Helping Family Manage ~$3-4.5M RE Inheritance

I can take them off your hand at a fair market value

Sorry for your loss and that your family is having a hard time, that sounds rough. For books, I would just search book recommendations for real estate investing on google or biggerpockets with a focus on 1-4 units or residential.

I have never personally seen or heard of a LLC protecting anyone liability wise. A good lawyer will be able to break the corporate/personal veil pretty easily. Since I still have loans against my rentals I am content with just having the standard insurance as liability protection BUT if I had a building with that much equity at risk I may get an umbrella policy as extra protection. This question is situational so contacting a lawyer might be a good idea.

I don’t know much about the Boston market but I have heard it is appreciating better than most right now but take that with a grain of salt. Otherwise I agree with your other comments around that subject.

I would do one of two things: Spend your time and energy researching property management companies instead of trying to learn and do this yourself OR sell the property and be done with it. Here is why I recommend just hiring a PM company:

1. It is MUCH more complicated than collecting rent. The PM company will take care of all the headaches for you. A good one is worth their weight in gold. No late night calls, no worrying about systems to collect rent, no tracking numbers/expenses, no market research, etc I could go on and on. Managing a property is another job, it doesn’t sound like anyone in this situation is looking for that.
2. A PM company is going to make sure you are charging market rents and not leaving anything on the table.
3. A PM company is going to be familiar with local laws, this circles back to your liability concern. This is especially going to be useful in a state like MA that is tenant friendly.
4. A PM will be able to properly screen tenants and will already have a solid lease for the area. This is a big one, getting the wrong tenant can cost you serious time, stress, and money.
5. They have already have efficient systems and teams in place to handle construction, emergencies, plumbing, electrical, etc.

Those are the main ones but there are many more (lower vacancy, easier accounting, eviction management, marketing, etc). They will take 5%-10% of your rent as a fee which a lot of people get hung up on but in my experience it is worth every penny. You will save multiples of that avoiding the issues mentioned above. I built my entire portfolio from burnt out landlords that had under market rents that refused to use a PM company. Good luck!

Another rental property owner checking in here.

First and foremost, I'd find a 3rd party manager who specializes in whatever property type & size you have and get them to take over the day-to-day.  Reach out to 3-4 and compare pricing.   If these are small multifamily buildings, you'll probably already have some awareness of who the 3rd party managers are from seeing their signs hanging outside similar buildings.

Also figure out the legal/ownership structure of the properties.  Were they in your in uncles name or in an entity that has transferred to your dad?  If there's an entity, make sure collections/expenses keep running through the appropriate bank accounts etc.. perhaps find out who your uncles attorney and/or CPA was and contact them to get this figured out asap (if applicable).

Finally, unless you and your father genuinely want to take on the responsibility (and liability) of being property owners, I'd strongly consider selling them, or at least put them on the market and see what you could get (and don't hire a realtor, find a commercial broker who specializes in this).  You seem hesitant to do this based on "ridiculous public market valuations", but this sounds like market timing to me, which is not a good reason (just DCA the proceeds into the market if you're that worried, and remember that trying to time the market is foolish if you have a long horizon ahead of you).

1. start digging into the financials of the properties, make sure all insurance and mortgage payments are up to date. Same for rent, make sure the rent payments are up to date. This will be a big task, very big huge.
2. hire a lawyer, contact the bank where the mortgage is held. Reach out to the mortgage banker, and ask for a referral.
3. After probate and all financials and bills are taken care of, then consider potentially selling. Likely given the inheritance your step up basis is zero. There is a time limit on when you can sell and not have to pay capital gains tax. Once you know how long you have, research "CoStar" PowerBroker listings in boston. It will give you the name of the commercial real estate brokerage companies who do the most amount of business. Get their valuation.
   1. I would not put work into the building, you don't know what you are doing, you don't know how to supervise a general contractor. You could likely sell your properties and exchange them into properties which have been renovated clipping coupons. Or you can buy NNN properties, like a Wendy's which takes care of all the work for you.
   2. If you keep the properties, hire a property manager. Walk around the neighborhood and look at all the plaques on the buildings that say "management'. then write them down and contact them.

I'm going to agree with the financial advisor here unless either you or your dad want to really go down this path. In the very least get a property management company to handle it for you during the transition.

PM me, I may be able to help you a lot. 

PM me. I am very familiar with Boston and operate at the same size as you. 

Send me a private message as I am quite familiar with Boston and operate at a similar size as you.  Also not sure why mods keep deleting my comment

Mentioned by previous posters but an important point: you inherit properties at a stepped up basis which means you have no capital gains tax on a sale, which is a very attractive feature and doesn't require the 1031 that you would otherwise pursue.  I understand public equities are valued very richly, but there's lots of ways to hedge.  For instance, construct 5 years of laddered treasuries and purchase S&P 500 ETF's as they mature.  

Just a  thought.  Good luck and sorry for your loss.  

Depending on your family situation, you might consider asking for a modest asset management fee. The dollar amount can be meaningless, but the symbolism is important. Real estate asset management is a real job. All property managers need some level of management - whether it be high level direction or day-to-day handholding. If you're taking on this burden, you should set some parameters so family members a) understand that there is a real cost to what you are doing, and b) don't expect you to do this in perpetuity, gratis.

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I’m sorry for you and your family’s loss. I was thrown into a very similar situation last year, also in the Boston area. Shoot me a message if you’d like to chat. Happy to share some tips I’ve found helpful.

Sorry for your loss. It’s great that you’re stepping up to help your dad with all this, especially while he’s grieving. To get up to speed on property management, I’d recommend “The Book on Managing Rental Properties” by Brandon Turner. BiggerPockets is also a goldmine for resources, especially if you’re looking to connect with others who might have dealt with similar situations. Since this is all based in Boston, it might be helpful to network with local real estate investors to understand the market and the specific landlord-tenant laws.

You’re absolutely right that property management involves more than just collecting rent. Setting up an LLC to limit personal liability is a solid move, but you should also focus on making sure the leases are strong and clearly define expectations. Since your uncle had informal agreements with tenants, you’ll need to clean up the process. Consider using a property management software like Buildium or Avail to make rent collection and record-keeping smoother, and be sure to formalize everything to avoid future headaches.

As for the Boston real estate market, it’s generally been strong, but the decision to sell or hold depends on the specific condition of the properties. If the properties are in need of significant updates, it might be worthwhile to renovate them before selling or increasing rents, especially if you’re expecting long-term appreciation. Selling them and rolling into the market might not be the best idea right now with public market valuations so high. If the properties are well-maintained and in good areas, holding onto them for cash flow could be a smart play in an inflationary environment.

To determine reasonable rents, don’t rely solely on Zillow. A more rigorous approach would be looking at rent comparables on sites like Rentometer and Apartments.com. You can also check local listings on Craigslist or Facebook Marketplace to see what similar properties are going for. If the leases were weak, the first step is to standardize rent collection and leasing terms to avoid future issues.

Regarding property managers, they can definitely be worth it if you want to take some of the burden off your dad’s plate. A good property manager will handle the day-to-day tasks—tenant screening, rent collection, maintenance coordination—so your dad doesn’t have to deal with the stress of it all. When searching for one, ask around in local landlord groups or check out reviews online. You’ll likely pay around 8-12% of the monthly rent, but make sure the cost is justified by the services they provide.

At the end of the day, your first priority should be cleaning up the lease agreements and formalizing the rent collection process. Then, figure out if it’s worth renovating and holding the properties for the long haul or selling them. And if you choose to hold, getting a solid property manager involved could make your dad’s life a lot easier in the long run.

I own a lot of residential rental properties. I don’t recommend keeping them unless you are experienced in this business. Maintenance is very expensive if you don’t have your own people, one problem can wipe out profits for the entire year or more. Management companies charge a lot and then you still have to pay to fix whatever the issues are.

Market is great right now, not much volume. You’ll fetch a great price. Put the money in something you understand better.