Help I'm left with a house!

Help I'm left with a house!

Member since 2023 · 11 posts · 0 votes

In recent years my mother has, as she said it, gifted me her old house, this process was done without me signing anything and I became the owner of this house that I'm responsible for.  Just within the last year I've had to replace bricks on the side of the house that was looking bad and now it's got a possible mold problem. I don't make enough money from my current job to pay someone to fix it and I'm not even sure if it's possible for me to make any money from selling it considering the way my mother transferred it. I'm no specialist but if sell it I'm assuming the cost of selling will be high since I paid nothing for it, I'm not really sure what the rules are on it. I have been listening to the podcast for a while now and every episode refers me back to here for more information, so I was hoping one you experienced guys know if I'm able to come up off this and possible turn it around and use this house to make money some way. My personal thought was to try and get a mortgage and fix it then rent it out to pay off the mortgage, would this be a smart move? Would I be better off trying to sell this and use what I make as a down payment towards a different loan and possibly start my real estate business this way?  So many questions and I'm from a small town so It's not likely I'll find a mentor out here in the country.

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Banker · Miami, FL · Member since 2023 · 2 posts · 3 votes
3y

Hi Gregory -

In this case I would say it depends on 1. the equity in the property currently 2. willingness to get the property rent ready. In my experience, you are in a great position since you already own the property. You don't have to go through the hassle acquiring a asset at this time. If I were in your shoes, I would use this property to learn the process of investing. Get a cashout refi and use those funds to get the property ready to be rented. This will give you the opportunity to build a relationship with a General Contractor (If the property requires a lot of work) and also with a lender. Having a good roladex of contacts is key in our space. Get that property rentable and acquire your first tenant. See how the property management side works and see if its for you. I would keep the LTV low on the refi to make sure you keep as much equity in the property has possible since it was inherited. It will give you ease of mind if you ever have a change of heart and decide to want to sell it down the line.

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  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    3y

    IS there any debt on the property?  IF not, there's no way the sale of the property can't be more than any costs associated with it.

  • Josh YoungPro Member
    Rental Property Investor / REALTOR® / Property Manager · Gilbert, AZ · Member since 2023 · 384 posts · 421 votes
    3y

    @Gregory Robinson where are you located? What's the address of the property? Is it vacant? We will be able to help you if you provide this, or can at least point you in the right direction.

  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    3y
    Quote from @Gregory Robinson:

    In recent years my mother has, as she said it, gifted me her old house, this process was done without me signing anything and I became the owner of this house that I'm responsible for.  Just within the last year I've had to replace bricks on the side of the house that was looking bad and now it's got a possible mold problem. I don't make enough money from my current job to pay someone to fix it and I'm not even sure if it's possible for me to make any money from selling it considering the way my mother transferred it. I'm no specialist but if sell it I'm assuming the cost of selling will be high since I paid nothing for it, I'm not really sure what the rules are on it. I have been listening to the podcast for a while now and every episode refers me back to here for more information, so I was hoping one you experienced guys know if I'm able to come up off this and possible turn it around and use this house to make money some way. My personal thought was to try and get a mortgage and fix it then rent it out to pay off the mortgage, would this be a smart move? Would I be better off trying to sell this and use what I make as a down payment towards a different loan and possibly start my real estate business this way?  So many questions and I'm from a small town so It's not likely I'll find a mentor out here in the country.


     My recommendation is to sell the house. I never recommend to someone with their first real estate property to get involved in a rental that needs a lot of work to get it rent ready. The stress it will add to your life does not have a dollar figure to it, but it can really wear you out. 

    Get a real estate agent to get you a price it could sell for and look to sell it. IF you want to invest in real estate, then go buy a property that does not need a lot of repairs. 

    7e investments53 Reviews
  • Member since 2023 · 11 posts · 0 votes
    3y
    Quote from @Joe Villeneuve:

    IS there any debt on the property?  IF not, there's no way the sale of the property can't be more than any costs associated with it.


     No debts its completely paid off and I have been paying the taxes on it , its just run down and needs some work 

  • Member since 2023 · 11 posts · 0 votes
    3y
    Quote from @Chris Seveney:
    Quote from @Gregory Robinson:

    In recent years my mother has, as she said it, gifted me her old house, this process was done without me signing anything and I became the owner of this house that I'm responsible for.  Just within the last year I've had to replace bricks on the side of the house that was looking bad and now it's got a possible mold problem. I don't make enough money from my current job to pay someone to fix it and I'm not even sure if it's possible for me to make any money from selling it considering the way my mother transferred it. I'm no specialist but if sell it I'm assuming the cost of selling will be high since I paid nothing for it, I'm not really sure what the rules are on it. I have been listening to the podcast for a while now and every episode refers me back to here for more information, so I was hoping one you experienced guys know if I'm able to come up off this and possible turn it around and use this house to make money some way. My personal thought was to try and get a mortgage and fix it then rent it out to pay off the mortgage, would this be a smart move? Would I be better off trying to sell this and use what I make as a down payment towards a different loan and possibly start my real estate business this way?  So many questions and I'm from a small town so It's not likely I'll find a mentor out here in the country.


     My recommendation is to sell the house. I never recommend to someone with their first real estate property to get involved in a rental that needs a lot of work to get it rent ready. The stress it will add to your life does not have a dollar figure to it, but it can really wear you out. 

    Get a real estate agent to get you a price it could sell for and look to sell it. IF you want to invest in real estate, then go buy a property that does not need a lot of repairs. 


      appreciate the advice thank you! 

  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    3y
    Quote from @Gregory Robinson:
    Quote from @Joe Villeneuve:

    IS there any debt on the property?  IF not, there's no way the sale of the property can't be more than any costs associated with it.


     No debts its completely paid off and I have been paying the taxes on it , its just run down and needs some work 

    Sell it.  There's not way you won't walk away without a large amount of cash...even after you pay the taxes.  If you are not able, or willing, to do improvements to turn it into a rental, then I would be willing to bet that any cost you incur doing the improvements wouldn't get you a bigger profit than you would get selling it now.  You would probably just get your costs back, so you would net the same profit, except your taxes and closing costs would be higher wince the property would sell at a higher price.
    Just sell it.
  • Banker · Miami, FL · Member since 2023 · 2 posts · 3 votes
    3y

    Hi Gregory -

    In this case I would say it depends on 1. the equity in the property currently 2. willingness to get the property rent ready. In my experience, you are in a great position since you already own the property. You don't have to go through the hassle acquiring a asset at this time. If I were in your shoes, I would use this property to learn the process of investing. Get a cashout refi and use those funds to get the property ready to be rented. This will give you the opportunity to build a relationship with a General Contractor (If the property requires a lot of work) and also with a lender. Having a good roladex of contacts is key in our space. Get that property rentable and acquire your first tenant. See how the property management side works and see if its for you. I would keep the LTV low on the refi to make sure you keep as much equity in the property has possible since it was inherited. It will give you ease of mind if you ever have a change of heart and decide to want to sell it down the line.

  • Dan H.Pro Member
    Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
    3y

    Do you have any desire to be a residential landlord (LL)?   If you do, you can extract value via a refi, place tenant in that would pay for the loan and put some money in you pocket. 

    I have fears about consequences of selling.  If you mom died and the property transferred to you, the value would obtain a new basis.  I suspect in your case the base value may be the value your mom obtained the property for.  Also if the value is above the annual gift amount (~$17k/year) then it goes against the estate tax exemption ($12m) and needs documentation.  My point is there could be some complications related to it being a gift and I recommend you consult a professional.  

    Even with the potential complications, if you have no desire to be a LL you should sell the property and enjoy the profits.  What would be the point of keeping it?  Residential RE is not passive.  Managing tenants, maintaining the property, tracking financials, etc. all take time.  

    Good luck

  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    3y

    Sell it. Even if you took out a loan to fix it up, you don't have the knowledge or experience to run a rental well. You could spend the time learning to do that, but it's not easy and won't happen overnight.

    I recommend selling it while the market is hot and cashing out. If you decide real estate is something you want to try, educate yourself and then buy a good investment to get started with.

    The DIY Landlord Book4.7248 Reviews
  • Erin ChurchPro Member
    Real Estate Agent · North Augusta, SC · Member since 2017 · 254 posts · 233 votes
    3y

    Hey @Gregory Robinson - I agree that selling is likely the way to go. It could also be less of a rehab than you think (which could turn into your first cosmetic flip). If you happen to be in the Augusta, GA area, I'd be happy to swing by and take a look at the property. If you're somewhere else, I'm happy to hop on the phone with you and chat through some options. :)

  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    3y

    Are you on title?  I'd sell it especially if you don't have the money to fix it up.  I'm also assuming your mom has moved out of the home.

  • Michael SmytheBusiness Member
    Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
    3y

    The only reason to keep it would be if you can live in it for 2 years - then you can sell with $250k exception.

    Logical Property Management4.9446 Reviews
  • Member since 2023 · 11 posts · 0 votes
    3y
    Quote from @Josh Young:

    @Gregory Robinson where are you located? What's the address of the property? Is it vacant? We will be able to help you if you provide this, or can at least point you in the right direction.


     I am Located Near Erie, PA I am currently cleaning out the property and it is vacant just has some old family stuff in it 

  • Member since 2023 · 11 posts · 0 votes
    3y
    Quote from @Erin Church:

    Hey @Gregory Robinson - I agree that selling is likely the way to go. It could also be less of a rehab than you think (which could turn into your first cosmetic flip). If you happen to be in the Augusta, GA area, I'd be happy to swing by and take a look at the property. If you're somewhere else, I'm happy to hop on the phone with you and chat through some options. :)


     I'm from Pennsylvania 

  • Member since 2023 · 11 posts · 0 votes
    3y
    Quote from @Michael Smythe:

    The only reason to keep it would be if you can live in it for 2 years - then you can sell with $250k exception.


    whats the 250k exception?

  • Member since 2023 · 11 posts · 0 votes
    3y
    Quote from @Theresa Harris:

    Are you on title?  I'd sell it especially if you don't have the money to fix it up.  I'm also assuming your mom has moved out of the home.


     Yes I am the owner completely and mom has moved out an into her new home but for some financial reason she was unable to sell it herself because she would have been disqualified from her SSI i believe is what she told me so she in her terms gifted it to me through a lawyer

  • Member since 2019 · 42 posts · 44 votes
    3y

    I would coordinate with a Realtor and have them conduct a CMA to determine the home's market value, maybe even meet with a couple of agents so you can average their pricing opinions and have a reliable sale figure to work with. The agent's main goal is to get you to sign a listing agreement, but I wouldn't do that until you're sure you want to move forward. Just let them know you're interviewing a couple of agents and deciding if you want to move forward. After that, meet with a real estate attorney and have them conduct a seller's net sheet based on the recommended list price from the CMAs. Most agents will be able to provide you with a seller's net sheet (explains how much money you'll walk away with when everything is said and done), but in your situation I believe an attorney would be more knowledgeable about all of the fees involved in your unique situation and could provide more accurate figures. Some agents or attorneys may not want to volunteer their time without being sure they're going to get paid, but everyone wants your business and some will be willing to prove their value by offering some of their time to earn it.

    When that's all done, you'll have a good idea of what the property will sell for and how much you'll walk away with.  At that point you can determine whether or not it makes sense for you to sell.

    P.S. I also agree with what others have said, I would not sign up for rehab or renting unless you are willing to put in the time to educate yourself on what is truly involved in either or both of those.

  • Erin ChurchPro Member
    Real Estate Agent · North Augusta, SC · Member since 2017 · 254 posts · 233 votes
    3y

    @Gregory Robinson

    Still happy to chat if you’d like. :) Feel free to send me a direct message if you’d like. :)

  • Michael SmytheBusiness Member
    Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
    3y
    Quote from @Gregory Robinson:
    Quote from @Michael Smythe:

    The only reason to keep it would be if you can live in it for 2 years - then you can sell with $250k exception.


    whats the 250k exception?


     IRS allows a single person a $250k nontaxable gain on the sale of a property. $500k if married and filing jointly.

    Logical Property Management4.9446 Reviews
  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    3y
    Quote from @Gregory Robinson:
    Quote from @Theresa Harris:

    Are you on title?  I'd sell it especially if you don't have the money to fix it up.  I'm also assuming your mom has moved out of the home.


     Yes I am the owner completely and mom has moved out an into her new home but for some financial reason she was unable to sell it herself because she would have been disqualified from her SSI i believe is what she told me so she in her terms gifted it to me through a lawyer

    Makes sense. If her income is over a certain amount or she has money in the bank, that likely will reduce her SSI.
  • Member since 2023 · 11 posts · 0 votes
    3y

    I also want to mention that some are saying to refinance my home but from what i Understand that replaces my mortgage with a new one with different terms, however, I do not have any loans out to refinance. Best I have is 30k in Student loan debt and maybe owe 300 dollars on my credit card for this month no other loans.

  • Investor · Pittsburgh, PA · Member since 2015 · 1k+ posts · 1k+ votes
    3y

    @Gregory Robinson you need to talk to two specialist. A real estate attorney and a CPA. Then they may need to talk to each other to help you decide whats best. Even before you evaluate what its worth you need to know if this gift was done correctly, what are you tax liability and then proceed from there

  • Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes
    3y
    Quote from @Gregory Robinson:

    In recent years my mother has, as she said it, gifted me her old house, this process was done without me signing anything and I became the owner of this house that I'm responsible for.  Just within the last year I've had to replace bricks on the side of the house that was looking bad and now it's got a possible mold problem. I don't make enough money from my current job to pay someone to fix it and I'm not even sure if it's possible for me to make any money from selling it considering the way my mother transferred it. I'm no specialist but if sell it I'm assuming the cost of selling will be high since I paid nothing for it, I'm not really sure what the rules are on it. I have been listening to the podcast for a while now and every episode refers me back to here for more information, so I was hoping one you experienced guys know if I'm able to come up off this and possible turn it around and use this house to make money some way. My personal thought was to try and get a mortgage and fix it then rent it out to pay off the mortgage, would this be a smart move? Would I be better off trying to sell this and use what I make as a down payment towards a different loan and possibly start my real estate business this way?  So many questions and I'm from a small town so It's not likely I'll find a mentor out here in the country.

    I've missed something very important.

    Your Comment: "this process was done without me signing anything"

    I'm not familiar with this technique. Have you checked at the county records or run a title report to see if your name is actually on title?  You can't sell what you don't own.

    In 100% of the cases I've been involved in with title, you are either on title, not on title or are an heir in probate or in a legal dispute where title is being determined. Now, you said she moved out so I guess she is still alive. 

    There is no way a living person can transfer title to you without your signature that I'm aware of. She may have put it in a will but a will isn't effective until her death and depending on the state, after probate is completed.

    I'm fascinated.

    How did she transfer legal ownership to you against your will and without your signature?

    EDIT: After thinking about it, I suppose she could produce, sign and record a Warranty Deed, but usually if that happens it's title theft and is litigated when discovered. This seems to be voluntary on her part. I don't operate in that space so I've never encountered it. Interesting.

    You still need to run a title report to understand the legal status of the property though.

  • Member since 2023 · 11 posts · 0 votes
    3y
    Quote from @Account Closed:
    Quote from @Gregory Robinson:

    In recent years my mother has, as she said it, gifted me her old house, this process was done without me signing anything and I became the owner of this house that I'm responsible for.  Just within the last year I've had to replace bricks on the side of the house that was looking bad and now it's got a possible mold problem. I don't make enough money from my current job to pay someone to fix it and I'm not even sure if it's possible for me to make any money from selling it considering the way my mother transferred it. I'm no specialist but if sell it I'm assuming the cost of selling will be high since I paid nothing for it, I'm not really sure what the rules are on it. I have been listening to the podcast for a while now and every episode refers me back to here for more information, so I was hoping one you experienced guys know if I'm able to come up off this and possible turn it around and use this house to make money some way. My personal thought was to try and get a mortgage and fix it then rent it out to pay off the mortgage, would this be a smart move? Would I be better off trying to sell this and use what I make as a down payment towards a different loan and possibly start my real estate business this way?  So many questions and I'm from a small town so It's not likely I'll find a mentor out here in the country.

    I've missed something very important.

    Your Comment: "this process was done without me signing anything"

    I'm not familiar with this technique. Have you checked at the county records or run a title report to see if your name is actually on title?  You can't sell what you don't own.

    In 100% of the cases I've been involved in with title, you are either on title, not on title or are an heir in probate or in a legal dispute where title is being determined. Now, you said she moved out so I guess she is still alive. 

    There is no way a living person can transfer title to you without your signature that I'm aware of. She may have put it in a will but a will isn't effective until her death and depending on the state, after probate is completed.

    I'm fascinated.

    How did she transfer legal ownership to you against your will and without your signature?

    EDIT: After thinking about it, I suppose she could produce, sign and record a Warranty Deed, but usually if that happens it's title theft and is litigated when discovered. This seems to be voluntary on her part. I don't operate in that space so I've never encountered it. Interesting.

    You still need to run a title report to understand the legal status of the property though.


     Note taken will do, yeah, my mom said I was supposed to receive a deed in the mail, and I've never gotten one, but I am legally responsible in the cities documents they charge me the taxes on the estate and go after me if the grass or weeds get too high.

  • Member since 2023 · 11 posts · 0 votes
    3y

    After doing more research, there is absolutely no way for me to refinance this property, I just don't make enough money to establish a loan. I'm still learning about this stuff, but I also need to find ways to make more money in order to get any loans to fix anything. PA is 7.25 minimum wage, and I am only making 14 an hour compared to the rest of the country that wage is garbage. Doesn't help that I have 30k student loan debt. Thank you all for you information and time I will mostly likely try to sell and then use that money to invest into something else down the line.

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