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Should i sell or rent my house calculator
Rent vs Sell Calculator
How to Use “Should i sell or rent my house calculator“
The “Should i sell or rent my house calculator” is a simple calculator that helps users evaluate whether it’s more financially advantageous to rent out a property or sell it. The calculator takes various financial factors into account and provides a recommendation based on the user’s input. Let’s go through the terms and provide an example:
Terms and Explanations:
- Property Market Value ($): This is the current estimated value of the property you’re considering. For example, let’s say the property’s market value is $300,000.
- Estimated Rental Income per Month ($): This is the expected monthly rental income you would earn from the property if you decide to rent it out. For example, if you expect to earn $2,500 per month in rent, you would enter this amount.
- Annual Property Management Fees (% of rent): Property management fees are the percentage of rental income you’ll pay for property management services. If it’s 10%, you would enter 10.
- Annual Maintenance Reserves ($): This is the amount you set aside annually for property maintenance and repairs.
- Monthly Mortgage Payment ($): This is your monthly mortgage payment for the property.
- Annual Mortgage Interest ($): The total annual interest paid on the mortgage.
- Expected Property Appreciation Rate (as a decimal): This is the expected rate of property value appreciation per year, expressed as a decimal. For example, if you expect the property to appreciate by 3% annually, you would enter 0.03.
- Marginal Tax Rate (%): Your marginal tax rate is the percentage of capital gains tax you’ll pay when selling the property. If it’s 20%, you would enter 20.
- Number of Years Property Will Be Held: This is the number of years you plan to hold the property before making a decision to rent or sell. For example, if you plan to hold the property for 10 years, you would enter 10.
Example:
Let’s consider a real-world example:
- Property Market Value ($): $300,000
- Estimated Rental Income per Month ($): $2,500
- Annual Property Management Fees (% of rent): 10%
- Annual Maintenance Reserves ($): $1,000
- Monthly Mortgage Payment ($): $1,200
- Annual Mortgage Interest ($): $8,000
- Expected Property Appreciation Rate (as a decimal): 0.03 (3%)
- Marginal Tax Rate (%): 20%
- Number of Years Property Will Be Held: 10 years
Output Explanation:
After clicking the “Calculate” button, the calculator provides the following results:
- Net Rental Income: This is the net income you’d earn from renting the property, taking into account property management fees and annual maintenance reserves.
- Net Cash Flow: This represents the net cash flow you’d have after paying the mortgage.
- Property Appreciation: The estimated value of the property after the specified number of years, taking into account the expected appreciation rate.
- Capital Gains Tax: The amount of tax you’d owe on the capital gains from selling the property.
- Net Profit from Renting: This is the total profit you’d make if you rented the property, considering rental income, property appreciation, and tax implications.
- Immediate Sale Income: The income you’d receive if you sold the property immediately, after paying the capital gains tax.
- Recommendation: This provides a recommendation based on the calculations. If “Net Profit from Renting” is higher, it recommends renting as more profitable; otherwise, it recommends selling.
In our example, the calculator would determine whether it’s more profitable to rent or sell the property after 10 years, taking into account all the financial factors provided. The recommendation will be based on the calculated values.