Analyze whether you should sell your property now or become a landlord.
Current Property Details
Rental & Future Assumptions
Option A: Sell Now
Sales Price:
Mortgage Payoff:
Selling Costs:
Net Cash Now:
Future Value if Invested (@%):
Option B: Rent & Hold
Cumulative Cash Flow:
Future Home Value:
Future Mortgage Balance:
Future Selling Costs:
Total Future Wealth:
Should I Sell My House or Rent It Out?
Deciding whether to sell your home or convert it into an investment property is a significant financial crossroad. This "Sell vs. Rent Calculator" helps homeowners analyze the long-term financial impact of becoming a landlord versus liquidation. Unlike a simple profit calculator, this tool accounts for equity build-up, property appreciation, and the opportunity cost of selling.
Key Factors in the Decision
When using the sell vs rent calculator, consider these critical components:
Cash Flow: This is your net monthly income after all expenses (mortgage, taxes, insurance, maintenance). Positive cash flow is crucial for a sustainable rental.
Equity Build-Up: While renting, your tenants effectively pay down your mortgage principal. Over time, this increases your net worth even if the property value stays flat.
Appreciation: Real estate generally appreciates over time. By holding the property, you gain exposure to this market growth.
Opportunity Cost: If you sell now, you receive a lump sum of cash. Could you invest that cash elsewhere (stocks, bonds) and earn a higher return than the property provides?
Understanding the Calculator Inputs
To get the most accurate result from the calculator above, ensure your inputs reflect reality:
Selling Costs: Typically 6% to 10% of the property value, covering real estate agent commissions, transfer taxes, and closing fees.
Monthly Operating Expenses: Do not include your mortgage payment here. Include property taxes, insurance, HOA fees, vacancy reserves (usually 5-10% of rent), and maintenance costs.
Alternative Investment Return: This is the annual percentage yield you would expect if you took the cash from selling the house and invested it in a diversified portfolio.
The 1% Rule
A common rule of thumb in real estate investing is the 1% rule, which states that the monthly rent should be at least 1% of the purchase price (or current value). While hard to achieve in high-cost areas, it serves as a quick benchmark for cash flow potential. If your calculator results show negative monthly cash flow, holding the property might become a financial burden unless appreciation is substantial.
function calculateSellVsRent() {
// 1. Get Inputs
var valCurrent = parseFloat(document.getElementById('svr_currentValue').value) || 0;
var balMortgage = parseFloat(document.getElementById('svr_mortgageBalance').value) || 0;
var rateMortgage = parseFloat(document.getElementById('svr_mortgageRate').value) || 0;
var termYears = parseFloat(document.getElementById('svr_loanTerm').value) || 0;
var costSellPct = parseFloat(document.getElementById('svr_sellingCost').value) || 0;
var rentMonthly = parseFloat(document.getElementById('svr_monthlyRent').value) || 0;
var expMonthly = parseFloat(document.getElementById('svr_monthlyExp').value) || 0;
var holdYears = parseFloat(document.getElementById('svr_holdingPeriod').value) || 0;
var rateAppreciation = parseFloat(document.getElementById('svr_appreciation').value) || 0;
var rateInvest = parseFloat(document.getElementById('svr_investReturn').value) || 0;
// Validation
if (valCurrent <= 0 || holdYears <= 0) {
alert("Please enter valid positive numbers for Property Value and Holding Period.");
return;
}
// — SCENARIO A: SELL NOW —
var sellCostsNow = valCurrent * (costSellPct / 100);
var netProceedsNow = valCurrent – balMortgage – sellCostsNow;
// Future Value of Net Proceeds if invested
// FV = P * (1 + r)^n
var futureWealthSell = netProceedsNow * Math.pow((1 + (rateInvest / 100)), holdYears);
// — SCENARIO B: RENT & HOLD —
// 1. Mortgage Calculations (Monthly Payment & Future Balance)
var monthlyRate = (rateMortgage / 100) / 12;
var totalPayments = termYears * 12;
// Monthly PI (Principal + Interest)
var monthlyPI = 0;
if (rateMortgage === 0) {
monthlyPI = balMortgage / totalPayments;
} else {
monthlyPI = balMortgage * (monthlyRate * Math.pow(1 + monthlyRate, totalPayments)) / (Math.pow(1 + monthlyRate, totalPayments) – 1);
}
// Calculate Future Balance after Holding Period
// Balance = P * [ (1+r)^n – (1+r)^p ] / [ (1+r)^n – 1 ]
// n = total payments, p = payments made (holding period in months)
var paymentsMade = holdYears * 12;
var futureBalance = 0;
if (rateMortgage === 0) {
futureBalance = balMortgage – (monthlyPI * paymentsMade);
} else {
// Standard Amortization Remaining Balance Formula
var numerator = Math.pow(1 + monthlyRate, totalPayments) – Math.pow(1 + monthlyRate, paymentsMade);
var denominator = Math.pow(1 + monthlyRate, totalPayments) – 1;
futureBalance = balMortgage * (numerator / denominator);
}
if (futureBalance < 0) futureBalance = 0; // Loan paid off
// 2. Cash Flow Calculation
// Net Monthly = Rent – Expenses – Mortgage Payment
var monthlyNet = rentMonthly – expMonthly – monthlyPI;
var totalCashFlow = monthlyNet * 12 * holdYears;
// Note: Simplified. Doesn't compound cash flow investment, nor increase rent/expenses annually.
// This keeps the calculator user-friendly and robust without requiring 20 inputs.
// 3. Appreciation Calculation
var futureHomeValue = valCurrent * Math.pow((1 + (rateAppreciation / 100)), holdYears);
// 4. Future Sale Logic
var futureSellCosts = futureHomeValue * (costSellPct / 100);
var netProceedsLater = futureHomeValue – futureBalance – futureSellCosts;
// 5. Total Wealth Rent
var totalWealthRent = netProceedsLater + totalCashFlow;
// — DISPLAY RESULTS —
var formatCurr = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD', maximumFractionDigits: 0 });
// Sell Now Card
document.getElementById('res_sellPrice').innerText = formatCurr.format(valCurrent);
document.getElementById('res_payoff').innerText = "-" + formatCurr.format(balMortgage);
document.getElementById('res_sellCosts').innerText = "-" + formatCurr.format(sellCostsNow);
document.getElementById('res_netCashNow').innerText = formatCurr.format(netProceedsNow);
document.getElementById('res_rateDisplay').innerText = rateInvest;
document.getElementById('res_investedValue').innerText = formatCurr.format(futureWealthSell);
// Rent Card
document.getElementById('res_cashFlow').innerText = formatCurr.format(totalCashFlow);
if(totalCashFlow 0) {
verdictEl.innerHTML = "Result: Renting is Better by " + formatCurr.format(diff);
} else {
verdictEl.innerHTML = "Result: Selling is Better by " + formatCurr.format(Math.abs(diff));
}
document.getElementById('svr_results').style.display = 'block';
}