Should I Sell or Rent My House?

It projects each path forward over your chosen time horizon. Sell-now path: take your cash offer net of any payoff, invest it at your assumed return rate. Rent-out path: collect monthly cash flow over the horizon, plus the home appreciates at your assumed appreciation rate, minus ongoing expenses. The path with the higher projected end value wins. Both are estimates — actual outcomes depend on real markets, real tenants, and real expense surprises.

Long-term US national home appreciation has averaged about 3-4% annually after inflation. Your specific market may run higher or lower — check Zillow Home Value Index or local reports. For conservative planning, 2-3% is reasonable. For hot growth markets (some Sun Belt metros), 4-6% is defensible. Avoid assuming the last 3 years of post-pandemic appreciation will repeat.

A diversified stock-and-bond portfolio has averaged 7-10% nominal annually long-term. After taxes and inflation, real returns land around 4-6%. Use 5-7% nominal as a default for sell-now path comparison. Higher assumptions favor selling; lower assumptions favor holding. Avoid using extreme returns (15%+) — they bias the answer.

Property management fees (8-10% of rent), maintenance reserve (1% of property value annually), capital expenditures reserve (1% of property value), vacancy reserve (5-8% of rent), property taxes (1-3% of value), insurance ($800-2000/yr), HOA if any. Add it up and even a self-managed rental rarely runs below 35-45% of gross rent in real expenses. We default to 50% to be honest.

Tax effects (rental depreciation, capital gains exclusion if you sell now and qualify under Section 121, 1031 exchange), opportunity cost of your time managing rentals, tenant risk (eviction costs, damage), interest-rate changes, area-specific risks (flood zones, regulatory changes). For rentals expected to span multiple market cycles, the math gets harder. Talk to a CPA about tax effects before deciding.

When you don't want to be a landlord, when your projected rental cash flow is weak (sub-6% cash-on-cash), when local appreciation has already pulled forward future gains, when you have a higher-yielding investment opportunity, or when you face foreclosure / divorce / relocation deadlines that force speed. The math is one input — your life situation is the other.

When the rental cash flows strongly (8%+ cash-on-cash), when local appreciation outpaces typical investment returns, when you have low or no mortgage (each dollar of cash flow is pure return), when you're emotionally attached and willing to manage it, or when you can self-manage to avoid the property-management fee.