I recently inherited a property in Florida. Now, I'm a college kid, so I don't know a thing about owning property. But that also means that I don't know what the pros and cons are of actually selling this property. I don't want to sell something really valuable and regret it later, but I'm not sure that I can run a rental property, either. Experts, what would you advise?
Real estate is a valuable thing indeed. Property owners can make profits from their properties by selling them (for more than the property was purchased for, of course) or by renting the space to tenants. Both can be quite lucrative, but which is right for you?
You could sell this Florida property, of course. That would give you an immediate influx of cash, though you could face some tax consequences. You could then invest that money elsewhere, using investment vehicles that would require less active management on your part — which, depending on your schedule and your priorities, could make them a better fit for your lifestyle. Another bit of good news is that the IRS should base its tax assessment of a sale on how long the home was owned by the person who left it to you — it won’t be considered a short-term flip by you, and that will save you some cash.
Of course, buying and selling homes in Florida — or anywhere else — isn’t a fast or simple process. Fortunately, you can rely on real estate agents to help you out. To earn their commission, real estate agents show homes and connect home buyers and sellers. After looking at the space and at your asking price, potential buyers will make an offer. There are other steps to deal with before the same is complete — a home inspection, for instance, and the mortgage approval process for the buyers — but you’ll have the help of experts, including real estate pros and attorneys, and you’ll no doubt reach and close a deal if that is the direction you choose to go in.
Or you could rent the property — which comes with a set of responsibilities all its own. You'll have to maintain this property, and — if you're not planning to live locally — that might mean hiring a property management company. Florida has its fair share of rough weather, so you'll certainly want to cover your space with insurance for floods, hurricanes, and other natural disasters. You'll also want to respond quickly if such disasters do strike the space — putting off repairs and maintenance needs will almost always cost you more than acting fast. One benefit of renting your property is that your maintenance and repair work, along with a ton of other expenses, can be tax write-offs.
The good news, say Tampa real estate agents, is that the Florida real estate market is looking pretty good right now. Whether you want to look for a buyer or a renter, you should find the task more than manageable.
We've laid out some basic pros and cons here, but you should not take this as financial advice, legal advice, or any other type of specific and essential advice that you need right now. Instead, our advice is this: you need to talk to experts in person. Specifically, you should speak with a financial advisor and an attorney.
Decisions like yours have to do with more than just your lifestyle and your preferences: you'll want to consider everything from tax implications to zoning laws. Where in Florida is this real estate property? What is the property worth? What is the value of the estate in question? All of this could matter. Have frank discussions with experts — and we mean local experts in Florida — and weight what you learn against your personal priorities. Figure out how much each option could be worth, and then ask yourself what it's worth to you to keep the property or, conversely, free yourself from the responsibilities of managing a rental property. Whatever you choose, we wish you luck.