Financial Calculators

Rent vs Sell Calculator

Determine if selling your home or keeping it as a rental property yields higher long-term returns. Computes landlord cash flow and ROE.

Interactive Calculator

1. Provide Details

Estimated Home Value ($)

Remaining Mortgage Balance ($)

Selling Costs (broker fee, closing %)

Target Monthly Rent Income ($)

Total Landlord Monthly Expenses ($)

2. Output Results

Net Cash Equity if Sold149000.00 $

Net Annual Landlord Cash Flow7200.00 $

Estimated Return on Equity (ROE)4.83 %

How to Calculate: Formula & Steps

Finds net cash proceeds from an immediate sale and compares it with net rental income to calculate Return on Equity.

Formula Used:Annual Rent Cashflow = (Rent - Costs) × 12; Sale Proceeds = Value - Mortgage - Fees; ROE = Cashflow ÷ Proceeds

Step-by-Step Calculation Example

Selling nets $100,000. Renting nets $500/mo ($6,000/yr), yielding a 6% Return on Equity.

Inputs and Assumptions

Enter values that match your project or situation. The calculator uses the following fields and defaults; update them before relying on the estimate.

Estimated Home Value ($): Default: 350000 $
Remaining Mortgage Balance ($): Default: 180000 $
Selling Costs (broker fee, closing %): Default: 6 %
Target Monthly Rent Income ($): Default: 2200 $
Total Landlord Monthly Expenses ($): Default: 1600 $

Common Mistakes to Avoid

Failing to account for vacancies, landlord insurance premiums, and ongoing maintenance reserves in expenses.

Practical Use Cases

Home relocation planning
Real estate investment reviews

Expert Tips

A landlord ROE below 5-6% usually suggests selling is more profitable than renting.

Rent vs. Sell: Evaluating Landlord Cash Flow & Return on Equity (ROE)

When relocating or upgrading to a new primary residence, homeowners face a critical financial decision: liquidate home equity today or retain the property as a long-term rental.

The Landlord Return on Equity (ROE) Equation

ROE (%) = [Annual Net Rental Cash Flow ÷ Net Immediate Sales Equity] × 100

*If your Return on Equity is under 5% to 6%, your home equity is working inefficiently as a rental and would likely generate superior, hands-off yields invested elsewhere (such as index funds or high-yield bonds).

Section 121 Capital Gains Exclusion

If you lived in the property for 2 of the last 5 years, you can exclude up to $250,000 (single) or $500,000 (married) in capital gains tax-free. Converting it to a rental long-term may cause you to forfeit this exclusion.

Depreciation Recapture Rules

Rental properties allow annual 27.5-year straight-line building depreciation deductions. However, when you eventually sell, the IRS taxes accumulated depreciation at a 25% recapture rate.

Disclaimer

This calculation tool is provided for educational and informational estimation purposes only. Results are based on mathematical formulas and user-supplied parameters. They do not constitute formal underwriting, financial, tax, engineering, or legal determinations.

Frequently Asked Questions About Rent vs Sell Calculator

What is landlord Return on Equity (ROE)?

A financial metric comparing net rental income to the cash equity that would be unlocked by selling the property.

Editorial contact: Vaughn Mercer

Editorial policyEstimate only