Deciding between landlord and seller

Homeowners weighing whether to rent out their property or sell it outright face a multidimensional puzzle. Renting can generate ongoing income and potential appreciation, yet it introduces responsibilities like maintenance, vacancies, and tenant management. Selling delivers immediate liquidity and frees you from landlord duties, but it also forfeits future growth. The Rent Out vs Sell Calculator distills these considerations into a side-by-side financial comparison so you can make an informed choice based on projected cash flows rather than gut feeling alone.

The tool first estimates what you would pocket if you sold the home today. Real estate transactions typically include agent commissions, closing costs, and potential repairs, which are entered collectively as a percentage of the current value. The net proceeds formula is $S=V(1-c)$, where $V$ is home value and $c$ the selling cost rate as a decimal. This figure represents money in your pocket after closing.

For the rental scenario, the calculator projects net rental income over a specified holding period and discounts those cash flows back to present value. Annual net rent is the difference between gross rent and recurring expenses like property taxes, insurance, maintenance, and management fees. If $P$ denotes annual net rent and $r$ the discount rate, the present value of those payments for $h$ years is $\mathrm{PV\_R}=P\frac{1-{(1+r)}^{-h}}{r}$. The property is then assumed to be sold at the end of the horizon for a future value $V{(1+a)}^h$ where $a$ is the annual appreciation rate. After deducting selling costs again and discounting back, the present value of the eventual sale is $\mathrm{PV\_S}=V{(1+a)}^h(1-c)\frac{1}{{(1+r)}^h}$. Summing $\mathrm{PV\_R}$ and $\mathrm{PV\_S}$ yields the net present value of renting then selling.

The calculator then compares $\mathrm{NPV\_\{rent\}}$ to the immediate sale proceeds $S$. A higher NPV indicates that renting appears financially superior, whereas a larger immediate sale figure suggests selling is the better move. This approach frames the decision in present-dollar terms, allowing apples-to-apples comparison even when rent spans years.

Consider the illustrative table below. A homeowner with a $300,000 property, 6% selling costs, $1,800 monthly rent, $700 monthly expenses, 3% appreciation, a 5% discount rate, and a five-year horizon receives the following results:

Metric	Formula	Value ($)
Sell Now Proceeds	$V(1-c)$	300,000 × 0.94 = 282,000
Annual Net Rent	$P=(R-E)\times 12$	(1,800-700)×12 = 13,200
PV of Rent	$P\frac{1-{(1+r)}^{-h}}{r}$	13,200 × 4.33 = 57,156
PV of Sale	$V(1+a)^h(1-c)/(1+r)^h$	300,000×1.159×0.94/1.276 = 256,194
Total NPV Rent		313,350

In this scenario, renting and selling later produces an NPV of roughly $313,350, exceeding the $282,000 you’d get by selling now. The $31,000 difference favors renting, though the margin is not enormous and could disappear with higher expenses or lower appreciation. Sensitivity analysis—testing different inputs—reveals how robust the conclusion is under changing market conditions.

Beyond the numbers

Financial outcomes are only part of the story. Being a landlord means fielding late-night repair calls, vetting tenants, and complying with housing regulations. Some owners outsource these tasks to property managers at the cost of 8% to 10% of rent, which you can include in the expense field. Time spent coordinating maintenance or bookkeeping represents an opportunity cost even if it doesn’t show up in the calculator. Conversely, selling eliminates these headaches, though you may incur capital gains taxes depending on how long you lived in the property.

Risk tolerance also plays a role. Rental income can be unpredictable due to vacancies, delinquent tenants, or large repairs like roof replacements. Market values might stagnate or fall, eroding the anticipated appreciation. Investors should consider setting aside a reserve fund for unexpected costs and factor in insurance for liability and property damage. Selling converts the asset into cash that can be diversified into other investments, reducing exposure to a single property market.

Taxes can tip the scales. Renting allows you to deduct mortgage interest, property taxes, depreciation, and operating costs, often sheltering much of the rental income. Depreciation recapture and capital gains taxes become due upon sale, but holding for more than a year ensures long-term capital gains rates. Consult a tax professional to tailor assumptions, especially if you plan to execute a 1031 exchange to defer gains when buying another property.

Personal plans matter too. If you anticipate moving back into the home, maintaining ownership may be preferable. Selling now might require repurchasing at higher prices later. On the other hand, if the property no longer fits your lifestyle or is far from your new residence, the logistics of remote landlording can be daunting. Use the calculator as a starting point, then weigh intangible factors like stress, flexibility, and future housing needs.

Interest rates and financing conditions influence both scenarios. A property owned free and clear might generate substantial cash flow, whereas a highly leveraged one could barely break even after mortgage payments. While this calculator focuses on net rent after expenses, you can incorporate mortgage principal and interest into the expense field if still carrying a loan. Refinancing at a lower rate before renting could improve cash flow and alter the outcome.

Another consideration is inflation. Rental income often rises with inflation, providing a hedge against rising living costs. Fixed-rate mortgages remain constant, improving real cash flow over time. Selling converts the asset to cash that may lose purchasing power unless reinvested in inflation-protected assets. The discount rate input implicitly accounts for expected inflation and investment returns, but savvy investors may adjust it to reflect personal expectations.

Finally, remember that no calculator can capture every nuance. Legal issues, neighborhood trends, and personal tolerance for landlord duties vary widely. Use the copy button to record your results and revisit them as market conditions shift. Combining numerical analysis with qualitative judgment leads to a decision that aligns both with your financial goals and your peace of mind.