Inheriting property is often associated with the unpleasant experience of losing a family member. However, an inherited home is a good way to generate income. You can start making money in real estate without an investment. But the first thing you need to do is decide how you are going to make money on the property you have inherited. Are you going to sell it or rent it? Both options have their advantages and disadvantages.
Let’s look at the pros and cons of both, which should help you make an informed decision.
Pros and Cons of Renting Out an Inherited Home
Here is what you should expect if you decide to become a landlord.
- You will have a stable and regular income. This extra money will give you peace of mind and provide you with a better work-life balance.
- You do not have to spend money on holding costs. Instead, you will be making money.
- It will remain your property, so you can use it as a second home.
- You can avoid inheritance tax. This tax only applies when an inherited home is sold.
- You can avoid the stress and hassle of selling. If you have ever sold a home, you know how stressful it can be. Finding tenants and renting out a home is usually less stressful and less time consuming.
- Managing a property is a serious responsibility. If something breaks at the property or an incident happens, you will have to act quickly in order to resolve the situation. Moreover, you never know what kind of tenants you will have. Not all tenants are accountable and pay their rent on time.
- You have to spend money on repairs before renting it out. Without certain repairs, your property could be too unsafe to rent.
Pros and Cons of Selling an Inherited Home
You may realize that you do not want the responsibility of an inherited property. In this case, selling would be the best option. However, selling also has its advantages and disadvantages to consider.
- You will receive a good amount of money that you can use for your different financial needs, including paying off your mortgage and debts.
- You won’t be responsible for managing a property. Owning a property is always a big responsibility. If you sell your inherited home, you do not have to deal with managing it.
- You can use the money you receive from the sale to upgrade your own property. Have you always wanted to upgrade your bathroom or kitchen? Or were you dreaming of extending your current home and making it bigger? This could be your chance.
- You will not benefit from a future increase in the property’s value. Most properties appreciate in value over time. However, if you decide to sell your inherited home, you will not benefit from this appreciation.
- You will not have an ongoing source of income. The money you receive from selling the property is your entire inheritance. Thus, if you decide to spend it, you will not have more money in the future. Keeping an inherited home means having an ongoing source of income that will contribute to your early retirement and act like a pension.
- Selling a home is a time-consuming and stressful process. If you decide to sell your home the traditional way, it may take months. You need to list your home, then find buyers, and then wait until the buyers are approved for a loan.
- It is difficult to sell a home. If the property was owned by a close family member or a loved one, it may be hard to sell it.
Whether you decide to sell it or rent it out, you should weigh the pros and cons first and determine what option is more beneficial.
For those who want to sell their inherited properties as soon as possible but do not want to do it the traditional way, selling to a home investor is the perfect option. If your property is located in the Tampa Bay area, KM Home Buyers is ready to help you. We purchase all types of homes, including inherited properties. If you have any questions, you can give us a call or send us a text. We are here for you.