At some point in your life, you may inherit a piece of property from a relative or loved one. When this happens, you’ll become the owner of that property, and you’ll be able to exercise full control over what happens to that property. But if you’re not an experienced property investor, or if you’ve never owned property before, this may feel very intimidating.
What exactly are you supposed to do?
Your Main Options
Let’s start by highlighting some of your main options in this scenario:
- Move in. If the property is in good shape and it represents an upgrade from your current living situation, you could consider moving in yourself. You may have to spend time cleaning the place, moving things out, and making renovations and changes as you see fit, but when all is said and done, the property will be yours.
- Keep the property operational. If you’re inheriting a rental property or another type of investment property, you may consider keeping the property operational—especially if there are currently tenants living in the property and paying rent. With this strategy, you’ll be able to capitalize on monthly rent payments, and hopefully continue turning a profit.
- Turn the property into a rental. If this property hasn’t been used as a rental property, you might consider turning it into a rental property. Depending on the laws in your area, you may be required to make certain changes, such as adding another point of exit. However, in many cases, you’ll be able to rent the property without many changes. Of course, you’ll need to clear out all old possessions, conduct a deep cleaning, and market the property to potential renters—and all these strategies take time and cost money—but eventually, you could enjoy a steady stream of cash as a result.
- Sell the property for a profit. If you’re interested in getting a sizable influx of capital, you could consider selling the property for a profit. In this approach, you’ll clean out the house, make any repairs and renovations that need to happen, and work with a real estate agent to list and sell the property for as much as possible. This method can be time-consuming, and there’s no guarantee you’ll be able to get the price you’re targeting.
- Sell the property as quickly as possible. If the property is in poor condition, or if you’re just too busy with personal responsibilities, you may be interested in selling the property as is. This is by far the most convenient and straightforward option on this list; you’ll be able to sell the property to a company, often all in cash, almost immediately. You won’t have to clean anything, repair anything, or wait for an interested seller. Instead, you can take care of everything all at once and move on. The only real downside is that you’ll likely sell for a lower price than you could get with a more exhaustive method.
Navigating the Legal Transfer
If you’re inheriting property from someone who has recently died, there are a few legal steps in the way of your formal acquisition of that property. Property transfer laws vary by state, but if you’re named as the beneficiary of the property, you should have minimal obstacles in your way. The executor of the estate will need to submit proper documentation to complete the transfer, and probate may or may not be necessary.
If there is a dispute about the property, such as a disagreement between you and another family member about how the property is to be split, it may take considerably longer to complete this process.
Setting Your Goals
There are many viable options for how to handle your recently inherited property, and none of them are strictly good or strictly bad. Instead, if you want to make the best possible decision, you need to understand your personal priorities, such as:
- Are you interested in making as much money from this property as possible? If so, you may optimize the property for rental income, or fix it up so you can sell it for the highest possible price.
- How much time and effort are you willing to spend on this property? Are you trying to unload the property as quickly and easily as possible?
- Personal attachment. Do you have any personal attachment to the property for nostalgic or emotional reasons? If so, you may want to keep it in your possession, either by moving in or keeping it as a rental property.
Which of these priorities is most important to you? Which of them can be set aside? With a better understanding of your short-term and long-term personal goals, you’ll be able to handle your inherited property in a much more confident way.
I’m a single mother of 2 living in Utah writing about startups, business, marketing, entrepreneurship, and health. I also write for Inc, Score, Manta, and Newsblaze