Should You Rent Out Your Old House or Sell It? The Actual Math

Why this is hard to compare honestly

Selling gives you one number, today. Renting gives you a stream of smaller numbers, plus whatever the house is worth later, plus the risk that either number disappoints. Those aren't the same shape, so you can't eyeball them side by side. You have to run both paths out over the same number of years and compare what each one actually leaves you with at the end. That's two separate calculations, not one.

The keep-and-rent side

Start with what the property would actually pay you as a rental, not what you hope it pays. The rental cash flow & DSCR calculator takes real rent and every operating cost: taxes, insurance, HOA, management, maintenance, capex, vacancy. (Even if you're "self-managing," your time isn't free.) It returns monthly cash flow, cap rate, DSCR, and cash-on-cash. Run it with numbers you could defend to a skeptic, not the listing agent's optimistic rent estimate. If the property doesn't clear a defensible cash flow number today, appreciation ten years out isn't going to rescue the decision.

The sell side

The seller net sheet does the other half: sale price minus mortgage payoff, agent commission, closing costs, and prorations, down to net proceeds. Then the after-tax walk-away, including the §121 personal-residence exclusion if you lived in the house recently, capital gains, and depreciation recapture if you already rented it out for a while. That exclusion matters on its own: it can shelter a meaningful chunk of gain from tax, but it only applies if you've lived in the house 2 of the last 5 years. The longer you rent instead of sell, the closer you get to losing it for good.

What the lump sum becomes

A net-sale check sitting in a bank account isn't the fair comparison. Money you'd otherwise have tied up in a rental has to go somewhere. Take what the net sheet says you'd walk away with and run it through the investment growth calculator at a plain, boring assumption over the same number of years you'd otherwise hold the rental. Now you have two real numbers on the same timeline: years of rental cash flow plus a future sale, versus a lump sum compounding from day one.

The middle path

If the honest answer is "keep should win, but you don't want the tax bill from selling later," a 1031 exchange defers the gain by rolling it into another property instead of cashing out. A 1031 doesn't add a third number to compare. It lets you take the "keep" path without your money staying stuck in this specific house.

The one-line test. If you have to assume optimistic rent and zero vacancy to make keeping it win, or ignore commissions and taxes to make selling win, you don't have an answer yet. You have a preference with a spreadsheet attached to it.

Run your actual numbers through the rental cash flow calculator and the net sheet side by side. Whichever path wins on real numbers, on your timeline, is the one worth trusting. Not the one that felt right on the drive home.