How to Turn an Inherited Property into Income for Your Family

Inheriting a house or other real estate can be both a blessing and a challenge. On one hand, it offers a valuable asset that has the potential to provide long-term financial benefits for your family. On the other hand, deciding what to do with an inherited property can be overwhelming, especially if you need clarification on the best way to maximize its value. One option is to convert the property into a rental home, which (when done correctly) can create a steady stream of income. Of course, if you plan to go this route there are several important things you need to know first. Let’s explore the steps you should take to successfully turn your inherited property into a long-term, income-generating asset that can benefit your family for years to come.

Assess the Property

The first step toward turning an inherited property into an income-generating rental is to do a thorough assessment of its current condition and potential. To assess the property’s condition, it’s best to have a thorough inspection of the property done. This inspection should test the home’s structural integrity, condition of the roof, and plumbing and electrical systems, as well as take note of any potential issues or necessary repairs. You could do this inspection yourself, if you feel qualified to do so, or you may want to hire a professional to ensure that all potential issues are identified and documented.

To determine a property’s potential as a rental, you’ll want to conduct a thorough market analysis. A rental market analysis will typically look at the property’s location, comparable rental properties in the area, local renter demographics, and market demand. If you’d like assistance with this analysis, consider asking a local rental market expert like those at Real Property Management for help.

Evaluate the Legal and Financial Situation

Inheriting a property can sometimes result in some legal and financial issues for the new owner. For this reason, it’s important to make sure that the property has been all the way through the probate process and that the title has been legally transferred into your name. You should also gather as much information as you can about any property tax due, both current/past and in the future. You’ll need to know all of the property’s expenses, including your expected tax bill, to determine your expected income accurately.

Other financial considerations that you will need to investigate depend on whether you expect to need financing to prepare the property for renters. If repairs and upgrades are needed, you should determine how you plan to finance that (home equity loan, personal loan, refinancing, etc.) and any costs associated with each option.

Complete Renovations and Repairs

With detailed information about the property and your finances on hand, you can then move forward with preparing the property for renters. The role of renovations is to attract tenants and maximize your rental income. While you don’t need to spend large sums of money on these renovations, you should aim to give the property any much-needed updates and ensure that all systems and appliances are in good working order. It’s also important to modernize the home as much as your budget will allow, especially in the bathrooms and kitchen, and to enhance the property’s curb appeal with clean and tidy exteriors and landscaping. If you’re not sure which updates your property needs, consult a local rental property expert.

Prepare for Tenants

After completing all necessary property maintenance and repairs, you should then get the property ready for your tenants. This process should include things like deep cleaning the home, inside and out, installing safety features, and establishing utility accounts. When cleaning the property, make sure to have all carpets and grout professionally deep-cleaned, as well as often overlooked areas like air ducts, garages, and crawl spaces. It’s also a good idea to have pest control come out and treat the entire property before your tenant moves in.

Once the property is clean, you can stage it for showing. This includes adding inviting touches, such as a flower arrangement, rug, or other decor, opening blinds and curtains, and turning on lights.

Basic safety features should also be in place before your tenant moves in. Good quality locks on all doors and windows, smoke detectors, and good lighting in walkways, entryways, and around the exterior of the home are all essential safety features every rental home needs. If your renter demographic includes young adults, consider adding some tech-based safety features like smart locks, video doorbells, and other items. This could make your property more appealing for safety-conscious renters.

Marketing Your Rental Property

Along with preparing and staging your rental, you will also need to market your rental property effectively to attract the kind of tenants you want. At a minimum, your marketing plan should include high-quality photos of all interior and exterior spaces, and detailed property listings that highlight all of the amenities (including nearby venues and attractions). These listings should be posted on major online platforms, such as Zillow and social media.

 In today’s market, virtual or video tours have become the norm, and so it is worth the initial investment to have one made for your property. Virtual tours can significantly cut down on the time you’ll spend meeting and showing your property to prospective tenants who may or may not submit an application. In this way, once you do schedule to meet a prospective tenant at the property, they are more likely to apply.

Screen and Select Tenants

Perhaps one of the most important parts of renting out any property is choosing the right tenant. Like most landlords, you will want someone who will take good care of the property, pay their rent in full and on time, and communicate with you immediately if repairs or maintenance are needed. Finding such a tenant can be a challenge, but having a good screening process in place can help.

An effective screening process should include collecting detailed information about your tenant (via an application) and all other occupants of the home; running thorough background and credit checks on occupants who are age 18 and over; verifying employment information; and checking all references provided. While there are no guarantees that any tenant will be your ideal occupant, by checking their credentials and information carefully, you can greatly increase your chances of finding the right tenant for your property.

Managing Your Rental Property

Finally, it’s important to remember that a big part of turning your inherited property into an income-generating rental is that it will require ongoing oversight and management. Despite popular belief, owning a rental property is not purely passive income. Instead, there will be ongoing maintenance and communication tasks required to ensure that the property remains in good condition and that your tenant is comfortable and safe in the home during their stay. If you plan to manage the property yourself, you should also be prepared to handle emergency calls and tenant complaints, which can happen any time of day or night.

This may be why many people who rent inherited properties choose to hire a professional property management company to do all this for them. From tenant communication and screening to marketing and property maintenance and beyond, managing a rental property is a real job. If you’d like to collect a monthly rental income without all the work, give your local Real Property Management office a call. We can handle the entire rental process and have your inherited property prepped and rented out for you as efficiently as possible. Visit us online today to learn more!

For additional questions regarding residential property management, or to inquire further about services, contact the experts at Real Property Management.

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