Free Rent Vs. Sell Calculator: Determine What To Do

For many people, owning rental properties is a dream - a path to financial freedom. Yet, at the same time, being a landlord can be stressful. This is particularly true if you don’t set out to become a landlord but are faced with the decision of renting or selling your house because of a move.

There are many things to consider when deciding whether to rent out or sell your house. Our rent vs. sell calculator lets you input the financial details - like your mortgage interest rate and the projected monthly rent for your house - to determine if you’d build more wealth by renting or selling your house. While there are still other factors at play (such as your desire to be a landlord), this calculator provides a good starting point for making your decision.

At Eaton Realty, we help people buy and sell real estate in Hillsborough County. We also offer property management services to make it as easy as possible to be a landlord. If you are deciding between renting and selling your Tampa home, our team can provide you with our expert analysis and help you crunch the numbers. To learn more about our full-service real estate offerings, give us a call to learn more.

Get Better Help Than A Calculator Can Provide. Speak With An Experienced Hillsborough County Realtor › 813-672-8022

Download Our Free Rent Vs. Sell Calculator

You can download our free rent vs. sell Excel calculator file by clicking the button below.

Download The Calculator

Should I Rent or Sell My House?

If you own a house in the Tampa region and are planning to move, you may be struggling with the question of whether you should sell your house or list it for rent. The answer to this question depends on multiple factors, including your personal circumstances and the current state of the real estate market.

There are advantages and disadvantages of both selling and renting out your house. When you sell your house, you often walk away with a large amount of cash - and you don’t have the ongoing obligation of a mortgage on the property. When you rent, you won’t get the same cash windfall - but you’ll build equity in your home and potentially have a passive income stream as well.

Reasons For Selling

There are some reasons why selling might be a better option. This includes:

• You need the money to purchase your next home. Real estate is a huge investment, and many people don’t have the extra cash to make another down payment without selling their current home. They may also not be able to cover a second mortgage if their first house isn’t consistently occupied.
• You want to take advantage of the capital gains exemption on your taxes. The profits that you make from selling your house may be taxable as capital gains - unless the house was your primary residence for at least 2 out of the past 5 years. This exemption allows you to exclude $250,000 to $500,000 in profits realized from the sale of your home, which can significantly reduce your tax burden. The capital gains tax - and the possibility of using the exemption - should be a consideration when deciding whether or not to sell your home.
• The real estate market is hot - as Tampa’s market has been in 2024. If property values have risen and housing prices are high, then you could potentially make a significant amount of money on the sale of your home (especially if you have owned your house for a while). In this situation, selling may be the smartest possible move - especially because there is no guarantee that housing prices will stay high.
• You don’t have any interest in being a landlord. Let’s face it - being a landlord isn’t for everyone. You can hire a property manager, but if you don’t want to deal with any part of having rental properties, then you should sell your house.

Reasons For Renting

In some cases, renting your house makes more sense based on market conditions and your financial situation. This includes:

• Home values are expected to rise in your neighborhood. If you own a house in an up-and-coming area, then it might be a good idea to hold onto your home and wait for the prices to go up before selling. A Tampa real estate agent can help you determine if the home prices in your area will likely rise in the next few years.
• There is a high demand for rentals in your area. If you own a house in a hot neighborhood - such as one that has become a hotspot for bars and restaurants - then there might be a strong demand for rentals in your community. In-demand locations often mean you can set the rent price higher and make a higher profit.
• You want to build equity in your home while earning rental income. One of the best parts of being a landlord is that your tenants will effectively pay your mortgage (and often a bit more).
• Your move is temporary. If you plan on returning to Hillsborough County in a few years, then it may make more sense to rent out your home than to buy it. With closing costs and commissions, selling your house can be expensive - so if you plan to move back to the area, you may be better off renting the house out instead.

There are a variety of costs to consider when you are deciding between renting and selling your house. When renting out your house, consider things like your mortgage and property taxes (if not covered by rent), landlord insurance, maintenance and repairs, property management fees, HOA fees, and carrying costs when the property is vacant. For selling your house, you will have to factor in expenses such as agent commissions, home improvements, closing costs, and paying off your mortgage.

These factors may seem complicated - and difficult to analyze! Luckily, we have created a tool that you can use to help you decide from a financial perspective - our free rent versus sell calculator.

How to Use Our Free Rent vs. Sell Calculator

Our rent versus sell calculator attempts to simplify the financial calculations involved in making this often complicated decision. Of course, there are still personal factors to consider - such as your desire to be a landlord and your need for cash to purchase a new home - but you can use this calculator to figure out the financial aspects of your decision.

The calculator is fairly simple. You will need to input the following information:

• The current value of your home, which you may get from an online resource like Zillow (which isn’t always accurate) or a trusted local Realtor who can analyze your home’s value based on current market conditions, comparable home sales, and other factors.
• The price that you paid for your home when you bought it.
• The original mortgage amount (i.e., you bought your home for $300,000 and had a mortgage of $250,000 at closing).
• The current mortgage balance.
• The interest rate on your mortgage.
• Your monthly mortgage payment.
• The length of your mortgage in months (180 months for a 15-year mortgage or 360 months for a 30-year mortgage)
• Your total taxes, insurance, and other set expenses (such as homeowners’ association fees).
• The anticipated monthly rent for your property, which you may also be able to find online or - preferably - through a Tampa real estate agent.
• The forecasted appreciation rate for your property, which is the percentage of the average annual home price increase or decrease that you expect to realize over the years that you intend to own the house.
• The “years to hold,” or the number of years that you plan to own the house before selling it. This number will help you determine whether it makes more sense to sell now - within a year, for example - or at some point in the future.

In addition to the numbers above, you can also manipulate more advanced inputs like the transfer costs, estimated property management fee, the expected occupancy rate, your tax rates, estimated selling costs, and your after-tax reinvestment rate.

Once you have put in these numbers, a chart will be populated with numbers that represent the amount of wealth that you may realize if you rent or sell your house. This result includes the annual rental income for each year you plan to hold the house and the total reduction in your mortgage. It will also inform you of your net cash flow based on income versus expenses (including maintenance, taxes, and other costs).

At the same time, you can view the projected value of your house over the same time period - and the amount of equity that you will gain. Finally, you will see the amount of wealth that you’ll realize if you sell versus rent. Importantly, this wealth number isn’t just money in the bank - it takes the equity of your home into account.

This calculator is a useful tool to help you make an educated decision about what makes the most sense financially. However, don’t use this in isolation. Other factors - like whether you plan to move back after a few years - should also be considered. An experienced Hillsborough County Realtor can work with you to help you make a more informed choice.

Looking to Rent Out or Sell Your House? Eaton Realty Can Help

There isn’t one right answer as to whether it makes more sense to sell your house or turn it into a rental property. While you can turn a profit more quickly by selling your home, you might gain more overall wealth by holding onto the property as a rental and building equity. Our free rent vs sell calculator is one tool that you can use to make your decision.

At Eaton Realty, we are adept at all aspects of West Central Florida real estate transactions. We represent both buyers and sellers in home sales, and we also offer comprehensive property management services to clients throughout the Tampa region. Whether you rent or sell your house, we will work with you to help you achieve your goals. We can even help you find a new house to purchase in the area. To learn more about our real estate services, fill out our online contact form or give us a call at 813-672-8022 to talk to a team member.

Resources:

• https://www.irs.gov/taxtopics/tc701
• https://www.tampabay.com/news/real-estate/2024/01/04/tampa-bay-makes-zillows-hottest-housing-markets-2024-ranking/

The information disclosed above does not constitute legal or financial advice. Use this information at your discretion and consult a legal or financial professional for further guidance.