Rent Out or Sell?: Methodology

The six-screen baseline asks for one complete monthly expense total. Tool starting assumptions are visible and editable: 3% property growth, 5% investment return, 3% inflation, 5% routine rent loss, no rent growth and 3% cost growth. These are illustrative planning choices, not sourced forecasts. Optional refinements add expense components, dates, evidence and household responsibilities.

The detailed monthly rental operating budget separates property taxes, rental insurance, association dues, owner-paid utilities, management, routine maintenance and other recurring costs. Its combined total feeds the scenarios. Supported and documented budgets need a source and date covering the breakdown. Annual bills are spread into monthly planning amounts, so actual bill dates may need more cash sooner. Maintenance is treated as spending; mortgage payments, escrow transfers and work entered separately are excluded. Management is a dollar budget and does not automatically change with rent or vacancy.

The guided version supports one US whole-home long-term rental with a fixed-rate amortizing mortgage or no loan. You supply the calendar start, dated sale and lease events, mortgage terms, scheduled gross rent, a routine vacancy and credit-loss rate, rent and operating-cost growth, preparation and conversion work, and a planned capital project. The routine loss rate reduces every scheduled rent receipt. The separate disruption can remove whole receipts and add an unexpected repair, so those inputs should not count the same loss twice. Both sale dates use the entered fixed and percentage closing fees. The base rental is sold at the comparison horizon; a separate earlier-sale scenario stops operations and retains later household contributions.

You choose how much of the available sale resources to invest or spend and when. Investments earn your entered return from the selected month and within-month position; waiting and unallocated cash earn no modeled return. Planned spending is consumption, not retained wealth. The comparison discloses when sale-path spending has no matching rental-path withdrawal. Buying another home is not modeled.

Property-appreciation and investment-return rates begin with editable tool assumptions; they are not forecasts. The result keeps household support requirements separate from contributions that your household can actually provide.

Planned later household contributions enter both alternatives on the same dates. You choose whether the corresponding money after selling stays in cash or is invested. Rental surplus can remain in the property reserve, be invested, or fund household spending, subject to the cash floor you enter. A refundable tenant deposit stays separate from owner cash with a matching liability. Neither deposits nor unprovided emergency support increase the household’s net wealth.

The automatic rental-trouble case also lowers scheduled rent by 10% and raises operating costs by 10%, with two extra months without rent and a $5,000 repair. Separate cases use rent 10% higher, property growth 2 percentage points lower, investment returns 3 points lower throughout the horizon, a sale delayed two months, and a rental sale halfway through the period. All settings are adjustable and constrained by supported dates and rates. The disruption adds vacancy from the planned first rental month, then nonpayment, and includes a separate early repair. The dated cash schedule shows when support would be needed. It is a constructed stress, not an estimate of the probability of vacancy or repairs.

For supplied rent, property-growth, invested-proceeds-return, routine-vacancy, unexpected-repair and planned-project-cost ranges, the current plan changes one assumption at a time. The unexpected repair uses the named disruption path; the other ranges use the baseline. A planned-project range replaces its cost at the entered payment date without adding a second expense or assuming higher property value. Changing that date or combining shocks can produce different cash limits. Searches sample 24 intervals and refine observed changes, reporting bounded brackets rather than guaranteed exact break-even points. Financial equality compares nominal before-tax retained wealth; rental cash checks separately test total and monthly support limits and availability. Changes between samples can be missed. Unknown, equal, no-observed-crossing and unavailable cases remain explicit.

New comparisons use an explicit annual inflation assumption to align the close-result label with each comparison end date. The starting threshold is the larger of $2,000 and 1% of initial comparable resources, measured in purchasing power at the comparison start. It grows or shrinks with the entered inflation assumption; a difference at either boundary is close. The starting threshold stays fixed across paths and scenarios. Cash flows, wealth, returns and financial-equality searches remain nominal; inflation does not automatically change their inputs. Earlier saved comparisons retain their original nominal threshold. This review convention still needs product and participant acceptance. Different delivered household spending, unresolved tax and practical constraints can matter more than a small retained-wealth difference.

Unknown sale tax remains unknown; it is not treated as a confirmed zero. Each sale date has its own optional sourced estimate, obtained date, coverage and unresolved items. An explicit zero requires the same evidence as another estimate. Applicable estimates reduce that path’s sale cash and retained wealth; the sale-now estimate also reduces the proceeds budget. Changed sale months require review rather than automatic reuse. Estimates stay fixed when modeled prices change. Results show the total rental-sale tax that would make the paths equal, holding the applicable sale-now estimate and other entered amounts and allocations fixed. The amount above the entered rental-sale estimate is shown when renting retains a positive advantage. This covers property-sale taxes only; rental-income, investment and omitted sale taxes remain unresolved.