If You Inherited a House, What To Do In Fairfax?

First, we’re very sorry for your loss. This can be a very challenging time for many reasons. Dealing with property ownership can be tough at the best of times.

You’re thinking, “I inherited a house, what to do with it? Rent it? If I do that, will I lose money? Do I need a property manager? If so, how much will that cost? Or should I sell? If I sell, do I have to fix the place up? How much will that cost? I don’t want to make a mistake, but where should I begin?”

You have a lot of question. And a lot of option.

The good news is: We can help.

We’re professional house buyers in Fairfax real estate, and we’re looking to buy several houses each month in the Fairfax Virginia area. Every month we get calls from people just like you who have inherited a house and are looking to sell the house. The information below contains some tips to help you navigate the process.

I Inherited A House, What To Do Next?

Here’s a few important considerations to help you make the right decision:

1) Make sure the mortgage is paid.

This may sound obvious, but if the person who left you a property also had a mortgage, you have to continue paying it. Or, with one house we bought recently, there was no mortgage, but there was a HELOC (home equity line of credit) that had to be paid every month. There is some good news, though. Although almost all mortgages contain a “due on sale” clause–allowing the lender to call the loan if the property is transferred without its permission (that’s designed to prevent loan assumptions)–there are exceptions for inherited properties. This isn’t legal advice, so please check with a lawyer. But the Garn-St. Germain Act says a lender can’t call the loan under certain conditions, including

  • transfer to a relative resulting from the death of a borrower;
  • a transfer where the spouse or children of the borrower become an owner of the property;

Bottom line: Ownership can transfer to a spouse, children, or other relative while the mortgage stays in place. That’s good! However, it doesn’t get rid of the debt.

2) The investment is only as good as the manager.

If you think you want to be a landlord, remember that (unless you like 3 am calls from tenants) you’re going to have to hire a property manager. If dealing with brokers, maintenance, tenants, rent collection, and all the nuances of property management isn’t the best use of your time, hire a professional to help you. But there are several things to consider:

  • The property might not be good as a rental. You need the right combination of house layout and design and an area that will support the rent you need to charge.
  • How much will it cost to get the property in rental-ready condition? The good news is that getting a house ready to rent costs less–often 20%-30% less–than getting it ready to sell. The bad news? It still costs a lot of money.
  • Some property management companies are very good. Some are pretty bad. Until they’re managing your property, you won’t know which you ended up with.

3) Property ownership costs money.

It’s rare to see a building that’s been perfectly maintained. Most inherited houses need major improvements.

Consider hiring a professional property inspector to give you a detailed rundown on what you’ll need to do within the next five years, along with estimated costs. Pay particular attention to the expensive items: the roof, the HVAC system, perhaps new windows. Surprises are very, very expensive.

4) Selling a property for top dollar costs money.

As we said above, it costs less to get a property into shape to rent it. It costs a lot more to get it into shape to sell. If you don’t want to deal with making repairs, updating kitchens, and improving landscaping and overall cleanup, don’t worry. We buy Fairfax houses for cash in as-is condition.

5) If the market will continue to grow faster than your other options, hang on to the investment.

We can help you analyze the value of your property today versus the long-term benefits of renting. If you can use the equity in your property in another way that outpaces the real estate market, you should. If you don’t have anything better to do with the money and the neighborhood is rising in value, hang on – real estate can be a great investment if you know how to correctly read the market. But the problem–as we saw around 2007-2009–is that the market can go down. That one came as a surprise to a lot of people!

6) Uncle Sam wants a piece of the action.

Don’t forget to discuss your inheritance with tax and legal professionals before you take action. There are major property and income tax consequences that can dramatically impact the cost of owning your investment. Again, though, there’s some good news. Please check with your tax advisor, but according to the IRS:

To determine if the sale of inherited property is taxable, you must first determine your basis in the property. The basis of property inherited from a decedent is generally one of the following:

  • The fair market value (FMV) of the property on the date of the decedent’s death.
  • The FMV of the property on the alternate valuation date if the executor of the estate chooses to use the alternate valuation. 

7) Consider all your options.

In certain situations we may be able to help you structure a lease-option agreement that allows you to rent and sell at the same time. That can capturethe best of both worlds. These kinds of deals can be complicated, but our Burke investment experience can help you win.

8) Compare a few scenarios.

We’ll help you determine prices for any property near Burke – if you sold it today without doing any work, the highest price the market will bear, and the projected value of keeping it as a rental (along with the costs).

Call us today at 703-239-4212 or contact us now for more information
on how we can make you a fair cash offer on your inherited house today!

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