Inheriting a multifamily rental Pittsburgh is often a bittersweet event. On the one hand, this type of housing has significant income potential and is typically worth quite a lot. On the other hand, inheritance means that someone passed away, and that is emotionally very challenging.
Given the emotions around these circumstances, you may not be thinking of all the potential legal and tax implications that can arise from this transaction. Additionally, you could inherit a property in a different state than you live, creating a different set of challenges. Imagine living in Hawaii and inheriting a property in Pittsburgh! With stops, the flight alone is over 12 hours, not to mention the many hundreds of dollars it will cost each time you go out there.
So, what should you do if you inherit one of these multifamily rentals? Ultimately, you have two choices. You can keep it or sell it. Let’s explore both of these options in more detail.
Option 1: Keep the Multifamily Rental Property
First, you need to ask yourself if you feel an interest in being a landlord. For some people, being a landlord is undesirable. They might feel stress at the thought of owning a property in another state for which they’re responsible. Other people love the opportunity to be one and consider how keeping the property can boost their finances.
If you decide that you want to join the many other landlords in this country, you should consider a few questions.
Are You Able To Spend the Time Necessary?
Managing a property is hard work. You can use a property manager (more on this later), but even then, you’ll still have more work than if you sold the place. At a bare minimum, you’ll have to re-sign the lease each year for the tenants and either fill out the Schedule E on your taxes or get a tax professional. Realistically, you’ll have to approve some repairs and make some phone calls to various contractors as a landlord.
If you go it alone, the time commitment gets even more significant. You’ll be the one fielding the 2 am calls!
Think about your life and lifestyle. While being a landlord isn’t a full-time job (usually), it does require the ability to commit time on-demand. If you already have a stressful life, you may wish to rethink keeping the property!
To Hire a Pittsburgh Property Manager or Not To Hire a Property Manager: That’s the Question for Your Multifamily Rental
Pittsburgh Property managers simplify the process of being a landlord substantially. They handle advertising the units, writing up the leases, and will take those 3 am calls when the tenants’ water pipe bursts.
However, property managers also take a hefty cut of the rent. Some property managers work on a fixed-rate basis, but most will take a percentage of your rent as a fee. Often, this percentage is between 7-10%. While that might not sound like a massive sum of money, let’s suppose you have a five-unit Pittsburgh multifamily rental. Each unit pays $1,000 a month in rent. Let’s say your property taxes are $1,000 a month, and you have $1,000 a month in miscellaneous expenses (gardeners, plumbers, etc.). Instead of making $3,000 a month, you’d be making between $2,500 and $2,650.
In other words, the Pittsburgh property manager will take 7-10% of your gross rent. In the example above, we had a 40% overhead of expenses. So now, instead of making a 60% profit, we’re only making between 50% and 53%!
Those fees add up substantially!
Option 2. Sell Your Inherited Property
While being a landlord might intrigue some people, many decide that the hassles aren’t worth it. After all, selling the property will put a handsome sum of money in your pocket relatively quickly! Depending on where your multifamily rental Pittsburgh is, you could be looking at millions of dollars in quick cash.
If that’s the route you decide to take, you should know that there are two primary ways to sell these properties.
Use a Real Estate Agent
The first way to sell your property is to use a real estate agent. Some agents have experience selling multifamily properties Pittsburgh, although this is a little less common than your typical home or condo. In this type of transaction, a real estate agent would market your property to an investor instead of someone interested in living in it themselves.
The process is the same as selling any other home or condo. The agent will take plenty of photos and possibly some videos. They’ll post listings on various real estate sites and try to attract buyers.
However, there are some problems with selling this type of housing. First, FHA and VA buyers cannot typically buy this type of housing unless they plan to live in it. Second, there are sometimes tenants’ rights to consider. Some jurisdictions may require that the new owner give the tenants the same terms that your relative was giving them. If that’s the case, and the rental terms were unprofitable, it may be challenging to attract buyers.
Given all of this, a real estate agent could take months to sell the property. In the meantime, you’ll have to find solutions for collecting rent, managing bills, paying property taxes, and performing necessary repairs! Logistically, selling your property with an agent can be a nightmare.
Sell To A Pittsburgh Cash Investor
The other way to sell your multifamily rental in Pittsburgh and get your cash as fast as possible is to skip the real estate agent altogether and sell directly to a cash investor.
Selling to a Pittsburgh cash investor has some significant advantages over using a real estate agent.
For starters, since there are no agents involved, you don’t have to pay a commission! On a standard real estate sale, you can expect to pay around 5%-6% in commission. If your multifamily rental property is worth $1,000,000, that’s $50,000 lost on the sale! With a cash investor, you won’t pay that!
Additionally, since a Pittsburgh cash investor’s deal involves, well, cash, you can close in just a few days. Instead of waiting months to sell your inherited property, you can sell it in a couple of weeks at most. Imagine walking away with a check that big in such a short time frame!
Finally, selling to a cash investor in Pittsburgh is straightforward. Once you fill out the contact form, you’ll get a call to discuss some of the details of your property. After that call, usually, they’ll give you a ballpark estimate. If that sounds good to you, you can schedule an inspection, after which you’ll receive a firm no-obligation offer. Should you accept that, you can schedule a closing date and trade the keys for a check!
No matter what repairs your property has or whether it has full tenancy, partial tenancy, or no tenancy, a cash buyer can give you the money you desire within weeks.
Inherited a Multifamily Rental? You Have Options!
Please know that you have some options when you inherit a multifamily rental Pittsburgh! You can keep it or sell it. If you keep it, please keep in mind some of the positives (income stream) and negatives (being a landlord, dealing with property management companies, taxes, etc.). If you sell it, then selling to a Pittsburgh cash investor is usually the best option.
At Cash For Homes Pittsburgh, we’ll be happy to write you a fair offer for your multifamily rental Pittsburgh. Contact us today!