I just inherited my mother's home and I'm not sure whether to rent it out or sell it???

Question

My mother passed away August 6th. I am an only child and my father is gone, so I am her beneficiary for everything. The only problem is her home. She has a home here in Houston with a tax value of approximately 101,000. There is a mortgage at 5.625%, 22 years remaining, and a balance of 66,177. The mortgage with escrow is 654 per month. I am really at a loss as to what to do. I have my home, which is paid for, and a rental property that is mortgaged. I'm not sure if I want the hassle of another rental property, however, in todays housing market, I'm not sure if I will even break even. Any advice would be greatly appreciated.

Scott Hubbard · Answer

I actually going to go the other way since you have a great deal of emotions tied to your property. Renters will not take care of the property and your bound to make choices based on emotions. So, how will you feel having to wonder month to month whether a tenant is caring for your mother's property? You should consider selling your mother's property and and using the equity to finance your rental investment business. You need to be able to run your business by making sound practical decisions aimed at maximizing value. I just think your judgment may get clouded because of the emotional ties and sometimes it is best to sell the home to a family who will treasure your mother's house as she once did. Good Luck!

Casey S. · Answer

First thing you need to do is figure out what a likely sales price is. Second thing is figure out what it will rent for. From there you can make some logical decisions.

Joe Delia · Answer

Owner finance the deal with a wrap around. Make the spread on the interest rate, and a solid consistent return on the equity. You'll be able to demand top dollar due to offering terms. Get enough down to pay the realtor and put a little in your pocket, plus, if there are anything that needs to be fixed, theres a good chance you won't need to put that money in due to offering terms. There's a chance they trash it and you have to foreclose, but, it's less likely than with rents. Could even do a lease option.

Chris Colvard · Answer

Hi: I vote for holding and renting it out. Obviously, you don't know know what you want to do. If you sell, you can't get it back. If you rent, regardless of how much a tenant may damage it, it is still yours. You can sell anytime. You also need to look at your overall financial & tax situation. Please don't make an irreversible decision, without giving it time to realistically think it though.

Richard Martin · Answer

I agree with Scott and Joel. Sell it. It's Mom's house and you will always be tied to it emotionally. If your Realtor says it's not worth what is owed then come back and ask the forum again. Best wishes.

Joel Owens · Answer

Kandace I agree with Scott.How will you feel if a renter trashes the house your mom lived in?? I would sell it as well.All depends on the value though in today's market.

Mike Nelson · Answer

If you can rent the property with a positive cash flow I would just rent it out and hire a property manager. That way you won't have to deal with another rental property.

Kandace Price · Answer

It's a middle class neighborhood. I'm sure I can get enough rent to cover the mortgage/ins./taxes. I had actually thought about buying more rental properties. If I could just get past the emotional thing....you know, this was my mother's home. And I wonder how well properties rent this time of year, with school already having started?

Mark D. · Answer

If the property will provide net positive cash flow and is not located in a war zone then I would keep it. Let some body else pay off the mortgage and have another asset to hold as a long term hedge against inflation.

Ed O. · Answer

Sorry to hear of your loss. I reads like you really don't want the house. If that's what you feel, then unloading it makes sense. I never trust the assessor. They assess me in my market at 2-3 times the legitimate value of my rentals. You should check with a realtor and see what they have to say, as far as what the outlook could be if you tried to sell. On the flip side, you have 8 years left on the note. With every payment, there's more and more paid in equity, which is a plus. The tax consequences could be very favorable. This is something to consider. Also, could you cash flow this home? Is it close to your residence or other rental? You could rent it for a few years, in the hopes that the market will come back. Good luck with your decisions ahead.