Sell vs Rent It Out Calculator
Selling a home feels simple until you do the math. Before you hand over 5% to a real estate agent, pay off your mortgage, and park the proceeds in a CD, it’s worth getting your numbers straight. You might be surprised at how quickly the the wealth gap can compound between: 1) “I sold it and invested the proceeds” and 2) “I kept it and rented it out.”
This calculator helps you run both scenarios side by side, and takes into account estimated annual cash flows, longer-term wealth projections, optional tax treatments, and the leverage effect of holding a mortgaged asset. Enter your own numbers and let the model illuminate your options!
Sell vs. Rent Calculator
Compare selling your home and investing the proceeds vs. keeping it as a rental. All figures are estimates based on your inputs.
Estimates only. Not financial or tax advice. Consult a qualified professional before making any decisions.
📈 Estimated Wealth Projection
Rental wealth = projected property value (less) remaining mortgage (plus) accumulated cash flows. Sell wealth = investable proceeds compounded at your total after-tax return rate. Appreciation is not guaranteed.
How the Numbers Actually Work
Once you unpack the question, "should I sell or rent this out?", two core factors become evident and they don't always align.
Cash flow pertains to what hits your bank account this month, year, or over many years. Rent comes in, the mortgage payment, taxes, insurance, HOA dues, management fees, and a maintenance reserve go out. What's left is your cash flow.
Wealth asks a longer question related to your net overall position after 5, 10, or 20 years? For the rental scenario, that's your projected property value, minus whatever mortgage balance is left, plus every dollar of cash flow you've collected along the way (in this case with no assumption that you reinvested any of it). For the sell scenario, it's your after-tax proceeds from the sale, compounded annually at whatever market return rate you input.
Note that a property can be a mediocre cash flow performer, barely breaking even some years, and could still come out well ahead on 20-year wealth, due to the impacts of leverage and/or appreciation. Your invested equity may be only a fraction of the property's value, but appreciation applies to the whole asset, not just your equity stake. A $650,000 property appreciating at 3% a year would gain roughly $19,500 in year one alone, against an equity stake that might be only $130,000 (20% equity). That leverage effect is a big part of why cash flow and wealth outcomes can differ so dramatically over time, and why a cash-flow-only hold/sell analysis can be misguided.
A few modeling choices worth knowing about:
- Use your actual mortgage payment. The calculator asks for your real monthly P&I payment rather than backing into one from your balance and rate. If you bought years ago on a 30-year term, recalculating from today's balance and a fresh amortization schedule would understate what you're really paying.
- The capital gains exclusion, if it applies. If this has been your primary residence for 2 of the last 5 years, the calculator can apply the $250K (single) / $500K (MFJ) exclusion to the sale scenario. Confirm your eligibility with a tax professional, since the specifics can vary. This can be a significant swing factor in the comparison. Selling a highly appreciated primary residence tax-free is a very different proposition than selling a straight rental property, where the entire gain (and any depreciation you've claimed) is typically taxable unless you do a 1031 exchange.
- No reinvestment assumed on rental cash flow. If you're pulling $400/month out of the rental and actually investing it elsewhere, your real-world rental wealth would be higher than what the calculator shows. This is a deliberately conservative assumption so you're not double-counting an outside investment strategy.
- Appreciation and market returns are inputs, not predictions. Nobody knows what either number will actually be. The calculator is a way to stress-test your own assumptions against each other. It's not a forecast.
A Worked Example
Take a $650,000 property with a $380,000 mortgage balance at 5.5% and a $2,650/month P&I payment, which is currently worth the same amount that you paid for it three years ago.
If you sell: After a 5% commission and 1.5% in other selling costs, you'd net roughly $228,000 in proceeds after paying off the mortgage. Say this was a rental, not a primary residence. No capital gains exclusion applies, and even with the property flat in value, three years of depreciation you've claimed creates taxable recapture on sale. After that tax hit, your investable proceeds land closer to $205,000. Invested at a blended 7% after-tax return, that grows to about $403,000 over 10 years.
If you rent it out: At $3,400/month gross rent, with an 8% vacancy allowance, 10% property management, taxes, insurance, HOA, and a maintenance/CapEx reserve carved out, Year 1 cash flow would land modestly positive — call it roughly $2,800 for the year. This is perhaps not exciting on its own. But over 10 years, assuming 3% annual appreciation, the property's projected value could climb to roughly $874,000 while the mortgage balance would have paid down to around $310,000. In the meantime, you'd have collected ~$35,000 in cumulative cash flow along the way. Estimated wealth in this scenario pencils out close to $600,000.
As you can see, the vast majority of the wealth gap can be traced back to the combined effects of leverage and appreciation, not the rental income. This is the kind of divergence the calculator helps to surface. While the sell scenario might win out on simplicity and liquidity, the rent scenario might win out on projected wealth. Neither answer is inherently right or wrong. Decisions like this depend largely on what exactly you're optimizing for and are of course impacted heavily by the assumptions you make about future appreciation, market returns, rents, operating expenses, etc.
Frequently Asked Questions
It absolutely can be, and probably more often than the raw numbers alone would suggest. The calculator only models the numerical inputs. It doesn't know if you're burned out on landlording, moving somewhere that makes remote management impractical, or would rather have liquidity than equity locked in real estate. A hold scenario that comes out ahead on paper isn't automatically the winner.
A common staring point is something close to your marginal federal rate, plus your state rate if applicable. You may also want to adjust for whatever mix of dividends, interest, and capital gains you'd be facing, based on your likely investment decisions. This can of course vary a fair amount by situation. If you're not sure, a rough blended estimate (many owners land somewhere in the 20–28% range depending on state and tax bracket) could be a reasonable placeholder. The calculator is meant to compare scenarios under consistent assumptions, not to substitute for an actual tax projection. A CPA or tax advisor can help you land on a number specific to your situation.
The capital gains tax rate you enter is applied to the full taxable gain on sale, which is a simplified way to approximate the total tax hit, even though depreciation recapture and long-term capital gains are technically taxed at different rates (recapture up to 25%, gains typically 15–20%). For a number specific to your actual depreciation schedule, it's worth running your figures by a CPA as the calculator's output is meant as a single-rate approximation for comparing scenarios, not a substitute for your actual situation.
Some owners lean toward a conservative rate closer to long-run historical norms for their metro rather than recent years, which may have run unusually hot or cold depending on the market. Something in the 2–4% annual range could be a reasonable starting point for many areas, though local conditions vary considerably. Trying the calculator at a few different rates can help show how sensitive the outcome is to this particular assumption. If the rent-vs-sell answer flips between a 2% and a 4% appreciation rate, that may indicate some fragility in the rent/hold scenario.
It does this because your actual payment was locked in at origination on your original loan term. If you're 8 years into a 30-year mortgage, recalculating from today's balance and rate would assume a fresh amortization schedule, which could incorrectly model the amounts you're really paying every month. Entering your real payment is meant to keep the cash flow numbers closer to your actual situation.
No. The sell scenario assumes proceeds go into the market, not that they roll into another property tax-deferred. If a 1031 exchange might be on the table for you, that might change the sell-side tax math meaningfully and may be worth modeling separately. Our 1031 Exchange Rules guide walks through how the exchange itself works if you need a refresher.
Written by Devin Redmond
Devin is an independent investor and freelance writer focused on the real estate industry. He previously worked at Jones Lang LaSalle, Hines Interests, and Roofstock. He actively acquires and manages residential properties across California and Hawaii.
