If you’ve inherited a property, you’re likely trying to decide what you should do with it.
Unless you’re interested in moving into the home yourself, you’ll either need to sell the property or hold onto it and rent it out. The decision will depend on your own financial situation and the goals you have in the immediate and distant future. If you’ve ever considered investing in real estate, this is an ideal and unique opportunity to set yourself up as an investor. You can begin earning money on that home without making much of an investment yourself.
San Diego homes are expensive. Inheriting one gives you an asset that’s worth a lot of money.
As you make your decision, weigh what it would mean to sell the property and be done with it versus holding onto the asset. This is a hot real estate market now, and selling is going to make you some money. If that’s what you need more than anything, the decision might be easy for you. Demand is high and inventory is low. It won’t take you long to sell.
But, if you see the potential that this property can have for the future, you might want to hold it.
You’ll also have to think about what this property means to you. If you’re emotionally connected to the property, your decision may be different than if it’s simply a property that you never spent much time in.
As San Diego property managers and real estate experts, we’re always advising people who aren’t sure what to do with a property that they have no intention of living in. We can help you sell it or rent it out, so our team isn’t going to push you in one direction or another. We’re going to help you make a choice that works best for you.
There are some specific things you’ll want to think through as you decide whether it’s better to sell the property or rent it out.
Good Reasons to Sell a San Diego Home You’ve Inherited
First, let’s take a look at why you might want to sell.
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Immediate Income is Better than Long Term Gains
If you sell a well-maintained property that’s in a good location right now, there’s a good chance you’ll get more than your asking price. It’s a seller’s market, as you may have noticed.
When money matters require you to liquidate the asset you’ve inherited, selling is a no-brainer. If there’s college tuition to pay or a big vacation you’ve been dreaming about or you’d really like to get yourself out of debt, selling a home is a good way to fund your most important plans.
You have a property that you don’t need, so why not sell it, earn some money, and walk away from the responsibilities that come with owning a property? It makes sense for a lot of people who are eager to sell and move on. Whatever your reasons for needing a predictable sum of money, selling your property can deliver that. If there is enough equity in the home you have inherited and you know the sales market will deliver the price you want, selling is an easy way to move on.
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You’re Not Thrilled with the Idea of Being a Landlord
Renting out a property is good for a lot of reasons, but if you can’t stand the idea of tenants living in the home you’ve inherited…you should probably sell it.
Tenants should always be well-screened and qualified. But, even the best tenants can do unpredictable things. They are living in your home, making messes in your home, and potentially damaging your home. That’s a lot of risk for some people, especially if you never planned to be a landlord in the first place.
There’s no need to worry too much. Tenants can easily be managed when you work with a San Diego property management company, but we know that some people are never going to be comfortable with others living on their property. If you don’t think you can detach emotionally from the home, it’s better to sell it. Renting might cause stress and drama that you don’t need.
To rent out a property effectively, you need to treat it like a business. You need to detach from it and stop thinking about it as a piece of personal property. If you can’t do that, we recommend selling the home you’ve inherited.
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Renovations and Maintenance May be Expensive
Rental homes must meet the demands of the San Diego rental market and the tenants driving the activity in that market. If the home you’ve inherited is older or in need of a lot of renovations and upgrades just to make it rentable, you may want to sell the property. You also won’t earn a lot of money on your rental if you’re spending thousands of dollars every year in maintenance and repairs.
If you’ve inherited a home that’s newer or it’s been well-maintained and recently updated, you are in a good position to rent or sell the home. But, if the home you’re now in possession of still has its original roof, furnace, water heater, and appliances, you’ll likely have to replace those items while you’re renting it out. There may be a lot of cosmetic work that needs to go into making the home attractive to tenants as well.
When the necessary investments to keep your property habitable and appealing just aren’t worth it to you, selling it is better.
Good Reasons to Rent Out a San Diego Property You’ve Inherited
You have plenty of excellent reasons to sell the home you now own.
But, that’s not the only option. What if you can make great money in both the short and long term by holding onto the home?
Renting out a property doesn’t have to be difficult. It’s not for everyone, but if you’ve wanted to invest in real estate and you haven’t had the funds to get started, you’re in a very strong position now. Here are some good reasons to hold onto the asset and turn it over to tenants.
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San Diego Rental Values are High
It’s not only the sales market that’s strong. The San Diego rental market is pretty owner-friendly right now, too. This means you can earn high rents if you have a desirable home that good tenants will find attractive. There’s an increasingly competitive rental market in San Diego, which has driven rental values up. If you decide to rent out your home, you’ll find you have a stable pool of well-qualified tenants who are willing to pay top dollar for a great rental home.
Earning monthly rent is a huge advantage, especially if your inherited property comes with a lot of equity already built into the asset.
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Rent Out the Home if You Might Need it One Day
So you’re not planning on moving into the home you’ve inherited right now. But, might you want it for yourself in a few years? Ten years? Or when you retire? Perhaps you have children who might need a place to live in San Diego in the not-too-distant future?
These are good reasons to keep the property.
There’s no way to know where prices will be in a year or 10 years. Trying to buy a new home in San Diego at that point in the future may be nearly impossible for any number of financial and logistical reasons. By keeping your asset, you know you’ll have a place to live if you need it. Real property is tangible. It provides housing.
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You Can Instantly Become an Investor
Investing in real estate is something a lot of people want to do, but it takes capital to get started.
If you’ve considered real estate as a way to increase the power of your entire investment portfolio, this is a great way to leverage what you already own. When you own a piece of property already, it’s an easy way in. Keeping your property as a rental will allow you to stay present in a growing real estate market. You’ll have a valuable asset that’s appreciating over time while your tenants pay down your rent and contribute to expenses like property taxes and insurance.
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Rent Out Your Home for Tax Benefits
Renting out a property can be beneficial from a tax standpoint. You can deduct any expenses associated with the property, including maintenance and mortgage interest and professional services like accounting, legal fees, and property management. The travel costs of getting to and from your rental property can also be written off.
Talk to your CPA or your tax accountant. Rental properties are excellent for tax purposes.
San Diego Property Management
San Diego property managers can help you effectively lease, manage, and maintain your rental property.
If you hesitate to rent out the property because you don’t want to take on the work, it’s important for you to understand that you don’t have to do too much.
There’s no need to worry about marketing and showing your home, finding a tenant, collecting rent, making sure the home is well-maintained, or dealing with legal complexities and liability. Property managers do this every day for owners just like you.
We’re in the unique position that we can help you either way – whether you decide to sell the property or keep it and rent it out. Let’s talk about what’s best for you. Contact us at Chase Pacific Property Management & Real Estate Services.