Rent vs. Sell Home Calculator

How it works

You already own the place, so this is not the rent versus buy question a buyer asks. Renting brings in a small monthly cash flow, plus the principal paid down each month. That rental path still ends in a sale of the property, just later.

• Sell now: the property value, minus the mortgage balance, minus selling fees
• R:: the monthly rent you could realistically charge for the apartment or house
• P:: your monthly mortgage payment, principal and interest only
• C:: monthly property tax, insurance and maintenance
• V:: a vacancy allowance, 8% of the rent, for months nobody is paying
• Y:: the years you keep renting before selling
• D:: the loan principal your tenants pay down over those years

Start with the defaults. An Atlanta property selling today nets $400,000, minus the $220,000 balance and $28,000 of selling costs. That leaves $152,000 in hand.

Renting it out collects $2,400 against $1,450 of mortgage, $650 of tax, insurance and upkeep, and a $192 vacancy allowance. That leaves $108 a month, or $6,480 over five years.

Add the $24,417 of principal retired in that time, and renting then selling lands at $182,897, about $30,897 ahead.

So one path ends this month with cash in the bank. The other ends five years later. You still have that same property to sell, plus five years of rent collected in between.

Put in your own rent, your interest rate and the balance you still owe.

✓ Every result is checked against independent reference math. See how we test the calculators →

How to use this calculator

1. Enter the property value you would list at today, and the balance you still owe.
2. Add the selling fees as a percentage, usually agent commission and closing costs.
3. Put in the monthly rent for the property, then your principal and interest payment.
4. Enter monthly property tax, insurance and maintenance, and set the years you would keep renting.
5. Compare the two totals, then change the years to see when renting overtakes selling.

A worked example: renting out a $400,000 house instead of selling it

You are moving out of a house worth $400,000 with $220,000 left on the mortgage. Sell it today and, after the loan and 7% of selling costs, you walk away with $152,000. Rent it out instead and the calculator makes renting the better move, by about $30,897 across five years.

Here is where that comes from. The place rents for $2,400 a month. Take out the $1,450 mortgage payment, $650 of tax, insurance and upkeep, and an 8% vacancy allowance for the months nobody is paying, and you clear $108 a month.

Five years of that is only $6,480, which is not the interesting part. The interesting part is the $24,417 of principal your tenants retire for you in the same stretch. Stack both on the $152,000 you would have had anyway and renting, then selling, lands at $182,897.

Now change one number. If the honest market rent is $1,800, cash flow flips to $444 a month in the red, five years of that bleeds $26,640, and the paydown no longer covers it: selling now wins by $2,223. A $600 swing in rent reversed the whole answer.

That is how close this call usually is, which is why the landlord hassle gets a vote. Put your own numbers in above.

What does the margin leave out?

The winner and its margin are the least reliable numbers here. Three things sit outside the calculator, and they do not all point the same way.

• Appreciation: the calculator holds the property value flat, which lowers renting's rate of return and favors selling.
• Idle proceeds: a sale hands you cash for stocks or bonds, and that investment is assumed to earn nothing here.
• Rent is income: it is taxable at your ordinary rate, and inflation slowly reduces what a fixed rent buys.

Investors treat that margin as the most renting could gain, not a forecast. When values are flat, a few thousand dollars of profit over five years is close to a toss-up.

Turning the margin into a rate of return

The calculator hands you a dollar gap. A rental is an investment, so investors turn that gap into a rate of return. Those rates compare cleanly against the wider market.

• Capitalization Rate (cap rate): yearly income after operating expenses, divided by the property price.
• Internal Rate of Return (IRR): the one rate that ties the monthly cash flow and the final sale together.
• Cash on cash: yearly cash flow divided by the equity and cash you have tied up.

Compare that IRR against the return investors expect elsewhere. If renting cannot beat it, selling is the cleaner investment with a surer profit. That same cap rate comparison, run on two properties, is the core of real estate investing.

Is renting it out really a second job?

The calculator makes renting look like easy money, because it leaves out the hours the work takes.

• Vacancy is normal: tenants leave, and a month of paint and carpet between one lease and the next is ordinary.
• Capital Expenditures (CapEx): at $108 a month the property earns about $1,300 a year, and a new furnace can cost several times that.
• Distance adds cost: an Atlanta property run from four states away means paying a property management company out of the rent.

That management fee shrinks the monthly margin again, and self management takes your weekends instead of your money. Check the monthly payment and the principal and interest split before you sign a lease.

What else could the sale money do?

The calculator stops at the sale, but that money could still buy property with no repair calls.

• Real Estate Investment Trusts (REITs): you own a share of a property portfolio that trades on the market. Those shares pay passive income, with no lease to manage.
• Wholesaling: you put a property under contract and sell that contract on, which is active work rather than passive income.

So weigh the renting margin against a REIT, a hands-off investment with a steadier return. Several REITs spread an investor's risk wider than one Atlanta property. Wholesaling suits people who want the work.

The accidental landlord decision

The most common version of this choice has nothing to do with monthly income. You bought near the top of the Atlanta market, and the offers now feel low. So you rent the property out and wait, sometimes through a recession.

That is not an investment decision. It is a refusal to accept a price.

Real property is not liquid, and what you paid is gone under either option. Would you buy this property today, at today's value, as a rental, with your own money? If not, holding it is a bet rather than investing in real estate.