Not sure what to do with 2nd house...

[luvthatdisney]

Spring 2009, DH and I inherited my father's small house. When I say small, I mean small (980 sq.ft.). It does have 3 bedrooms and 1 bath, large corner lot, and a small deck and out building. Along with the house, we took over the mortgage on the house, which has a balance of $35,000. It is not in my name, but we have been paying it. The payment is $400 a month, $100 utilities, $25 fire ins and $750 a year property tax.

The house needed a lot of work, my father was in denial of what the condition of the house was and would not let us do to anything to it. He was a heavy smoker and the inside of the house was covered in nicotine. Several realtors told us we would not be able to sell it the way it was except to flippers or to those looking to rent it. They told us it would not sell for more than was owed on it. So we took the chance to "flip" it ourselves.

Well... we finished the house and put it on the market in Feb 2010. Since now and then only 2 people looked at the house. We had maybe 5 people ask to rent it. Our contract with our realtor expired last month, we are at a loss as to what we should do now. The housing market in this area is awful, as I am sure it is many other places. We have considered renting it out, but DH and I are not great with that type of thing. Also, the area this house is in is not the best and would not attract the best renters. We would have to charge $450 a month just to cover our monthly expense. That would be no buffer for repairs. We could maybe get $500 a month in rent, maybe.

I guess it is the fear of the unknown as far as where to start with renting. DH would be better at handling the person to person interaction and I can handle the money, but I know there are so many laws we have to follow that I dont know where to start. The contracts, credit checks, deposits,etc... my head is spinning.

I know we need to do something as I cannot continue making 2 house payments. I do not want to let it go as we have our own money tied up in it now. Any advice, suggestions, experiences that you could share would be appreciated!

 

[deva]

I think you should consult an attorney (which I am not) to understand the law in your state about "inheriting" debts. Presumably the estate would have to settle all of its debts before distributing any remaining assets. If the home is security for the mortgage, the bank would take the house in satisfaction of the debt. Does the bank know your father died?

 

[DawnM]

How much are you in it for now? Are you listing it with the intent to make a profit or just to get the 35K and what you put into it back?

I would sell it for as little as you are willing to go and be done with it. Until then you will be sinking money into interest if nothing else and every month you do that you are losing out.

Dawn

 

[Tampa Mousekeeter]

We also inherited my father -in-laws home after he passed away in February...we knew immediately we were selling it. We live in Fl and his home was in NJ. We put the minimum money in to make it presentable to sell and had it on the market in days. Be careful about his homeowners insurance, alot of companies have clauses regarding homeowners insurance and a home left vacant, not covering vandalism, fire, etc. Also, if you did not settle his estate and are just continuing to pay on his mortgage you may be looking for trouble. I would contact an estate lawyer and see what the tax ramifications are in your area.
Find out what comps are selling for in his neighborhood and get rid of it! I studied the comps for days, listed it sightly below the average and we had a contract in 2 weeks. It was such a relief after closing not being responsible for a home you are so far away from! Good luck

 

[TheRustyScupper]

1) It is not enogh info upon which to base a decision.
2) But, I would have thought the estate would have been closed by now.

3) If the house is the bulk of the estate, and little coming to you in cash,
. . . let the lawyer dispose of the house at any price
. . . close the estate
. . . any debts/mortgages left over are not owed by you

4) If you expect to get something from the estate
. . . sell the house for just enough to get out of the mortgage
. . . pocket the remainder of the estate
. . . have the lawyer then close the estate

 

[hambirg]

First let me say that I don't know anything about the inheritance, estate, taxes, etc, part of this. So check with a lawyer and be sure you understand all of that. BUT if after all of that the option to rent the house is still a viable one, consider using a property management company. I have had friends that went to teach overseas do that before and they thought it worked out great. That way you won't have to do all the rental property kinds of things most of us don't want to deal with, but could still build equity in the house. HTH

 

[luvthatdisney]

OP here

Just to answer a few things...

1. The house did go through probate and the bank is aware I am paying it. They have switched the mailing address on the account to my address. The deed has been put into my name when the estate was closed according to the attorney. The bank does not seem to care I am paying it, they are getting their money and not having to deal with another forclosed home.

2. The insurance company is also aware it is empty. We do not have homeowners ins on it, just fire insurance. This is how the insurance company set it up.

3. The house has been totally remodeled. New roof, new bathroom, new carpet and tile, new countertops, new cabinet doors, new siding and new furnace. We are asking $79,200 for it. I don't want to give it away. We have about $55,000 in it counting the mortgage.

 

[tlbwriter]

I would suggest you never become an accidental landlord. It's hard work and not guaranteed money, especially the house you are dealing with.

 

[Tampa Mousekeeter]

I said it previously, you have to look at the comps in the neighborhood, it doesn't matter how much you owe or how much you put into it or how much you think it's worth... it's what the people who are buying homes in this neighborhood are paying for similar houses....unfortunately the way you described the area it sounds like you may be one of those folks with the "nicest house on the block" which is bad when your selling...I would price it to sell and get rid of it.

 

[luvthatdisney]

I would suggest you never become an accidental landlord. It's hard work and not guaranteed money, especially the house you are dealing with.

That is the whole reason I posted, we do not want to be landlords. But it is coming down to that it appears.

I don't want to give the house away, but we may have to. I guess the reason I am so torn is that this was my inheritance. It was my father's plan for me to be able to make some money off of the house. Of course, he did not see the economy tanking as it did. He also would not see the actual state of the house.

I need to stop looking at it that way, I know. I just wonder if we listed it with a bigger real estate company (we had previously used a friend of ours that works for a very small rural company), if it would be easier to sell. Not sure what to do. We have had companies calling since they know our listing expired. Maybe we should lower the price some more, so confused.

 

[LoveBWVVBR]

I'd dump it for what I could get for it, personally. We just bought a new house (foreclosure) and sold our current house and we priced it to sell. It must have worked because ours is under contract now after 5 weeks on the market. We live in coastal FL and it's hurricane season to boot so that is saying something. Price it right and you'll find a buyer. Just be realistic about what pricing it right means. If you only had 2 showings while it was listed, then the price was too high.

FWIW, I didn't want to be a landlord either even though houses here rent for quite a bit ($1350/month is the going rate in my neighborhood). We would have made a profit every month and I still didn't want to be a landlord. If you don't want to be a landlord, don't do it.

 

[luvthatdisney]

Just talked with my real estate agent. She is going to run the comps again tomorrow to see what a more competitive price would be. I told her I could not accept less than 65K, so I can get my money back out. She suggested listing it again at 67k (was 79.2k). That might do the trick. I sure hope so!!

She did suggest renting it again, but I really dont want to. I did give her the breakdown of what I have to pay each month to rent it and she now sees I have to pay basically what I could get in rent. Not worth the hassle IMO

Thanks for all of the input, I will let you know what happens.

 

[Swimalie]

Don't forget to look into any taxes that might be owed on the inheritance, too. Since you received the house as an inheritance and are not living in it, you will probably have to pay capital gains tax on it. So keep that in mind when you set the price.

Good luck.

 

[LoveBWVVBR]

Don't forget to look into any taxes that might be owed on the inheritance, too. Since you received the house as an inheritance and are not living in it, you will probably have to pay capital gains tax on it. So keep that in mind when you set the price.

Good luck.

It isn't really a gain if they put the money into it to improve it, though. It sounds like the OP is just trying to break even at this point.

 

[libraryfreak]

It's easier to reduce your asking price when you realize that you are spending $6775 each year it sits empty.

I'm so sorry your inheritance is causing you this stress, you certainly don't need this on top of losing your dad.

 

[Shleedogg]

I'm so sorry that you're having to deal with this. Becoming a landlord would be so much added stress; not to mention money. My dad used to own a duplex in a not so nice area in the inner city of where he lives. His intent had been to live in one floor and rent out the other, but for some reason he decided not to. I was too young at that point to really pay attention. What I do remember, multiple times a year, was spending my weekends with him in the apt after tenants moved out and left it a mess, helping my dad clean and paint, while he fixed holes and other problems caused by the tenants. He spent over 5 years trying to unload that rental. He finally did, thank god. It just wasn't worth the headache, despite the positive income coming in.

I'm fearful of being in a similar situation to you when my father passes (which hopefully won't be for a long long time). His house isn't in the best neighborhood. He once told me he wanted me to move in and live there which I promptly told him no. He's tried doing renovations lately. New windows, roof, furnace, ac, kitchen. But the cosmetics are terrible. He has no taste. We will have to gut the kitchen and bath, new flooring throughout if we want to get top dollar. But we won't. I just want it gone, even if it doesn't pay off the mortgage or we don't make anything. I say run now. Run fast. Get your money out and call it a day. It's just not worth it. I hope everything works out for you!

Oh and I would say try listing with another company, not your friend. A larger group will have more clients and more advertising power. I know it's a sticky situation though.

 

[Tampa Mousekeeter]

Is your realtor part of the MLS? If you are going to list again with her you need the best possible exposure. Good Luck !!

 

[fostrmom2mny]

If renting is at all an option for you, I can tell you that the fact that it is a house and not an apartment is a great point for section 8 participants. We have recently had to do the same thing. I was afraid of the clientel and what damages may be incurred, but being able to have section 8 housing has made us feel better. Here in Oklahoma, a section 8 approved house doesn't stay on the market long at all (reguardless the neighborhood!), and there are the higher deposits that as a landlord you can require, and a bit higher rent. Since most of the $$ paid each month to the landlord is paid thru section 8, and there are some fiarly strict requirements the resipients have to meet in order to quailify.

We haven't totaly completed the reno, but are strongly considering getting it to sec8 standards. It may sound like a lot, but really it isn't. Just a thought.

If we rent stand alone without section 8 we figure about $600 per month.
If we go section 8 I believe the figures are closer to $750. If a section 8 recipient breaks their contract/lease or damages, they run the risk of loosing their sec 8 voucher. The voucher uses an income based scale to figure what the family would pay of the rent, then sec 8 pays the rest.

I've seen some sec 8 homes charge $1000 and the family pays $150 and sect 8 picks up the rest. That should tell you that if you get approved for sec 8, you will (most people) follow the requirements to stay on the section 8 voucher. Does this make sence?