I Inherited a House in Hampton Roads — Should I Rent It or Sell It?

If you’ve recently inherited property in Hampton Roads, you may suddenly find yourself responsible for a home you never planned to own.

You may be wondering whether to sell it, keep it, or turn it into a rental property. Perhaps there’s still a mortgage. The home may need repairs. It could already have a tenant. Or you may simply have no idea where to begin.

And if you’ve inherited the property following the loss of someone close to you, making an immediate financial decision may be the last thing you want to do.

One of the first questions is usually:

What should I do with the house?

For most homeowners, the basic choices are to sell it, keep it for personal use, or turn it into a rental property. However, there isn’t one answer that’s right for everyone.

Before making that decision, it helps to understand the property, your options, and what each choice may involve.

First, Understand Your Inherited Property in Hampton Roads

Before deciding what to do with an inherited property in Hampton Roads, start by getting a clear picture of what you actually own and the property’s current situation.

For example, you’ll want to determine:

• Has ownership of the property been legally transferred?
• Is there an existing mortgage or other lien?
• Are the property taxes and insurance current?
• Is the property part of an estate or trust?
• Does anyone currently occupy the property?
• If there is a tenant, is there a current lease?
• What repairs or deferred maintenance does the property need?
• Are there association or condominium requirements that apply to the property?

Some of these questions go beyond real estate and property management. Therefore, estate, title and tax questions should be discussed with the appropriate attorney, tax professional or other qualified adviser.

Once you understand the property’s legal and financial status, you can begin evaluating what you actually want to do with the home.

Option 1: Sell the Inherited Property

Selling may make sense if you don’t want the responsibility of owning another property, need access to the equity, or simply have no interest in becoming a landlord.

You may also live outside Hampton Roads and prefer not to maintain a property from a distance.

Before making that decision, however, consider the property’s current condition and market value.

Does it need substantial work before it could be sold?

Would certain repairs or improvements make financial sense?

How much equity is in the property?

Additionally, inherited property can involve tax considerations that differ from a typical home purchase. Questions involving your individual tax consequences, basis, or potential capital gains should be discussed with a qualified tax professional.

Because First Landing Realty handles both residential sales and property management, we encourage inherited-property owners to evaluate both sides of the equation rather than automatically assuming they should rent the property—or automatically assuming they should sell it.

Sometimes selling is the better choice.

Sometimes keeping the property as a rental deserves serious consideration.

The important thing is having enough information to make that decision.

Option 2: Keep the Property as a Rental

Renting the property may allow you to retain ownership while potentially generating rental income and preserving the opportunity for future appreciation.

However, before deciding to become a landlord, you’ll want a realistic picture of how the property may perform as a rental.

Start with four important questions.

What Could the Property Reasonably Rent For?

This is one of the first numbers you need.

Don’t base the decision solely on what you hope to receive or on an automated online estimate.

Instead, look at current rental market conditions and comparable properties. Location, size, condition, amenities, competing rental inventory and other factors can affect rental value.

→Find Out What Your Property Could Rent For

Is the Property Ready for a Tenant?

An inherited home may have been occupied by the previous owner for many years.

As a result, there may be deferred maintenance or updates that should be addressed before offering the property for rent.

Depending on the home, that might include:

• General repairs
• Cleaning
• Paint
• Flooring
• Plumbing or electrical concerns
• HVAC servicing
• Appliances
• Exterior maintenance
• Landscaping
• Safety-related items

That doesn’t necessarily mean you need to renovate the entire house.

Rather, the goal is to determine what should reasonably be addressed to prepare the property for the rental market.

What Will It Cost to Own the Property as a Rental?

Rental income is only one side of the equation.

You should also consider expenses such as:

• Mortgage payments, if applicable
• Property taxes
• Insurance
• Association fees
• Routine maintenance
• Larger future repairs
• Vacancy
• Turnover expenses
• Property management

For example, a property renting for more than its monthly mortgage payment doesn’t automatically mean it’s producing positive cash flow.

Looking at the larger financial picture will help you make a better-informed decision.

Do You Want to Become a Landlord?

This question is easy to overlook.

Inheriting a property doesn’t necessarily mean you also wanted to inherit the responsibilities of being a landlord.

Someone will need to handle tenant screening, leases, rent collection, maintenance, accounting, property oversight, tenant communication and other responsibilities associated with operating the rental.

You can choose to manage those responsibilities yourself.

Alternatively, you can hire a professional property manager to handle much of the day-to-day management on your behalf.

→Should I Rent My House? What Hampton Roads Homeowners Should Consider Before Becoming a Landlord

What If the Inherited Property Already Has a Tenant?

This situation deserves special attention.

If you’ve inherited a tenant-occupied property, don’t assume that the change in ownership automatically changes the existing rental agreement.

Instead, one of your first steps should be gathering as much documentation as possible concerning the existing tenancy.

That may include:

• The current lease and addenda
• Tenant contact information
• Rent and payment history
• Security deposit records
• Property condition documentation
• Maintenance records
• Existing notices or agreements
• Any outstanding tenant requests or concerns

The existing lease and applicable Virginia requirements should be reviewed before making decisions that affect the tenancy.

If you don’t want to personally manage the existing tenant, you may also have another option.

Depending upon the circumstances, a professional property management company may be able to take over management while the property is already occupied.

In other words, you may not necessarily have to wait for the current tenant to move out before considering professional management.

→Can a Property Manager Take Over When You Already Have a Tenant?

What If You Live Outside Hampton Roads?

You don’t necessarily have to live near the inherited property to keep it as a rental.

However, distance changes the logistics.

If the air conditioning stops working in July, someone needs to respond.

If a tenant reports a leak, someone needs to coordinate the repair.

When the lease expires, someone needs to handle the property, turnover and next tenancy.

For an owner living in another part of Virginia—or another state entirely—having an established local property management team can make retaining the property considerably more manageable.

Professional management allows you to remain the property owner without requiring you to personally handle every day-to-day issue from a distance.

→Learn About Our Hampton Roads Property Management Services

What If You’re Not Ready to Decide Whether to Rent or Sell?

That’s okay.

You don’t necessarily have to make the rent-or-sell decision immediately.

Sometimes the best first step is simply gathering information.

Start by answering four questions:

What is the property worth if I sell it?

What could the property reasonably rent for?

What repairs or improvements does it need?

What would it cost me to keep it as a rental?

Once you know those numbers, the decision between renting and selling often becomes much clearer.

And if you’ve inherited the property during an already difficult period, giving yourself enough time to gather the facts before making a major decision can be valuable.

Rent It or Sell It? The Right Answer Depends on Your Situation

There isn’t a universal rule that says inherited property should be sold.

Likewise, keeping an inherited home as a rental isn’t automatically the better financial decision.

Your answer will depend on the property, its condition, your financial circumstances, the current sales and rental markets, and what you ultimately want from the property.

That’s why we believe the better question isn’t:

“Is renting better than selling?”

It’s:

“Which option makes the most sense for this property and this owner?”

You Don’t Have to Figure It Out Alone

For more than 35 years, First Landing Realty has helped Hampton Roads homeowners with both residential real estate and professional property management.

That gives us a useful perspective when working with someone who has inherited a home.

If you’re unsure whether to rent or sell, we’re not limited to looking at the property from only one side.

We can help you understand its potential as a rental, discuss what may need to happen before it could be rented, and provide information about the current rental market.

If selling ultimately makes more sense for your situation, our real estate brokerage can help you explore that option as well.

Our objective is not to automatically tell you to rent the property or automatically tell you to sell it.

It’s to help you understand your options so you can make an informed decision.

Not Sure Whether to Rent or Sell Your Inherited Home?

You don’t need to have everything figured out before contacting us.

Tell us a little about the property, where things currently stand, and what questions you have.

We’ll help you identify the next steps and give you the information you need to evaluate your options.

No pressure. Just a conversation about the property and what makes sense for you.

Start With Your Property

→Talk With Us About Your Options

Or, if you’d like to begin with the numbers:

→Request a Free Rental Analysis

First Landing Realty provides professional property management and residential real estate services throughout Virginia Beach, Chesapeake, Norfolk, Portsmouth, Suffolk, Hampton and surrounding Hampton Roads communities.