The Rent to Survive Report: When Homes Don't Sell and Owners Rent Them Out Instead

0:00Welcome to Real Stories with Buddy Blake. Today's episode features real estate insights from Buddy Blake. Let's dive in. Okay Buddy, so I gotta ask you about something because you've been talking about this pattern for a while now. A house goes up for sale, sits there, price cut, sits more, and then it just disappears. And then it pops back up weeks later, but not for sale. For rent.

0:30What's going on there? Yeah, I've been watching that for months. And honestly, I've seen owners do this in every kind of market since I started selling here back in 98. But I'd never actually seen the hard numbers on it. Like, how often does that really happen? And does it even work out for the person doing it? So we built a report to find out.

0:50Oh, I love that you actually went and pulled the data instead of just going off a hunch. What'd you call it? We call it the Rent to Survive Report. Because that's really what's happening. Most of these owners aren't trying to become landlords for fun. They're renting the house just to keep up with the payment while they figure out their next move.

1:10So walk me through it. What exactly did you look at? We pulled every resale listing in our five counties, New Hanover, Brunswick, Pender, Gonslow, and Duplin, that expired or got canceled in the last 12 months. Then we checked the MLS to see which of those same properties came back as a rental.

1:28And? What'd you find? About one in 22 homes that didn't sell ended up becoming a rental. That's 241 out of 51 96 listings that expired or got pulled. One in 22. Okay, that's not nothing. How long were these places just sitting there before the owner threw in the towel?

1:51The median home sat on the market 119 days before the owner gave up. And usually that's after they'd already cut the price at least once. Four months, basically, before they even get to the renting part. So once they do rent it, is the money any good?

2:08Not really. They asked a median of $19.95 a month, and the ones that actually rented got $1,900. Stretch that over a year, and that's only about 7% of the price they couldn't get for the house. 7%? Sorry, wait, that's me reacting. Okay, that's rough. So it's really just a stop gap, not a real financial win.

2:32Exactly. And here's something interesting. A lot of owners had a backup plan going the whole time. 128 of them listed the home for rent while it was still actively for sale. 65 actually signed a lease before the sale listing even ran out. Wow. So they were hedging their bets from the start. But did the renting side always work out?

2:55No, not even close. 53 of those rental listings also expired or got pulled without ever landing a tenant. And 34 are still sitting on the rental market right now. So some of these homes just can't catch a break either way. Now, I noticed you mentioned Onslow County specifically. What's happening down there?

3:14Onslow really stands out. About 1 in 10 homes it didn't sell became a rental there, and in Jacksonville, it's closer to 1 in 7. Makes sense when you think about it. There's a big military rental market there, so a lease is just an easier fallback. We've also got the numbers broken out for New Hanover County, Wilmington, and Brunswick County if folks want to see how their area compares.

3:36Okay, this next part is what I really want to know. Does the rent even cover the mortgage? That's the part I was most curious about too. The MLS doesn't show anybody's actual loan, but it does show when the home was last bought and what it sold for. So for 156 owners we could trace, we estimated the payment the way a lender would. 20% down, a 30-year loan at the average rate the week they bought, plus their real tax bill, insurance, and HOA dues.

4:06And what'd that math look like? About 30% are taking in less rent than the payment itself, just the mortgage, taxes, insurance, and HOA. And once you factor in normal upkeep and one empty month a year, about 65% are losing money every single month.

4:2365%. Okay, that's a lot of people losing money just trying to hang on to the house. Yeah, and for the ones coming up short, the median loss is about $390 a month, and that's before you even pay a property manager. Most of these owners bought in 2022 or later when rates were already sitting at 5-7%. That's a huge reason the math just doesn't work.

4:48Can you give me like a real example? Not with names or anything, just to make it click. Sure, take the property closest to the middle of our data set. Bought in 2022 for $170,000 at about 6.9%. It rents for $1,400 a month. After the mortgage, taxes, insurance, and HOA, there's about $125 left. Then take out upkeep and one month empty a year, and there are about $154 in the hole every month. And that's assuming nothing big breaks.

5:18Jeez, so even in a best-case scenario, they're still losing money. Why do people even go this route instead of just selling for less and moving on? Usually, it's one of three things. They don't want to sell for less than they think it's worth or less than they actually need, or they've already bought their next place and need the payment covered right now, or they're just hoping rates or prices move and next year looks better.

5:43That makes sense emotionally, but it sounds like there's hidden costs nobody really talks about. There really are. Tenants wear a home down faster than owners do. The repair calls come on their schedule, not yours. Your equity stays locked up in the house, and honestly, a lease makes the next sale harder too. Now you're either selling to an investor with a tenant already in place, or you're waiting for the lease to end before you can even list it.

6:10Okay, so with somebody sitting there right now wondering if they should rent or just sell, what do you tell them to do first? Run your own numbers before you decide anything. We've got a rent-it-or-sell-it calculator. You put in your home's value, your loan balance and rate, and the rent you'd expect, and it shows you what's actually left each month after the mortgage, taxes, insurance, repairs, empty months, and a property manager. You can even download the results as a PDF to

6:39look over later or share with your spouse or your tax advisor. That's such a practical tool. And honestly, if a home didn't sell in the first place, isn't the bigger question just, why? That's exactly it. Most of the homes in this report sat for months and cut their price before the owner gave up. A lot of the time, the real fix is the price, the condition, or just who actually saw the home. A fresh plan can cost a whole lot less than spending

7:07a year as an accidental landlord. That's part of what we look at with every seller. It's also why we built the DealKiller report and our market insights for different areas. This has been such a good breakdown, buddy. Where can people go see the full numbers for their own area?

7:23The full Rent to Survive report updates every day straight from the MLS. You can read it right on screen or download the PDF to print out. And it breaks everything down by county, price range, and type of home. If your home didn't sell or you've already rented it and you're thinking about your next move before the lease ends, let's talk it through. I'll show you the numbers for your neighborhood and help you figure out what actually makes sense for you. Call or text me, 910-395-1000.

7:54Perfect. And we'll have the full report linked right in the show notes for anyone who wants to dig into the numbers themselves. Buddy, this was great. Thanks so much for breaking it all down. Anytime. Thanks for having me.

8:09Thanks for listening to Real Stories with Buddy Blake. For the full article and more, check the show notes. See you next time.