Should you rent out your house or sell it? How to decide with your own numbers
Compare two things in dollars: the cash you would hold if you sold today, and the cash left each month if you rented. Then add what the numbers leave out: repairs you cannot predict, the work of being a landlord, and the tax rules for each path. If the monthly cash left is thin and you do not want the job, selling usually wins; if the loan is cheap and the rent covers every cost with room to spare, renting can make sense.
Step 1: what selling would put in your pocket
Start with a realistic sale price, then subtract what comes off the top: your loan payoff, agent and closing costs, and repairs a buyer would ask for. What is left is the cash you would hold. Ask a local agent for a written estimate; an online value guess is not enough to decide on.
Example a made-up house would sell for $380,000. Loan payoff $240,000. Selling costs of $26,000 (agent, closing and small repairs). Cash after the sale is $380,000 - $240,000 - $26,000 = $114,000.
Step 2: what renting would leave each month
List every cost of owning it as a rental: loan payment, property tax, landlord insurance, repairs, any association dues, and a vacancy allowance for the months it sits empty between tenants. Subtract the total from the rent you expect.
Example the same made-up house would rent for $2,400. Loan principal and interest $1,520, property tax and insurance $520, repairs set aside $200 and vacancy $200. Costs are $2,440, so the house loses $40 a month before any large repair. Some of the loan payment is principal you keep as equity, but that is not cash in your pocket.
Those costs matter more than the headline rent. A house that clears $0 to $100 a month has no cushion for a $9,000 roof.
Step 3: put the two side by side
| Question | Sell | Rent |
|---|---|---|
| Cash in hand | Sale proceeds after costs, once | Monthly cash left, if any |
| Risk of big repairs | Ends at closing | Yours every year |
| Your time | One sale process | Tenants, repairs, records, notices |
| Tax on the home | Possible gain, with a home sale exclusion that may apply | Rental income and deductions yearly; gain and depreciation later |
| Flexibility | Cash is free to use | Equity stays tied up in the house |
If you rent for years and then sell, the tax picture changes. Read our posts on the home sale exclusion after renting and depreciation recapture, and ask your tax preparer to run both paths before you decide.
Step 4: price your time and your tolerance
Number crunching skips the question many owners regret not asking: do you want this job? A single house means one tenant calling you, usually at the least convenient hour. Our post on how much time being a landlord takes gives a realistic picture. If you live far away, see managing a single-family rental from another state.
Also decide what would make you sell later. A tenant who damages the house, a repair that costs a year of rent, or a job change are all reasons. Write down the point at which you would sell, so a hard month does not force a rushed decision.
How DoorKeeping handles it
If you keep the house, DoorKeeping gives it its own books and shows what it actually clears, so the rent-or-sell question gets answered with real numbers after a year instead of guesses. Ask your own Claude or ChatGPT how the house did against its costs; anything involving money waits for your one-tap approval. A single unit costs $2 per unit per month. DoorKeeping gives no tax or legal advice, so your tax preparer and agent decide what fits.
Sources
Questions
- Is it better to rent or sell my house when I move?
- It depends on your numbers: the cash you would hold after a sale, the monthly cash a rental would leave after every cost, and how much you want to be a landlord. The steps above compare them.
- What costs do people forget when renting out a house?
- Repairs, vacancy between tenants, landlord insurance and association dues. A house that clears almost nothing each month has no cushion for a large repair.
- Does renting my house affect taxes when I sell later?
- It can. Depreciation and the home sale exclusion are both affected by how long you rent, so ask your tax preparer to model both paths. IRS Publication 523 covers the rules.