The 30-year verdict
Keep & Rent It Out
by $1.23M over 30 years
Keeping the house and renting it out beats selling and investing in the S&P 500 (at 7%/yr) by $1.23M at Year 30. Leverage, tax shelter, and compounding rent do the work.
Year 1 cash flow
−$1,664/mo
You'd pay this out-of-pocket monthly for a while, betting on appreciation + loan paydown.
First profitable year
Year 16
The year rent growth finally pushes cash flow above $0/mo.
Year 30 net wealth (renting)
$3.02M
Home equity + cumulative rent + tax savings, if you keep it 30 years.
How this calculation works
We model a 30-year hold as a rental: 25% down, current mortgage rate, property tax at ~1.1% of value, insurance at ~0.3%, 5% vacancy, 4%/yr rent growth, 5%/yr appreciation, 32% marginal tax rate, 0% property management (you self-manage).
The "sell" alternative invests the same capital (down payment + every year of negative cash flow) in the S&P 500 at 7%/yr base case, taxed at long-term cap gains at exit.
Net wealth comparison at Year 30: home equity + cumulative cash flow + cumulative tax savings minus S&P 500 alternative after cap gains. Want to change the assumptions? Open the full calculator.