Rent vs sell calculator

Two ways to use the same starting equity

The sell-now scenario deducts your entered selling costs and mortgage payoff from the current property value, then compounds those net proceeds at the alternative investment return. If the proceeds would not cover the mortgage today, the calculator asks for different inputs because it does not model extra cash needed to close that sale.

The rental scenario keeps the property for the chosen number of years. Each month it collects rent after the vacancy allowance, pays operating costs and the mortgage, and adds the remaining cash flow to a comparison account. At the end it sells the property, deducts the same selling-cost percentage and repays the remaining mortgage.

How the monthly calculations work

Collected rent = monthly rent × (1 − vacancy % ÷ 100)
Rental cash flow = collected rent − operating costs − actual mortgage payment
Rent-scenario ending value = net sale equity + accumulated cash-flow value

Mortgage interest uses APR ÷ 12, with the payment at month-end. The last payment is reduced to the amount owed; no payment is charged after payoff. A payment below the first month’s interest is rejected because this model does not support negative amortization.

Home-value growth and the alternative investment return are effective annual rates converted to equivalent monthly rates. Rental cash flows enter at month-end. A positive balance represents accumulated surplus; a negative balance represents contributions and their opportunity cost, not borrowing at the assumed investment rate.

Worked example: a property with no mortgage

Take an illustrative $100,000 property with $1,000 monthly rent, $200 monthly operating costs, no vacancy and a one-year horizon. Assume zero selling costs, home-value change and investment return. Renting produces $800 × 12 = $9,600 cash flow and leaves $100,000 sale equity. Its ending value is $109,600, versus $100,000 from selling today.

Now add a $12,000 zero-interest mortgage paid down at $1,000 per month. The rental cash flow totals −$2,400, but the mortgage is paid off, leaving $100,000 sale equity and a $97,600 rental ending value. Selling today starts with $88,000. The difference remains $9,600: principal payments move money from cash into equity and must not be counted twice as a loss.

What to include in costs

Enter your chosen property-tax, insurance, maintenance, management, association-charge and reserve amounts in operating costs. Enter only principal and interest in the mortgage payment field so the same costs are not deducted again there. Selling costs apply to the property value at each scenario’s exit date.

Rent and operating costs remain constant. Vacancy is an average percentage applied every month, not a prediction of when a unit is empty. The calculation excludes income and capital-gains taxes, depreciation, refinancing, major one-time works, changes in rent and your own replacement housing costs. These omissions can materially change a real decision.

For a lease offer with concessions, use net effective rent. For a partial first or last month, use prorated rent or move-out proration. The general prorate tool handles other date-based amounts.

Questions, answered