Advice on inherited properties

[beaurrr]

My dad recently passed and left me with a few properties. Two are condos in Florida that have been property-managed for years. The third was his personal home in AZ. None have mortgages. There are no other heirs beside myself.

I'm pretty unfamiliar with holding real estate as investments, so I'm looking for some advice. In my uneducated opinion, the two condos in Florida appear to have been pretty good investments. The HOA dues seem a little steep, and the rents are not that high, but the tenants have been there for a few years.  I have recently opened probate in order to place the properties in my name. Also, per my tax preparer, I had the properties appraised after my father's death for the step-up basis.

The house in AZ is a modest home in a decent area. I spoke with a property manager and she estimated it could draw $850-$900 in rent. Probate has completed on this property and it is my name now. Should I have this property appraised for step-up as well?

It is my intention to move back to Oregon soon. I had variously considered selling one or all three, but I don't really need the cash, and I have enough in reserve for expenses.

I don't currently own any real estate and I don't have any debts. I had considered taking a modest mortgage on the home I plan to buy in Oregon, paying the remaining two-thirds with cash.

Except for this passive income, most of my other income is tax free, except the Social Security part.

Any thoughts on this scenario? Tax implications I should be aware of? How does one compute ROI in a scenario like this? How do I evaluate the quality of these investments?

[leighb]

First, sorry for your loss.

I am in a similar position. My father passed and left my sister and me a few properties in 2014. We both live out of state and the properties are managed. 

I have a bit more real estate background than my sister. Before is death I had two rentals. I was actively researching the real estate business and was working with him to find good properties. In my spare time I would travel back to work on the properties. It became a bit of a fun project for me. I really enjoyed it. It also gave me something to do with my dad. We would talk "business" together all the time. So when he's properties got added to my own I new what to expect.

My sister on the other hand is currently selling all of the properties that she inherited. She has a better place to put that money where she can keep a better eye on the investment. She never wanted much to do with the houses. So this too makes sense for her.

My advice, if you don't want to invest in real estate, don't.

Here's what I know about taxes, (at least, what I think I know). You'll have to pay taxes on the difference between the appraised value done for the estate and the sale price if it sells for more. I think because they are rentals they will be treated like capital gains.