Post about "Property"

Should You Sell, Buy Or Rent Out an Inherited Property?

It is tough when you’ve lost a loved one and then have to work out what to do with the home they leave behind. Should you sell the property? Buy it yourself? Rent it out for a while or the long term?

To help, the first thing to do is not to rush into a decision. Give yourself a few weeks to adjust to the situation before you do anything – take some time to grieve if you need. The next step is to sort out everything left in the home. Ideally don’t strip the place bare as it’s easier to sell a property with some furniture in and it’s safer too. Depending on how long you are likely to leave the property empty for, make sure you follow our Empty Homes tips

Are you Inheriting the Property with others? The next step is to start to work out what your options are. Of course the property you are inheriting may be shared between other family members. If there is a surviving spouse, for example, you may all decide it’s easier if they stay in the home from a familiarity perspective. Alternatively you might decide that it’s better the parent sells up and moves closer to you.

Top Tip: Draw up your will! Don’t forget that ideally before you officially inherit the property, it’s important to have your own will drawn up (and potentially put the property in a trust if you have children of your own) to ensure that if anything happens to you, your wishes are carried out.

Next, it’s important to chat to other family members that have inherited the property with you and try and gain a consensus of what to do.

Options on What to do when you have Inherited Property Sometimes it’s as easy to buy the property yourself if it’s the size you want and in the location that you want to live in. This can be straightforward if you are a lone child and require some tricky negotiations if you have brothers and sisters!

Option One: A Family Member Buys the Property

Ideally you need to get an agreement drawn up between you which includes how the property will be valued and how other siblings will be compensated (if required) for their share of the property. Your legal company should be able to guide you through this process at the same time they are carrying out probate.

Option Two: You Decide to Sell the Property

If you aren’t the only sibling selling the property may well be the best option, especially if there is any disagreement on who should own the property or how to move forward. This way everyone can take their share and do what they want with it.

The important thing to do is to decide who’s going to manage the sale of the property and agree the minimum that you will all accept. If it helps, even get this in writing between you so no-one can change their mind latter on. If necessary, your legal company will look after the sale, but they will charge you for it.

If for any reason you need a ‘quick sale’ then you can turn to private buying companies such as:-

ARC Property Group
Quick Move Properties
Move With Us

However, they will a discount of up to 15% off the market value of the property. So if they value your property at £200,000, they will only pay around £170,000. The advantage is that they will be able to do this within a matter of weeks, so it takes the uncertainty out of selling the property.

Alternatively you can prepare the property for sale and then put the property on the market. Make sure however you chose your agent very carefully as you need to be able to trust them to enter and exit an empty property.

Option Three: Keep and Rent out the Property

To rent a property out, you need really to commit to doing this for six months or more. It’s important to be aware that renting a property isn’t just about finding a tenant, taking deposit and sitting back and banking the rent.

You also need to make sure that you all own the property correctly from a legal perspective, so you MUST discuss this option with your legal company prior to making any decisions.

Over the last five years, that have been major changes to the law and most of these legal changes are in favour of the tenant, not you, the landlord. If you don’t abide by these laws, then the tenant in some cases can even sue you for £3,000!

Ideally, if you are renting a property out for the first time, use a letting agent. Make sure this is a letting specialist as opposed to a company that does sales and rentals as many estate agents don’t know how to run a lettings business properly.

If you want to manage the tenant on-going, then instead of full management, you can choose a ‘Let Only’ option where the letting agent finds the tenant and moves them in legally, with an inventory done, and even collect the first month’s rent. After that you can manage it. However if you don’t want calls at 1am in the morning to say there is a problem with the property – go for full management!

To be sure you are legal from marketing stage, make sure the property has:

1. Energy Performance Certificate

2. Gas Safety Certificate

3. Electrical Safety Certificate OR self certifying that the electrics are safe

Once you have found a tenant, you will need:-

1. An up to date tenancy agreement.

2. To protect deposits in a tenancy deposit scheme.

3. To carry out credit checks on the tenant.

Finally remember that any excess rental income versus allowable costs you receive could be taxable, so you’ll need to check this out too!

How to Put Your Finances on Autopilot

In your quest for taking control of your own personal finances, it is important to remember that doing so is a means to an end. Ideally, you want to get your financial house in order so that you can lay the foundation for creating substantial wealth.

Laying that foundation can be accomplished in a number of ways. The most popular way, and least effective, is to let your bills come in, pay them if you can, and save later.

There is a far more effective way to lay this foundation: Automate your finances.

Today is your lucky day. I will show you how to completely automate your finances: Pay your bills, set up your savings and investments, and never write a check or lick a stamp again.

The key to all this is using the online services that are available to you now.

First, open a FREE online checking account. There is a plethora of them out there, so finding one should be super-easy. I use WaMu, but you can use Schwab, your local bank, or some other source.

Set up a FREE online savings account, too. In fact, open 3 or 4 (I’ll tell you why shortly). Make sure it’s a high-yield savings account. Link it to the checking account you just opened.

Here’s an optional tip for those of you rewards credit card fiends: For every regular bill you currently pay, set it up so that your rewards card is debited for the monthly amount. Do not confuse this with a debit credit card. No, use a true rewards credit card, either a points, airline miles, or cash back credit card. The benefit here is that you rack up a ton of rewards for things you would normally pay by check or debit card. This is as close to a free lunch as you’re going to get.

Now, set up your investment vehicles. If you have the option of investing in an employer-provided plan, like a 401k, set up whatever minimum there is to get the employer match. Then, attempt to invest at least another 10 percent in an IRA (Roth or traditional, and the choice is less important than the act of investing in either one). Finally, set up a taxable brokerage account.

Finally, set up direct deposit with your employer so that your entire paycheck is deposited in your online checking account.

The hub of this system is online checking account. For any bills that you could not set up to be paid by credit card, set up bill pays for them with your online checking account. If you did your homework, this feature will be free.

So you’ve set up all your bills to be paid by credit card or auto bill pays. The only manual bills you’ll have to pay are your credit card bill and any recurring, variable cost bills like cell phone (hint: buy a pay-as-you–go plan and you’ll eliminate this, too), water, and power (where I live, PG&E offers a “leveled” payment plan that sets your monthly bill at a constant rate for 4-6 months at a time).

Set up auto transfers from your online checking account to your online savings accounts (set up multiple savings accounts for things like your emergency fund, vacation fund, gift fund, and escrows like property taxes and insurance that come due every 6 to 12 months), your retirement accounts (IRAs), and your brokerage account (Zecco and TradeKing work great, as does Sharebuilder).

Take it one step further: Set up your investment accounts (IRA, 401k, and brokerage accounts) to take that auto-transferred money and invest it regularly in mutual funds and stocks in fixed dollar terms on at least a monthly basis (taking full advantage of dollar cost averaging).

The beauty of this system is that it’s infinitely flexible and you can adapt it to your particular needs and goals.

Remember, this system helps you lay your personal financial foundation. Using the time you save, and your newfound financial organization, layer other strategies on top of this foundation to totally stoke your financial future!