What to do with our current home?

Question

Hi Everyone,

My wife and I are currently living in Raleigh NC. We own 100% of our home in Raleigh. We are actively looking into moving to Charlotte with the intention of buying another home to live in for a year or two and then use that as an STR, once we save enough to purchase another home.

Any advice on what is the smartest thing to do with our existing home in Raleigh? Do we sell and take the cash? Long term rental? STR?

Any and all advice is greatly appreciated.

Pat Lulewicz · Answer

As others have said, this entirely depends on location and your personal liquidity needs. If building a portfolio if your goal and liquidity isn't a concern with your next purchase, I would never sell an asset in Raleigh unless you need to.

Putting an LTR in there is your lowest touch option and you could likely manage it effectively from Charlotte. Shorter-lease unfurnished rentals are another option (and still self manage); we get a lot of those individuals who either just moved here or are between homes and you can get good premiums on those rents.

If you have the capital, furnishing it and renting it as a MTR/STR is definitely going to be your highest $$ return...we manage 6 of these types of properties in the Triangle and there's great demand for them. If you need some guidance on the furnishing aspect, we've done the design/furnishing (white glove: order it, build it, etc) of 2 in the past year so can give you some ideas.

Bruce Woodruff · Answer

like @Nicholas L. said, we'd need a lot more info. So your loan is paid off and you're free and clear? How much is the estimated sales value and is that enough to get what you want in Charlotte? Don't forget that it'll take more available cash to get yout STR up and running, what with furnishing it and adding amenities.

Have you run Comps on your own house's value, and also on what the STRs in your new neighborhood are taking in? There are a lot of moving parts here to consider!

And can you afford to buy the STR without selling your currnet home?

Theresa Harris · Answer

I had the same comment as Jules-how much did you buy it for and what would it sell for?  Look at the capital gains implications because if you rent it out for 5 years and then sell it, you will pay cap gains on all of the profit.

Jules Aton · Answer

One of the things I consider when deciding if I want to sell or rent out my primary home is the implications of the homeowner capital gains tax exemption. Also at this point in my advanced life the homes I live in are no longer purchased as an investment but a consumable so generally don't make the best rental property which further supports selling.

Ashish Acharya · Answer

@Brett Hushon You're in a great position owning your Raleigh home outright—it gives you flexibility and a valuable asset to work with. The smartest move depends on your goals: cash now, cash flow, or long-term wealth building.

• Sell and take the cash: If you want max liquidity to help with the Charlotte purchase or future investments, selling could free up significant capital. Since it's your primary residence, you may qualify for the Section 121 exclusion (up to $250K single / $500K married tax-free gain) if you've lived there 2 of the past 5 years.
• Long-Term Rental: If the numbers work, this option gives you passive income and appreciation, especially in a strong market like Raleigh. With no mortgage, your cash flow could be solid even at modest rent levels.
• STR (Short-Term Rental): Raleigh’s a solid STR market, but you’ll need to check local zoning and permitting rules. STRs usually yield higher returns, but also come with higher management needs. You can self-manage or hire a co-host if you're comfortable with more involvement. This can even save you a lot in taxes, unlike LTRs.

If you're not pressed for cash and want to grow long-term wealth, renting (LTR or STR) the Raleigh home while using leverage to buy in Charlotte is a strong move.This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

Zach A. · Answer

Depending on your long term strategy, I'd say renting out the house you already own out right would be the best option. Consider the fees associated with selling it. On the flip side, if you keep it and have to finance your next home, you'll be paying near 7% interest.

Benjamin Carver · Answer

^ furnished MTR is the best squeeze IMO without running into HOA - related issues and too much active management headaches.

Nicholas L. · Answer

@Brett Hushon

Hi Brett.  not enough info to help.  here are some miscellaneous reactions and questions:

-is your property in a location that lends itself to being an STR, and set up in a way that would work as an STR?  not all properties will work as STRs.-do you have a passion for hospitality, and want to own an STR?  do you have funds available to furnish and launch?

-what would be the tax consequences of selling?  do you have a CPA that can advise you on that?

hope this gets you started

Dave Foster · Answer

@Brett Hushon,

I @Ashish Acharya, is spot on with his three options.  You can apply each of those to your personal situation. If you've lived in the property for two out of the five years prior to selling, you would be able to take advantage of the primary residence exclusion (121 Exclusion), which allows you to take the first $250k ($500k if married) of the gain tax-free. That is always my first choice.

With that being said, if you decide to rent out the property either as a LTR or STR and convert it into an investment property, the property would also qualify for both the primary residence exemption for the next three years and a 1031 exchange treatment after that. A 1031 exchange allows you to defer all of the tax and depreciation and purchase another investment property using all of the tax you would normally pay.

Sherry McQuage · Answer

When considering if you should rent your Raleigh home out (instead of selling), don't forget to consider the age of the house and it's systems.  If it's 10+ years "old", will it need a new roof, hot water heater, flooring, etc, in the near future if it's a rental?  Is it energy efficient?  Will renters be ok with the cost to heat/cool it?  Is there adequate parking if you rent it out?

Best to you!

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