Inherited property but Testatrix requested it be kept

[ianstone1]

I have inherited a property. Note in will saying don't sell until market picks up, rent.

House has a current 'normal' mortgage and I have no idea where to start... any ideas / advice?

[Bel]

Talk to the mortgage company pronto

[fletchj]

You may need to be a bit clearer here to get good advice - the mortage you mention - is this a mortgage that was taken out by you or by the peron you inherited from? If it was the pre-existing mortgage then I'm pretty sure that this will have to be paid off as a debt of the estate before the estate can be finalised. In this case if there isn't enough cash in the estate you would have to re-mortgage in your name - the problem there is that it's a slightly catch 22 - the house won't be in your name til the estate is settled so it may be difficult to get a mortage.

Overall you really need some advice on dealing with wills and inheritance in the first instance. Do you have a lawyer dealing with the will processing of the deceased. If so I would start there. If not or if you want other opinions the Wills and Probate discussion board on the Motley fool site is pretty good for this sort of thing www.fool.co.uk

[jeffrey]

I have inherited a property. Note in will saying don't sell until market picks up, rent.

House has a current 'normal' mortgage and I have no idea where to start... any ideas / advice?
What do you mean by the wording that I've underlined? Please cite the precise clause as it appears in the Will.

[ianstone1]

What do you mean by the wording that I've underlined? Please cite the precise clause as it appears in the Will.

It's not in the will, but Mum knew she was dying so wrote a number of things down to supplement her will, though they have no legal bearing we are keen to fulfil her wishes where ever we can.

Here's a little more info...

House (today) worth about 130K
Mortgage (In Mum's name) interest only at about £40K
Probate currently going through
Not informed mortgage lender yet.
Very little money in the estate
Some work needed to let I feel...

Just don't know where to start... need to advise the vultures (my 3 siblings who want the money now) that the logical and best thing to do for us all financially is to fulfil mum's wishes and rent out for at least 18 months.

Anything I've missed?

[Bel]

It depends on the financial position of your siblings.

If they have a lot of credit card debt it may be more prudent for them to pay off with proceeds of sale, rather than speculate on market picking up.

I hope you are good with spreadsheets. You need to do a cash flow projection for the rental project and apply it to each of their situations, factoring in any loan required to service the mortgage and pay for improvements before you get tenants in, and a prediction of what the housing market is likely to do in the next couple of years. To compare, you need to show how much better or worse off they will be at the end of the 2 years if they sell now or hold on and rent. You can also do a long term projection, say 10 years, to give weight to your case.

Only allow 10 months rent per year in your projection to allow for voids.

Please be aware that letting can be a risky venture. And you can end up worse off.

[ianstone1]

It depends on the financial position of your siblings.

If they have a lot of credit card debt it may be more prudent for them to pay off with proceeds of sale, rather than speculate on market picking up.

I hope you are good with spreadsheets. You need to do a cash flow projection for the rental project and apply it to each of their situations, factoring in any loan required to service the mortgage and pay for improvements before you get tenants in, and a prediction of what the housing market is likely to do in the next couple of years. To compare, you need to show how much better or worse off they will be at the end of the 2 years if they sell now or hold on and rent. You can also do a long term projection, say 10 years, to give weight to your case.

Only allow 10 months rent per year in your projection to allow for voids.

Please be aware that letting can be a risky venture. And you can end up worse off.

My thoughts were to increase the mortgage (i.e. buy out the normal interest only mortgage) and top it up by about 10K. That should still leave at least 50-60K capital in the house... that should give them a little cash with which to pay off their debts and then rent out the property using the cash to create a 'slush' fund and pay for improvements needed.

I do however believe they are in a worse financial situation than I. One is on benefits as a carer, one has adverse credit history and the other hand zero mortgage on their home but is struggling to keep it.

I really do feel stuck between a rock and a hard place!

[Bel]

If you dont see eye to eye with them, the whole project will be a drag on you. Especially if it fails; you will be held accountable and could lead to falling out.

If you are so sure of the investment; offer to buy them out of their share.

They may then decide to hold on to it after all. ;)