What to do with my mother's house?

rl
By rl on Thu, Nov 9, 2017 - 10:35am
Hello all,
 
I'd like to ask some advice.
 
My mother died this spring, leaving the 
house in her estate to her 3 sons, including myself. 
 
I've been debating whether or not to keep
the house as some kind of revenue property.
 
Keeping the house as a partnership 
with my brothers won't be an option.
They are interested in the money. 
 
If I were to keep the house, I would have to either: 
partner with someone else, or
take out a mortgage for 2/3rds of the purchase price. 
 
Another consideration is that I will
leave the area after the estate is settled.
 
So, someone will need to manage the rental property
for a fee. 
 
There is the talk that house prices are going to crash.
If that happens, it would make more sense to sell outright,
and buy again after the prices drop. 
 
 
Ideas please.
 
Thanks a lot!
 
 
BTW, Hope you all don't mind me posting here. 
But the gold and silver forum seems to be
the only active forum. The last post to
investing was in Jan 2016
 
 
 
 
 
 

7 Comments

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 4770
houses

In your situation, you have a pair of brothers you need to buy out.  Presumably, you'd need a loan to do that.  So your rough P&L looks like:

  • rental income, less:
  • property taxes
  • P&I payments
  • upkeep & maintenance [older the place, more upkeep you'll need to do]
  • management fee (about 8% of gross rents)

Doing the math will give you a sense as to how exciting the prospect will be.  My understanding is, single family homes don't make great rental properties.

You can use Zillow to provide a rough sense as to what the rents might look like.

My sense: I'd probably sell, unless you want to keep the home in the family for sentimental reasons - which I completely understand too.

rl's picture
rl
Status: Bronze Member (Offline)
Joined: Feb 9 2009
Posts: 39
Current economic climate for real estate
HI Dave,
 
Thanks for the response. 
 
I understand the number aspects of it. 
And also thinking about the people aspect.
 
 
What I'm wondering about is the current economic climate.
 
If house prices are about to crash, then it 
probably wouldn't make sense at this time to invest. 
 
On the other hand, if there is a lot of inflation,
including house and rental prices, then it would
make sense.
 
Anyone, any ideas on the current economic climate,
including real estate?
 
Thanks a lot!
 
davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 4770
local

Ok fair enough.

Real Estate is - as they say - local.  What's your metro area?  I'll dig up the data on your area and see what it looks like.

My problem with giving predictions on "where things are going" is - there are a couple of ways this could play out (i.e. inflation vs deflation), and its uncertain which one it will be.

I'd decide based more on how well-funded your local pensions are, what your local economy is based on (and how secure that is), and how much of a bubble your current real estate (and rents) happen to be in at the moment.

 

robshepler's picture
robshepler
Status: Silver Member (Offline)
Joined: Apr 16 2010
Posts: 104
China and capitol flight

China has clamped down on investors investing in other countries. It seems to be taking affect in major real estate markets like Sydney, Toronto, Seattle which have skyrocketed over the last few years. My sense is that the worm is turning and will probably affect all markets.

My personal take on our current times is to not take on debt, even to support a "tangible asset."

http://www.news.com.au/finance/real-estate/sydney-nsw/chinas-harsh-investing-rules-are-changing-sydney/news-story/f8370b73afbc231183823f7a477f141f

 

redinr08's picture
redinr08
Status: Member (Offline)
Joined: Mar 21 2008
Posts: 19
What needs to be done if you sell

This is a blog that I often read, and this short article may help you:

http://www.stpaulrealestateblog.com/2017/11/mothers-house-ready.html

 

 

rl's picture
rl
Status: Bronze Member (Offline)
Joined: Feb 9 2009
Posts: 39
Any other ideas?

Thanks everyone for your thoughts. 

Yes, in addition to all the STUFF, it will need to be made ready to sell. Work, work,work. 

Any other ideas, re:

Sell it, or keep it as a revenue property? 

Thanks again. 

 

 

rl's picture
rl
Status: Bronze Member (Offline)
Joined: Feb 9 2009
Posts: 39
Any other ideas?

Thanks everyone for your thoughts. 

Yes, in addition to all the STUFF, it will need to be made ready to sell. Work, work,work. 

Any other ideas, re:

Sell it, or keep it as a revenue property? 

Thanks again. 

 

 

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