Should You Rent, Renovate, or Sell a Home You Inherited?

Renting the Home: The Good and the Bad

Renting out an inherited property can provide you with a steady stream of income, but it’s not always as simple as just putting up a “For Rent” sign.

Pros of Renting:

1. Steady Cash Flow: Renting the property provides monthly rental income, which can help cover expenses like your mortgage, property taxes, insurance, and maintenance costs.
2. Future Value: If the neighborhood is appreciating, holding onto the property can pay off in the long run. You may even be able to sell it for more later if home values rise.
3. Less Immediate Pressure: If you’re not ready to pour money into renovations or don’t have the budget right now, renting allows you to keep the property while you figure things out.
4. Flexibility: Renting gives you time. You can always decide to sell or renovate the home later on when you’re ready.

Cons of Renting:

1. Ongoing Maintenance: As a landlord, you’ll need to deal with the upkeep of the property, including repairs, maintenance, and dealing with tenants. It can be time-consuming and costly.
2. Tenant Issues: Not all tenants are dream renters. You might encounter late payments, property damage, or other tenant-related challenges.
3. Higher Insurance & Taxes: Rental properties often have higher insurance premiums and could increase your tax liability, especially if rental income pushes you into a higher tax bracket.
4. Not Rent-Ready?: If the house needs repairs before you can rent it out, it might not be feasible to rent immediately. You’ll need to spend time and money fixing it up first.

Renovating the Home: Is It Worth the Effort?

Renovating can turn your inherited home into a personal haven or a valuable asset, but it requires a significant investment of time, effort, and money.

Pros of Renovating:

1. Increase Property Value: Renovations can raise the value of the home, especially if it’s outdated or in need of repairs. A kitchen remodel, new flooring, or modern bathrooms can make a big difference in resale value.
2. Make It Your Own: If you plan to live in the home, renovating allows you to personalize the space exactly how you want it.
3. Potential Profit: If you plan to sell the home after renovations, you could get a significant return on your investment, especially in a good market.
4. Tax Benefits: Certain home improvements may qualify for tax deductions or credits, which can offset some of the renovation costs.

Cons of Renovating:

1. High Costs: Renovations can be expensive, especially if there are major repairs needed. Without enough funds, you may have to take out a loan or mortgage, adding financial pressure.
2. Time & Disruption: Renovating can take weeks or months, which can be inconvenient if you’re living in the home during the process.
3. Unforeseen Problems: Older homes often have hidden issues, like plumbing, electrical, or structural problems, which can increase the scope, cost, and timeline of renovations.
4. Emotional Stress: If the house has sentimental value, making decisions about what to change or preserve can be emotionally taxing, and the whole renovation process can feel draining.

Selling the Home As-Is: The Easiest Option?

Sometimes, the simplest and most profitable option might be to sell the home as-is. This route allows you to bypass the hassle of dealing with tenants or major renovations. Instead, you can quickly get a fair price for the property and move on.

Pros of Selling As-Is:

1. No Need for Renovations: Selling the home as-is means you don’t have to worry about spending money or time on repairs and updates. It’s an easy, straightforward way to move on from the property.
2. Quick Sale: The selling process may be faster, especially if you work with a company that specializes in buying homes as-is. You won’t need to wait for renovations to be completed before listing the property.
3. Avoids Stress: Selling the property lets you skip the stress and inconvenience of managing tenants or living through a renovation process.
4. Fair Offers: There are companies out there that buy homes for a fair price, even if they need work. They often handle the renovations themselves, which means you don’t have to deal with contractors or DIY projects.

Cons of Selling As-Is:

1. Lower Price: You might not get as high of a sale price as you would if you renovated the home, as buyers will take the cost of repairs into account when making an offer.
2. Missed Potential: If the market is strong and you can make the right updates, you might leave money on the table by selling as-is rather than investing in renovations that could increase the home’s value.
3. Emotional Attachment: If the home holds sentimental value, selling it quickly may feel like letting go of a family legacy, even if it’s the practical decision.

‍

The Hassle Factor: When Selling Makes Sense

Sometimes, selling the property as-is might be the most practical option. While it might seem like a good idea to renovate, it can be just as profitable (or even more so) to sell the home quickly. Companies like ours buy homes as-is and handle all the renovations themselves.

Doing the work yourself, especially if you don’t have experience, could end up costing you more money and time than you expect. When you sell, you avoid the hassle of managing contractors, handling tenants, and dealing with renovation surprises. Plus, you’ll get a fair price and can move on with your life—no stress, no headaches.

Financing Your Renovations or Rent

No matter what path you choose—renting, renovating, or selling—you’ll likely need to think about financing. Here are your options based on whether the home has a mortgage or not.

If the Home Has a Mortgage:

1. Home Equity Line of Credit (HELOC): If there’s equity in the property, you can take out a HELOC, which lets you borrow against that equity at a relatively low-interest rate. You can use this for renovations or repairs.
2. Cash-Out Refinance: With a cash-out refinance, you replace your existing mortgage with a new one and take out extra cash to cover your renovation costs.
3. Personal Loan: If you don’t want to use the home as collateral, you can take out an unsecured personal loan, though the interest rates tend to be higher than those for a HELOC or refinance.

If the Home Doesn’t Have a Mortgage:

1. Credit Cards: For smaller renovations, using a credit card can be an easy option. However, be cautious of high-interest rates if you don’t pay it off quickly.
2. Unsecured Home Improvement Loan: These loans are another option for funding your renovations. You don’t need to put your home at risk, but expect higher interest rates than with a HELOC or refinance.
3. Paying Cash: If you have the funds available, paying cash is the least expensive way to go since it avoids interest and loan fees altogether.

Legal Work: Protect Yourself Before You Start

Before jumping into any project—whether it’s renting, renovating, or selling—you need to make sure all the legal work is in order. The home needs to be legally transferred into your name before you can do anything with it. That means completing the probate process and ensuring the title is clear.

To make sure everything is handled correctly, it’s a good idea to contact an estate attorney who specializes in probate and estate work. They can help ensure there are no surprises when it comes to the legalities of inheriting and managing a property.

We personally recommend Byrd & Byrd in Bowie, MD. They’re experts in estate law and can guide you through the process smoothly, protecting you from potential legal issues down the line.

The Hassle Factor: When Selling Makes Sense

Sometimes, selling the property as-is might be the most practical option. While it might seem like a good idea to renovate, it can be just as profitable (or even more so) to sell the home quickly. Companies like ours buy homes as-is and handle all the renovations themselves.

Doing the work yourself, especially if you don’t have experience, could end up costing you more money and time than you expect. When you sell, you avoid the hassle of managing contractors, handling tenants, and dealing with renovation surprises. Plus, you’ll get a fair price and can move on with your life—no stress, no headaches.

Conclusion: Rent, Renovate, or Sell?

Ultimately, deciding whether to rent, renovate, or sell your inherited home depends on your personal goals and the home’s condition. Renting can give you steady income if the house is in good shape, while renovating can increase its value if you’re willing to put in the time and money. If you want a quicker, hassle-free option, selling the property as-is might be the right choice.

Whatever you decide, make sure the legal work is handled first, secure financing options that work for you, and consider the time and effort involved in each choice. With the right approach, you can make the best decision for both you and your inherited home.

‍