What Should I Do With An Inherited House?
You have inherited a house! The major question now is what should you do with this house. The two most common options are selling or renting out the house. There are pros and cons to both of these choices.
Pros Of Renting Your Inherited House In Knoxville
You have the option of renting the house as either a traditional long-term property or an AirBnB. AirBnB or similar lodging hospitality websites allow for short-term rentals, and you would have more control over when your property is available.
Rental income can save you in taxes. This is because it is considered passive income rather than earned income. There are also several possible tax deductions for rental properties.
Real estate appreciation can have a positive impact on the house as a rental. This means that a house could increase in its worth over a certain amount of time, especially if the housing market is experiencing positive trends.
Cons Of Renting Your Inherited House In Knoxville
Renting can be very time consuming. To be a landlord, you need to research rental laws, screen tenants, make sure the house is up to date with maintenance and repairs, etc. However, you could hire a property manager to deal with such things.
Tenants have the possibility of being a hassle. Even good tenants can find themselves needing their landlord frequently due to maintenance or other issues that arise. With some tenants, landlords must deal with late or unpaid rent, property damage, etc.
Repairs may be needed. They could be extensive and costly. First, you may have to get a house inspection that can cost hundreds of dollars. Also, when renting the house out, you may need to get repairs like fresh paint or new flooring that could be avoided when selling.
Pros of Selling Your Inherited House In Knoxville
If the market for selling the house is good, you could make a great profit. A seller’s market is ideal for a large profit. A seller’s market is when the real estate market is hot, and properties are selling well due to high demand.
There is no need to waste time with possible tenants and repairs. If you are selling the house as-is, there is no need to worry about screening possible tenants or figuring out what repairs and maintenance are necessary to make the house rentable.
There is always the option to invest the money you make into another opportunity. If the market is doing well enough, you will be able to make a sizable profit. This can allow for a plethora of options for how you spend and/ or invest your profit.
Cons of Selling Your Inherited House In Knoxville
If the market is not doing well, the house could be on the market for a long time.
You could lose out on a higher profit if the trends in the housing market change soon. If the real estate market is experiencing a buyer’s market, you would make a smaller profit than you would with a seller’s market. Possible landlords and those who are in the position of inheriting a house need to research real estate trends to see their best possible outcome that will allow for the largest profit.
Owning a rental property can be more rewarding in some areas. In some areas, there is a high demand for rental properties. This allows for a high possibility for making a large profit from renting out your inherited house. Consult an experienced real estate professional to gauge your market’s rental demand.
Final Thoughts On Inheriting A House In Knoxville
There are several things to consider about the house before making your final decision on whether you will rent or sell your inherited house in Knoxville.
Repairs: The amount and cost of repairs are a huge influence in deciding what you will do with an inherited house. If the necessary repairs are too expensive and/ or time extensive, you might decide to forego renting and pursue selling the house instead. On the other hand, if repairs are minimal and inexpensive, you may be more inclined to consider renting out the property.
Mortgage: The amount owed on the mortgage can be a major factor in the decision-making process of if you should rent or sell. The specific details could have a big influence. For example, if the house is worth less than what is owed on it, then you might want to investigate the idea of contacting the bank and exploring a the idea of a short sale. Reverse mortgages have an impact on your decision as well. If the home has no mortgage, you gain more control over what decision will be best for you.
Proximity to the house: If you live far away from the house you just inherited, this could cause issues with renting since you would have to be a more remote landlord. Determining your availability and accessibility to the possible rental is necessary to the process of deciding if you should rent or sell your inherited house.
*This article is not a substitute for legal or tax advice. All legal advice should be from the counsel of an attorney. Any tax advice should be from the counsel of a certified public accountant, or an attorney that specializes in tax.