Anyone have advice for folks inheriting expensive properties? Will be inheriting a couple VHCOL properties (some of the most desirable land/neighborhoods in the city) mortgage free, in the ballpark of $6-7m worth. What would you do, sell some and invest in indexes or keep them as rentals? I’m thinking lump sump investing into securities may make my worth much higher in the future compare to just keeping some properties.

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Inheriting as in the person passed away? If so, you should be getting a step up basis on them to the current value. That means you don’t have to pay any capital gains, which is hugely fortunate.

How you handle them moving forward is largely dependent on how hands on you want to be. In general, the options are probably:
- set them up as a short term (furnished) or long term (unfurnished) rental. These can be highly lucrative, but will require some work. You may be able to hire a property manager for some of the headaches, but you will still need to be involved in setting them up.
- cash out on the houses and invest in other things. This could be a mix of real estate if you want the income, index funds if you just want growth, annuities if you want some income without the volatility / management overhead of real estate, or any number of other investments.

$6m to $7m is life changing, and you could easily see generate enough income from that amount of money to never have to work again. So you should consult some professionals and explore all of your options before making any decisions.

Also, do NOT tell family or friends about this unless they need to know. You will have all kinds of people come out of the woodwork to try and “help” you. You don’t want their help.

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For others who might be curious - the OP messaged me and said that these properties were gifted, not inherited, so there’s no cost basis step up. That changes the decision tree a bit, but at the end of the day, I think consulting with a tax professional and/or a CPA who can help understand the cost basis as well as the potential tax implications is the best next step.

Since the tax code so highly advantages landlord's, I would think that would be hard to beat.
But maybe one property is enough to provide that tax shelter?

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I would consider the rental market for those kinds of properties. Who rents them? Is it long-term tenants or Airbnbs? Are you OK with that? Are you going to manage them or pay someone to?

I manage them and they are A neighborhoods in desirable VHCOL cities. Usually DINKs or high paying families $400k+ min income fight to rent these properties long term within a week of listing.

Unless you are renting for $30k/month, I would sell. Maintenance and upkeep of a $6m property will be time consuming and expensive. I wouldn’t want to have to deal with this.

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