How to use the sell vs rent out home calculator
- Enter the home value, your mortgage balance, rate and monthly payment, and the cost to sell.
- Enter the monthly rent, the landlord costs each month and the share of time the home sits empty.
- Enter the home value growth and the return on invested money you want to assume, and the number of years to compare.
- Read the value of each path at the end, the difference and the year-by-year table.
Formula
Sell now: proceeds = value x (1 - selling cost %) - balance, grown at the investment return each month
Keep: each month, rent x (1 - empty %) - landlord costs - loan payment is added to an account that earns the same return
Keep at the end = account + home value x (1 - selling cost %) - remaining loan
Home value grows at the yearly rate you enter, applied monthly. The loan runs month by month and stops when it is paid off. A month with negative cash flow is money you add to the account.
A $400,000 home with $220,000 still owed
Selling now at a 7% cost to sell nets 400,000 x 0.93 - 220,000 = $152,000. Invested at 5% a year for 10 years it grows to $250,345. Keeping the home with $2,600 rent, 5% empty time, $650 of costs and a $1,500 payment leaves $320 a month. Saved at 5% for 10 years that is $49,690.
After 10 years at 3% growth the home is worth $537,567 and the loan has fallen to $107,108. After 7% selling costs the equity is $392,828, so keeping totals $442,519. That is $192,173 ahead of selling in this example.
How to read the comparison
The two paths end in dollars of net worth at the same date, so you can compare them directly. The keep path is ahead when rent and growth outpace what the sale money could earn elsewhere. Change the growth and return assumptions a few points each way and watch the result move. If it flips easily, the decision depends more on how you feel about being a landlord than on the numbers.
What is not modeled
Income tax on rent, capital gains and depreciation recapture, the tax rules for selling a home you lived in and mortgage rules for a rental are not included and can change the answer a lot. Neither is the work of finding tenants, repairs that cost more than you planned or a year with no tenant. A tax professional can tell you how your own situation would be treated.
For the sale side use the Home Sale Proceeds Calculator, for the rental side use the Rental Property Calculator and to compare paying down a loan with investing use the Mortgage vs Invest Calculator.
Assumptions and limits
- The home grows and the investment returns at constant yearly rates, compounded monthly.
- Rent, costs and the payment stay the same every month, and the loan has a fixed rate.
- The cost to sell is the same share of the price now and at the end.
- Nothing is uploaded. Calculations run in your browser, and growth and return are assumptions, not forecasts.
Frequently asked questions
Which return should I use for the invested money?
Use a figure you would accept as an average over the whole period, after fees. It is an assumption and not a forecast. Try a low and a high value to see how much the answer depends on it.
Why does the keep path count equity after selling costs?
To compare in cash terms, the tool treats the home as if you sold it at the end. That subtracts the cost to sell and the remaining loan from the final value.
What if rent does not cover the mortgage?
Then the monthly cash flow is negative and the tool treats it as money you add each month to cover the gap. It is added to the account with the same return, with a minus sign.
Are taxes included?
No. Taxes on rent and on a sale depend on where you live and on how long you owned and used the home. Include them with a tax professional before you act.