A Different Question Than "Rent vs. Buy"

This calculator is for landlords who already own a rental property and are deciding whether to keep it or sell. That's a fundamentally different question from our rent vs. buy calculator, which helps someone decide whether to rent or buy a home to live in. Here, you're the owner weighing ongoing rental income and appreciation against cashing out and reinvesting elsewhere.

How the Comparison Works

Both paths assume the property (or its sale proceeds) eventually gets converted to cash, so the comparison is apples-to-apples: which path leaves you with more net worth at the end of your chosen time horizon.

How to Use This Calculator

Enter your property's current value and original purchase price, plus depreciation claimed to date. Add your remaining mortgage if any. For the "keep" scenario, enter your net monthly cash flow (after all expenses and mortgage) and expected appreciation. For "sell," set your alternative investment return rate — what you'd realistically earn investing the proceeds elsewhere.

What This Reveals

• High cash flow, low appreciation market: often favors keeping, since the ongoing income compounds well
• Low or negative cash flow, high appreciation market: the comparison gets closer, and selling to reinvest in higher-yielding assets may win
• Large embedded gain with significant depreciation recapture: selling triggers a real tax hit — strongly consider a 1031 exchange instead of selling outright if you want to redeploy capital

Why the Alternative Return Rate Matters So Much

The entire "sell" case rests on actually reinvesting the proceeds and earning a real return — if that rate is unrealistic or the money gets spent instead of invested, the comparison falls apart. Use a return rate you can genuinely expect from your intended use of the proceeds, not an optimistic best case.

Non-Financial Factors

Management burden, tenant headaches, your proximity to the property, and how much you simply want to be done with landlording all matter and aren't captured in a pure net-worth comparison. Plenty of investors sell a perfectly profitable property simply because they're done managing it.

Worked Example

A property worth $450,000, bought for $280,000, with $55,000 in depreciation claimed and no mortgage: selling today after 7% costs nets about $418,500, with roughly $211,000 in taxable gain (recapture + remaining gain) costing an estimated $44,000–$50,000 in tax — leaving about $370,000 to reinvest. Compare that against keeping the property, collecting $400/month net cash flow, with 3.5% annual appreciation, over a 10-year horizon.

Where This Fits Your Bigger Picture

Check your property's current performance with our cap rate calculator and cash flow calculator. If selling, model the tax deferral option with our 1031 exchange calculator before deciding.

Frequently Asked Questions