Compare the financial outcomes of renting out your property versus selling it and investing the proceeds over a specified time horizon.
Selling Scenario Inputs
Renting Scenario Inputs
Understanding the Rent vs. Sell Dilemma
Deciding whether to rent out your property or sell it can be one of the most significant financial decisions a homeowner faces. This choice involves weighing potential income, expenses, market appreciation, and alternative investment opportunities. Our Rent vs. Sell Calculator helps you analyze these factors to make an informed decision over a specific time horizon.
Key Factors to Consider:
Property Value & Appreciation: How much is your property worth now, and how much do you expect it to grow in value over time? Appreciation benefits both scenarios, but more directly impacts the renting option if you plan to sell later.
Mortgage Obligations: Your outstanding mortgage balance, interest rate, and remaining term significantly impact your cash flow if you rent, and your net proceeds if you sell.
Selling Costs: Real estate agent commissions, closing costs, and other fees can significantly reduce your net proceeds when selling.
Rental Income & Expenses: If you rent, you'll gain monthly income but also incur expenses like property management fees, maintenance, vacancies, insurance, and potentially property taxes (if not escrowed with your mortgage).
Opportunity Cost of Equity: If you sell, the net cash you receive can be invested elsewhere. This calculator considers the potential returns you could earn from that alternative investment.
Time Horizon: The length of time you plan to hold the property or invest the proceeds is crucial, as it allows for compounding returns and appreciation.
How the Calculator Works:
The calculator compares two primary scenarios over your chosen time horizon:
Selling Now & Investing Proceeds: It calculates the net cash you would receive after selling costs and paying off your mortgage. Then, it projects the future value of that cash if invested at your specified opportunity cost rate.
Renting Out & Selling Later: It projects the future value of your property based on expected appreciation. It then calculates the total net rental income (rent minus rental expenses and mortgage interest paid) over the time horizon. Finally, it determines the net proceeds you would receive if you sold the property at its future value, after accounting for the remaining mortgage balance and selling costs.
By comparing the total financial outcome of both scenarios, the calculator provides a clear indication of which option is likely to be more financially beneficial for you.
Example Scenario:
Let's consider a property owner with the following details:
Current Property Value: $500,000
Outstanding Mortgage Balance: $300,000
Current Mortgage Interest Rate: 4.5%
Remaining Mortgage Term: 25 years
Expected Annual Property Appreciation: 3%
Comparison Time Horizon: 5 years
Total Selling Costs: 6% of sale price
Expected Monthly Rent Income: $2,500
Annual Rental Expenses: 15% of annual rent
Opportunity Cost of Equity: 7% annual return
Using these inputs, the calculator would determine:
If Selling Now & Investing: The net cash after selling would be invested, growing to a certain future value.
If Renting Out & Selling Later: The property would appreciate, rental income would be collected (minus expenses and mortgage interest), and the property would be sold at its future value, yielding net proceeds.
The calculator then presents the total financial outcome for each scenario, highlighting which option yields a higher return over the 5-year period.
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function calculateRentVsSell() {
// Get input values
var currentPropertyValue = parseFloat(document.getElementById("currentPropertyValue").value);
var outstandingMortgageBalance = parseFloat(document.getElementById("outstandingMortgageBalance").value);
var mortgageInterestRate = parseFloat(document.getElementById("mortgageInterestRate").value);
var remainingMortgageTermYears = parseFloat(document.getElementById("remainingMortgageTermYears").value);
var expectedAnnualAppreciation = parseFloat(document.getElementById("expectedAnnualAppreciation").value);
var timeHorizonYears = parseFloat(document.getElementById("timeHorizonYears").value);
var sellingCostsPercentage = parseFloat(document.getElementById("sellingCostsPercentage").value);
var expectedMonthlyRent = parseFloat(document.getElementById("expectedMonthlyRent").value);
var annualRentalExpensesPercentage = parseFloat(document.getElementById("annualRentalExpensesPercentage").value);
var opportunityCostEquity = parseFloat(document.getElementById("opportunityCostEquity").value);
// Validate inputs
if (isNaN(currentPropertyValue) || isNaN(outstandingMortgageBalance) || isNaN(mortgageInterestRate) ||
isNaN(remainingMortgageTermYears) || isNaN(expectedAnnualAppreciation) || isNaN(timeHorizonYears) ||
isNaN(sellingCostsPercentage) || isNaN(expectedMonthlyRent) || isNaN(annualRentalExpensesPercentage) ||
isNaN(opportunityCostEquity) ||
currentPropertyValue < 0 || outstandingMortgageBalance < 0 || mortgageInterestRate < 0 ||
remainingMortgageTermYears < 1 || expectedAnnualAppreciation < 0 || timeHorizonYears < 1 ||
sellingCostsPercentage < 0 || expectedMonthlyRent < 0 || annualRentalExpensesPercentage < 0 ||
opportunityCostEquity property value), assume 0 for investment
if (netProceedsFromSaleNow 0 && totalMortgagePayments > 0) {
monthlyPayment = outstandingMortgageBalance * (monthlyMortgageRate * Math.pow((1 + monthlyMortgageRate), totalMortgagePayments)) / (Math.pow((1 + monthlyMortgageRate), totalMortgagePayments) – 1);
} else if (outstandingMortgageBalance > 0 && totalMortgagePayments > 0) { // Handle 0% interest rate
monthlyPayment = outstandingMortgageBalance / totalMortgagePayments;
}
var totalInterestPaid = 0;
var principalPaidDown = 0;
var currentBalance = outstandingMortgageBalance;
for (var i = 0; i < paymentsOverHorizon; i++) {
if (currentBalance currentBalance) {
principalPayment = currentBalance;
}
// Adjust monthly payment if it's too high for the remaining balance + interest
if (monthlyPayment > currentBalance + interestPayment) {
monthlyPayment = currentBalance + interestPayment;
principalPayment = currentBalance;
}
totalInterestPaid += interestPayment;
principalPaidDown += principalPayment;
currentBalance -= principalPayment;
}
var remainingMortgageBalanceAtEnd = outstandingMortgageBalance – principalPaidDown;
if (remainingMortgageBalanceAtEnd 0) {
recommendation = "Renting out the property and selling later is financially better.";
resultColor = "#155724"; // Green for better
} else if (difference < 0) {
recommendation = "Selling the property now and investing the proceeds is financially better.";
resultColor = "#856404"; // Orange/Yellow for better
difference = Math.abs(difference); // Display positive difference for selling now
} else {
recommendation = "Both options yield a similar financial outcome.";
resultColor = "#004085"; // Blue for neutral
}
// Format results
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 0,
maximumFractionDigits: 0
});
var resultHTML = "
Calculation Results:
";
resultHTML += "Financial Outcome if Selling Now & Investing: " + formatter.format(futureValueOfInvestedProceeds) + "";
resultHTML += "Financial Outcome if Renting Out & Selling Later: " + formatter.format(totalValueFromRenting) + "";
resultHTML += "" + recommendation + " By: " + formatter.format(difference) + "";
resultHTML += "(Note: This calculation is an estimate and does not account for taxes on capital gains, inflation, or unexpected major repairs.)";
document.getElementById("result").innerHTML = resultHTML;
}