investing using inherited home as leverage - Posted by walter

Posted by phil fernandez on November 22, 2003 at 07:23:58:

You have alot of flexibility here. Good news is that you are getting the house at the FMV at the time of death. If you sell immediately you shouldn’t have a capital gain due to the inheritence. You could not do a 1031 exchange here nor would you need one due to the inheritence at FMV.

You could just refinance the house and pull investment capital out to use as downpayments on additional property.

AS far as selling now or refinancing to raise investment capital, that would be a decision for all the siblings and yourself to make. If you are trying to form an entity with 5 siblings involved, that won’t be easy. You’ll need all 5 pulling in the same direction. Why not buy out some of the siblings to make it easier.

investing using inherited home as leverage - Posted by walter

Posted by walter on November 22, 2003 at 06:23:10:

My father recently passed away leaving me and my 4 siblings equal ownership of his two-family house. My sister occupies one unit for which she pays 500/mth and a renter occupies the second unit @ 1000/mth. The house is fully owned and is located in Quincy, MA which is several miles south of Boston. Given the location and size of the house and the going rate for homes in the area we believe the house is probably worth 600-700k. Rather than sell this income generating asset we would like to use it as leverage for the purchase of other income generating properties. What is the best course of action? Should we set up some kind of partnership among the children? What are the best methods for extracting money from the house for funding various investment projects? Or should we take advantage of the skyrocketing market value of homes and cash out?

Thank you


Re: investing using inherited home as leverage - Posted by Tom kirby

Posted by Tom kirby on November 22, 2003 at 11:23:16:

First I think 1,000 a month is way to low rent for a house going for 700,00-800,000. On Long Island a house going for 375-400 is renting at 1,800 - 2,400+.

Re: investing using inherited home as leverage - Posted by Tim

Posted by Tim on November 22, 2003 at 09:04:11:

There are a lot of things you could do in this situation. If I was making the decision I would seriously consider selling & using the money to reinvest in other properties. A $1500/month return on a $600,000 property is only a 3% return, & that’s if you don’t have any property taxes, insurance, maintenance, or management expenses. The other drawback is the property is owned by 5 people, each of whom will have different opinions about what a good deal is.