion is that you should never sell land, but keep it and rent it, because eventually that mortgage will be paid off and you will just be coasting. But it also depends on what the difference is between the mortgage payments and what you'd be paying in rent.
posted by corb at 5:30 AM on February 23, 2013
Since you have no sentimental attachment to this property, my impression is that the reason you want to keep it unless you feel it will have a substantial appreciation in value in the near future that you want to realize. My advice would be to realistically assess how substantial that appreciation could be and make your decision from there. As far as the outstanding mortgage, you could refinance the mortgage to something that would give you a much lower payment. Then you could hire a property management company that would handle the process of collecting rent and arranging upkeep (for something like 5% of the rent +expenses).
But realistically, unless hundreds of thousands of dollars are at stake here in as-yet-unrealized gains, you're better off selling it. If you're going to be a landlord, it's best to do it close to home.
posted by deanc at 6:56 AM on February 23, 2013
But realistically, unless hundreds of thousands of dollars are at stake here in as-yet-unrealized gains, you're better off selling it. If you're going to be a landlord, it's best to do it close to home.
posted by deanc at 6:56 AM on February 23, 2013
This thread is closed to new comments.
Alternatively, if you think the area will go up in value in the future, rent the property for a while then sell it when the price is right.
Personally, I'd sell it and put the money into something less risky or closer to home.
posted by Diddly at 5:37 PM on February 22, 2013