Keep vs Sell Calculator

How to decide whether to keep or sell

Most people who face this decision already have a gut feeling — they just want the numbers to confirm it. Sometimes they do. But running an honest comparison often surfaces a different answer than expected, usually because the rental expenses were too optimistic or the net sale proceeds were higher (or lower) than assumed. The calculator above does the arithmetic; this section explains what actually drives the outcome.

The two inputs that move the needle most: realistic monthly cash flow after all expenses (not just mortgage, tax, and insurance — vacancy, maintenance, and management matter too), and what you'd actually do with the sale proceeds. A strong sell scenario depends on net proceeds after mortgage payoff, agent commission, and closing costs, and the return you can realistically earn by reinvesting that capital. This calculator uses 7% as the invested-proceeds benchmark, consistent with long-run diversified equity returns.

Worked example: the numbers side by side

Using the default inputs: home value $420,000, mortgage balance $240,000. Sell path: agent (5.5%) + closing (1.5%) = $29,400 in costs. Net proceeds = $150,600. Invested at 7%/year for 5 years → $211,200 in projected wealth.

Rent path: $2,600 gross rent, 7% vacancy ($182/mo), $900/month operating expenses, $1,650 mortgage payment → cash flow starts at −$132/month. But rent grows 3% per year while the mortgage payment stays fixed, so cash flow turns positive by year three — cumulative 5-year cash flow lands slightly positive (≈ +$1,050). Meanwhile the property appreciates 4%/year to ≈ $511,000, and at a 7% rate the balance amortizes down to roughly $222,100. Future equity: $511k − $222k = $288,900, minus ~$35,800 in future sale costs, plus the cumulative cash flow: rent wealth ≈ $254,200. Keeping wins by ~$43,000 in this scenario — the first year runs negative, but rent growth and appreciation compound on the full property value while the sale proceeds only compound on the smaller net amount. Appreciation is the input with the most leverage: drop it from 4% to 2% and the two paths finish within about a thousand dollars of each other, with selling barely ahead.

When selling typically wins

• Monthly cash flow is deeply negative (−$300+/month is difficult to sustain over years)
• You need the equity liquidity for another investment, purchase, or life event
• The local market has flat or declining appreciation
• The property needs significant capital work before it's rentable
• You can deploy the net proceeds at a return that exceeds the rental scenario

When keeping typically wins

• Cash flow is breakeven or positive after all realistic expenses
• You have a below-market mortgage rate (3–4%) that can't be replicated on a new purchase
• The property is in a market with consistent 4%+ annual appreciation
• You plan to hold 7+ years — compounding makes appreciation the dominant factor over longer horizons
• The local rental market is strong with low vacancy and rising rents

The locked-in mortgage rate factor

If you have a 3% or 4% mortgage from 2020–2021, that loan is a financial asset. Selling forces you to give it up permanently. A property with marginal cash flow at a 3.5% rate may be worth keeping specifically to preserve cheap leverage — you generate equity paydown at minimal interest cost, and that rate cannot be replicated on a future purchase. This is one of the primary reasons many owners from that era are choosing to rent rather than sell even when the headline cash flow is thin.

What this calculator doesn't model

Capital gains taxes are often the largest swing factor. If the property was your primary residence for 2 of the last 5 years, you may exclude up to $250,000 in gains from federal tax ($500,000 married filing jointly). That exclusion phases out after you convert to rental use. Rental income is taxable, but depreciation offsets a portion of it each year — the IRS allows you to depreciate residential property over 27.5 years. Both the capital gains exclusion and depreciation are property-specific and worth reviewing with a CPA before any decision of this size.

Use this calculator as a starting point, then review capital gains exposure, depreciation recapture, financing terms, and current rental comps before making a final decision.

Frequently asked questions