Rent or Sell Your Durham Home? Essential Insights for Homeowners

If you’re a homeowner in Durham and considering a move, you might be wondering: should I rent my home or sell it? It’s a common dilemma, and the answer varies based on individual circumstances. Let’s explore the key factors to help you make an informed decision.

The Case for Renting

Owning real estate can be a great way to build wealth. If your long-term plan includes retaining ownership of multiple properties, renting out your home might make sense. However, several considerations could affect your decision.

Financial Implications

1. Mortgage Rates: If you purchased your home within the last few years, your mortgage rate is likely between 6% and 8%. This could mean your mortgage payment equals or exceeds the market rental value of your home. For instance, if your mortgage is $2,500 per month and your rental value is also $2,500, you won’t generate any income from renting.
2. Higher Insurance Costs: Landlord insurance rates are generally about 25% higher than standard homeowners’ insurance. Given that insurance costs in North Carolina have been rising, this could significantly impact your profits.
3. Maintenance and Repairs: Budgeting for maintenance is crucial. Experts recommend setting aside about 1% of your home’s market value annually for repairs. This can quickly add up and eat into your rental income.
4. Tenant Management: Finding and screening tenants can be time-consuming and costly. If you’re not using a property management service (which usually charges 8-12% of rent), you’ll need to factor in marketing expenses and background checks.
5. Vacancy Costs: Consider potential vacancies. If your home sits empty for just two months, you could lose $5,000, plus the ongoing mortgage payments.

The Case for Selling

If holding onto your property doesn’t fit into your financial strategy or if the costs of being a landlord are too daunting, selling might be your best option. Selling allows you to cash in on your investment and reinvest those proceeds into opportunities that better align with your goals.

Conclusion

Deciding to rent or sell your home depends on your financial situation and future plans. If real estate is part of your long-term wealth strategy, renting may be viable despite the challenges. Otherwise, selling could provide immediate financial relief and flexibility.

If you need assistance navigating this decision, don’t hesitate to reach out to your local Durham real estate expert!