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Original poster

Inherited property: sell or keep and rent out?

27 replies

reuse · 18/05/2023 22:56

My DF died a few months ago. My parents were divorced and I'm an only child, so apart from a few charity bequests he left everything to me. He was very savvy with investing so I'm in the fortunate position of inheriting a good chunk of money in investments as well as his home.

I'm lucky that I have only a small amount outstanding on my mortgage (and a great fixed rate deal for the next couple of years), good pension, and some investments of my own.

With this in mind I'm considering holding on to his house as an investment and renting it out. I've been reading that lots of landlords are selling up at the moment so maybe this is a daft idea. The house is in good nick, in a nice area, though an area with lots of older people so I need to research how much demand there is for rentals of course.

I will be taking financial advice but I would like to start thinking and researching for myself as well (which I will do outside MN as well!)

OP posts:
Candleabra · 19/05/2023 08:27

Unless you’re very attached to the house and want to keep it, or know what you’re doing as a landlord, I would just sell the house and invest the money.
Having the responsibility for another property is a lot to take on, and the returns look good on paper but are quickly eroded by tax and maintenance.

OutOfMyPocket · 19/05/2023 08:36

The tax position has changed for landlords, I think it depends if you are keeping it for sentimental reasons, hoping property will rise over time, or for an income.

Also consider whether you want your children to have to manage it when you are gone as it will be another stress.

Pamalot · 19/05/2023 08:41

Does it need money spent to bring it up to date and to rental standard? Are you local in case you need to go there? Can you be bothered with the maintenance and all the other tasks that go with renting?

TheFormidableMrsC · 19/05/2023 08:42

I would sell it. I know a few people who have attempted becoming landlords in similar situations and it's been an all round nightmare. I realise this won't be the case for absolutely everybody but it's a huge responsibility. I'd invest the cash elsewhere I think.

SquashPenguin · 19/05/2023 08:45

I’d sell. I just wouldn’t want the hassle of renting.

Georgiepud · 19/05/2023 08:49

I was in a similar position. An only child, I sold my mum's London house because I didn't want hassle with tenants. I bought a holiday home by the coast for us I allow friends to use it so I do get some sort of income to cover bills.

SheilaFentiman · 19/05/2023 08:58

I would sell. It’s getting harder, as a landlord, to keep things up to standard and it can be tricky if you decide later you want to sell but the tenant isn’t willing to leave.

Mindymomo · 19/05/2023 09:12

We sold late father in laws house, as it needed a lot doing, new boiler, windows, bathroom, garage door etc. and it sold really quick because of this Estate Agent said people like buying a home where they can do it up to their taste. My friend also lost her Mum around the same time and decided to keep house and rent it out. She’s been really lucky, the family pay her 1 year in advance each year and apart from gardening which my friend still likes to do, they’ve not had to do any repairs or replacement on the house. Another friend has 2 houses in an area near a university which he rents out to students, he replaces fridges, freezers, cookers, showers, curtains nearly every year and they continually break things and hardly makes any money from it.

Wonnle · 19/05/2023 09:13

I inherited my childhood home a couple of years ago , was gifted 50% way back and got the other 50% when my father died . My mum was living there but is now in a home so the house was empty .
There was no way i was going to rent it out , it's just too much hassle to keep on top of everything that needed doing .
Found out after my mum moved out that technically i had been her landlord and even though she was living rent free I should have had landlord insurance and all the safety certificates
My advice is sell it

determinedtomakethiswork · 19/05/2023 09:16

I'm so sorry you lost your dad.

I agree with others. I would sell it and invest the money. It's just too much hassle having to rent it out.

GremlinDolphin4 · 19/05/2023 09:22

Get good financial advice and think about what you want! There are so many variables!

I rented out my family home for 10 years and I enjoyed it and it was an amazing source of income but there were occasional tenant issues. I had a brilliant maintenance man locally too.

It has been sold now as I am divorced and it felt too much financial responsibility on my own.

Also from an emotional point of view it really helped me to see it as other people’s home rather than if I’d had to sell it as soon as mum wasn’t in it.

Good luck!

morelippy · 19/05/2023 09:25

I sold and bought a holiday home. Have since sold that and invested the money.

Both times I thought about renting but having looked at it decided wouldn't touch it with a barge pole.

Sprig1 · 19/05/2023 09:27

Sell it. You can get much better investments than rental properties these days.

Eomt · 19/05/2023 09:30

I own and rent out 2 flats. I employ a letting agent to deal with everything. I spend a couple of days each year doing my tax returns and that's about it.
I am a very conscientious landlord with properties in perfect condition. Any issues are dealt with straight away. I think if you get decent tenants and treat them very well, it's fine

parietal · 19/05/2023 09:31

definitely sell.

NoSquirrels · 19/05/2023 09:35

As others have said, it depends a lot on the property itself, how close you are to it and how actively involved you can/want to be in managing it, and what the income generation is.

For instance, I’ve been a LL with 2 properties in my time - one family-sized property that was inherited, in a low-demand/low rental yield area, but rented to a friend of a friend who kept it in wonderful nick, communication easy and trust on both sides, long-term rental stability. By contrast the smaller property, in a high-demand, high rental yield area, had a revolving door of tenants every couple of years, proportionally more upkeep/maintenance, way more admin and communication needed etc. and much more of a PITA all round.

I’m not 100% with the ‘just sell it’ posters, but you should think about the admin and maintenance very carefully. Property investment isn’t set-it-and-forget-it in the way that other investments can be.

Beamur · 19/05/2023 09:39

Look into it carefully.
I have one property I inherited and rent out. It makes a modest profit and the value of the property has risen. I live in an area where demand is high for rental, it's managed by an agent and it's kept in good condition and at a fair rent.

EggInANest · 19/05/2023 09:46

You wil no doubt do the sums and seek specific advice, but having looked at the net rent income after management fees / maintenance/ various costs, look at the position on tax on rental income, and Capital Gains Tax.

It may well not be worth the hassle. Or it might!

saraclara · 19/05/2023 09:47

I'm in the position of 'inheriting' my mums rental property (which she put in both our names when she bought it about 18 years ago. The rental money goes entirely to her, and always had. It now helps to pay her care fees.

I'm dreading taking it over when she dies. I don't want the responsibly, I don't want the hassle, and I don't want my kids to have to inherit it from me.

I'm sorry for the tenant (who's been there for the full period) but I will offload the property as soon as humanly possible. It is my mums only asset as she has run out of funds. My brother struggles to make ends meet, so though he is not named on the deeds, I want to raise the money for the house so I can give him half, as it will be his only 'inheritance'.

Allthegoodnamesarechosen · 19/05/2023 09:55

I really wouldn’t. I rented our house to some highly recommended personal friends of the agent when we couldn’t sell because of the Brexit and then Covid hiatus. We met them, had them round for drinks, seemed to get on well.

As soon as they had the keys, we became ‘ the landlords’. I would say they hated us. They broke things , including a patio window ( how do you do that) they complained endlessly about things like the ceiling colour in the kitchen which they must have seen when they viewed the property (it was a very pale apricot white!). They tried not to pay the rent , they tried to steal the white goods when they left.

I think we were lucky that they found somewhere nearer their office and so wanted to move out ; it seems much harder to terminate a rental now.

Never again.

Whatevergetsyouthroughthenight · 19/05/2023 09:58

I found myself in a similar situation and have chosen to keep the house and rent it out (for complex reasons it was rented out before my DPs died and I inherited it).

It’s been easy so far and there’s a family with children at the local school in the house so I don’t anticipate the tenants wanting to move out anytime soon (they have been in the house for three years now).

After costs, I would earn a little bit more income (maybe 1%) if I sold the house and put the money into a fixed term savings account, but inflation would erode those savings whilst over the long term the house is an appreciating asset. Also the family would really struggle to find a home if I sold (they are a large family on benefits). I also am fortunate to already have pension and investments in the stock market so I like having some diversification of assets.

I use a full agent service as the house is a long distance away from me. They collect the rent, arrange insurance against non payment of rent, check on the condition of the house, keep me abreast of any legislative requirements, let me know if anything needs repairing and organise those repairs. This service costs 10% of the rental income (although obviously the repairs cost extra). I have to arrange the landlord insurance once a year.

SheilaFentiman · 19/05/2023 10:21

I do think there is a big difference between continuing a rental arrangement already there and finding agents, tenants etc.

yoga4meinthemorning · 19/05/2023 11:13

The only landlord selling are ones with mortgages. If you're an outright owner you'd be daft to sell it.

Renting really isn't that stressful.

Whatevergetsyouthroughthenight · 19/05/2023 12:31

SheilaFentiman · 19/05/2023 10:21

I do think there is a big difference between continuing a rental arrangement already there and finding agents, tenants etc.

I was the one who had to do all the initial arrangements for the rental. It was all pretty straightforward.

Amboseli · 29/05/2023 22:33

We have a couple of BTL. We've been fairly lucky with tenants so not too much hassle. I do sometimes think about selling but would have a lot of CGT to pay which puts me off.

All our other investments are ISAs and pensions so all in equities. I like the diversification owning a BTL gives you, and the rental income is fairly steady even if property prices go up and down. I wouldn't want to be 100% dependant on equities in retirement, a combination of rental and equity/dividend income seems sensible.