According to one survey, on average, people are leaving about $177,000 in inheritance.
If you recently realized, “I inherited a house!”, you may be wondering whether you should sell or rent it.
There are pros and cons to both, but we’re here to help you decide what to do with the inherited property, so make sure you keep reading!
One Percent Rule
When you evaluate whether or not a property is better as a rental or not, consider the one percent rule. This says that the property produces 1% of the purchased price in rental income each month.
If the income isn’t hitting that 1%, then you’re not making any real rental income, and it’s better to look into selling an inherited house.
However, if you want to decide based on more factors, you can always weigh the pros and cons.
If you rent the property, you’ll have passive income on a recurring basis. This might make it easier for some people to manage the money coming in.
You also won’t have to rush to sell the home because you’ll be making money rather than spending it on costs while you hold it. This is even more important if you’re inheriting a parent’s house during a buyer’s market.
Some of the cons of renting out a property is that it can be a lot to maintain over time. It’ll take up a lot of your free time.
If your property is farther away from you, you’ll either have to hire a remote landlord or even pay for professional management.
If you need to renovate the house, you’ll also have to spend money fixing it up before you can have tenants.
If you don’t want to deal with the hassle of renters, selling the home can be a great way to make a lot of money, especially in a seller’s market.
You also won’t have to worry about taking care of the investment property or deal with finding tenants all the time. You’ll even have a lot of the money upfront so that you can invest it into something else and make a greater return.
Selling the house could be disadvantageous because it could take a long time to sell, but that depends on what the market conditions are like. If it takes a while, you may have to pay holding costs.
Another obvious disadvantage is that if you’re emotionally attached to the property, it might be difficult to part with.
Learn More About What to Do When You Find Out: “I Inherited a House!”
These are only a few factors to consider when you find out: “I inherited a house!”
We know that dealing with the loss of a loved one can be difficult enough, which is why we’re here to help you out.
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