$
Current estimated market value
Enter home value ($50k–$5M)
$
Remaining mortgage owed
Enter mortgage balance
$
Gross rent you'd collect each month
Enter monthly rent income
$
Mortgage P&I + tax + insurance + maintenance
Enter monthly costs
%
US average: 3–4% annually
Enter appreciation rate (0–20%)
Better Financial Decision
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⚠ Disclaimer: This analysis is a simplified estimate. Actual results depend on tax situation, local market conditions, tenant vacancy, and investment returns. Consult a financial advisor before deciding.
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Rent vs Sell — How to Decide
When you move or upgrade homes, the rent-vs-sell decision comes down to one core question: will keeping the property as a rental generate more long-term wealth than selling and investing the proceeds?
The answer depends on your local rental yield, appreciation rate, financing costs, and what you'd do with the sale proceeds. This calculator compares both paths over your chosen timeframe.
The Two Paths
Sell Path: Net Proceeds → Invested at 7%/yr (S&P 500 avg)
Net proceeds = Home value − Mortgage balance − 6% selling costs (agent fees + closing)
Rent Path: Annual Cash Flow × Years + Future Equity
Cash flow = Monthly rent − Monthly carrying costs. Future equity = Appreciated home value − Remaining mortgage balance.
💡 Rule of thumb: If your gross rental yield (annual rent ÷ home value) exceeds 6–8%, renting often wins. Below 4–5% in high-appreciation markets, selling and investing may be better.
Key Factors to Consider
| Factor | Favours Renting | Favours Selling |
|---|---|---|
| Rental yield | Above 6% | Below 4% |
| Appreciation rate | Above 4%/yr | Low-growth market |
| Monthly cash flow | Positive | Negative (cash drain) |
| Landlord appetite | Willing to manage | Want hands-off |
| Tax situation | High bracket (depreciation helps) | Capital gains exclusion available |
⚠ Capital gains exclusion: If the home is your primary residence and you've lived there 2 of the last 5 years, you can exclude up to $250,000 ($500,000 married) in capital gains from tax. This exclusion expires if you convert to a rental for too long.
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Frequently Asked Questions
6% total — typically 5–6% agent commission plus 0.5–1% closing costs. You can adjust your scenario by entering a lower home value to account for a discount sale.
7% annually — the historical inflation-adjusted average of the S&P 500. If you'd invest more conservatively (bonds, savings), your sell path returns would be lower.
No — tax impact varies significantly by individual situation. Key tax factors: rental income tax, depreciation deductions, capital gains exclusion (up to $500K for married couples), and 1031 exchange eligibility.
Yes. A typical vacancy rate is 5–8%. Multiply your monthly rent by 0.92–0.95 for a more realistic income estimate. Enter this adjusted figure as your rent income.
When your monthly cash flow is positive, you're in a high-appreciation market, you want to keep the property long-term, or you're not yet eligible for the capital gains tax exclusion.
Cap rate (NOI ÷ Property Value) varies by market: 4–6% in coastal/major metros; 6–9% in mid-size cities; 8–12% in secondary markets. Below 4% = low yield (typical SF, NYC). Above 10% may signal higher risk. Most residential investors target 5–8%. Cap rate ignores financing — cash-on-cash return is better for leveraged investments.
Selling a primary residence: up to $250K ($500K married) of capital gains excluded if lived there 2 of the last 5 years. Renting it out: depreciation deductions offset rental income, but "depreciation recapture" (25% tax rate) applies when you eventually sell. A 1031 exchange defers capital gains tax if reinvesting in another investment property.