Renting a home you might otherwise sell creates a landlord break-even problem: rent must cover mortgage, taxes, insurance, maintenance, vacancy, and the opportunity cost of equity. This article shows how to build that stack and when selling wins instead.
Build the monthly cost stack
Add principal and interest, taxes, insurance, HOA, a maintenance reserve, and a vacancy allowance. Compare that total with realistic rent. If rent only covers the mortgage while ignoring vacancies and repairs, the “break-even” is fake.
Selling side of the ledger
Estimate sale price minus commissions, closing costs, and loan payoff. That net cash could pay down other debt or be invested. Ignore equity opportunity cost and rentals look better than they are.
Break-even questions to answer explicitly
- What rent is supported by comparable listings, not wishful thinking?
- How many months vacant do you expect each year?
- What CapEx year is coming (roof, HVAC, appliances)?
- What after-tax return could net sale proceeds earn elsewhere?
Worked break-even illustration
Monthly PITI $2,100 + $150 maintenance reserve + $100 HOA + 5% vacancy on $2,400 rent ($120) ≈ $2,470 carrying stack against $2,400 rent—cash-flow negative before capital projects. Selling might net $120,000 after costs; if that capital avoids 7% debt or earns a conservative return, renting has a higher bar to clear.
Model scenarios in the rent vs sell calculator and cross-check sale tax issues with the capital gains home sale calculator.
Opportunity cost of locked equity
Equity trapped in a rental is capital that could sit in another investment or pay down higher-interest debt. Even when monthly rent covers cash costs, opportunity cost can tip the math toward selling. Include expected CapEx years so the first roof bill does not surprise a “break-even” plan.
Tax and management friction
Landlord tax rules, depreciation recapture risk on later sale, and management fees change net yield. Self-managing saves fees but costs time. If you will not answer tenant issues, subtract professional management before you call it break-even.
One-year landlord stress test
Build a twelve-month grid: rent in, vacancy months, repairs, insurance deductible events, and one CapEx reserve contribution. If the year only works with zero repairs and zero vacancy, the break-even is fragile.
Repeat the grid with rent 5% lower and expenses 10% higher. Deals that fail the stress test are sell candidates unless you have a strategic reason to hold.
Put both base and stress cases into the rent vs sell calculator so the decision is documented, not vibes-based.
Frequently Asked Questions
Is break-even just rent = mortgage?
No. Include taxes, insurance, maintenance, vacancy, and CapEx.
What if rent covers everything cash-wise?
Still check equity opportunity cost and your willingness to be a landlord.
Which calculator should I use?
Start with the Rent vs Sell Calculator.
Decision rule
Rent when realistic rent clears a fully loaded cost stack and you accept landlord work. Sell when cash flow is thin, CapEx is near, or equity is better used elsewhere.