Calculator · Five years, two paths
Rent it out or sell it? Run the five years.
Keeping the house as a rental can work. In Texas, the property-tax bill decides it more often than the rent does. Put in your numbers and compare five years of renting with selling now and investing what you'd walk away with.
Being a landlord is passive income right up until the water heater has an opinion.
Example inputs. Vacancy, management, the tax rate, maintenance, the reserve, growth and what the money earns start at example assumptions — J.D. sets these.
Your numbers
Five years from now
Keep it and rent it
$176,087
Sell now and invest at 5%
$150,474
Over five years, keeping it comes out ahead by $25,613.
The line that changes minds in Texas
24.9%
Property taxes take 24.9% of the rent — $5,985 a year.
Year one
- NOI
- $8,320
- Cap rate
- 2.92%
- Cash flow
- −$3,680−$307 a month
- Cash-on-cash
- −3.1%
- Year one, you'd put in $307 a month to keep it.
- Rent, 12 months
- $24,000
- Vacancy
- −$1,440
- Management
- −$1,805
- Property taxes
- −$5,985
- Insurance
- −$2,400
- Maintenance
- −$2,850
- Big-ticket reserve
- −$1,200
- Net operating income (NOI)
- $8,320
- Mortgage payments
- −$12,000
- Cash flow
- −$3,680
Five years from now
Keep it and rent it
- Equity today
- $135,000
- Value growth, to $330,393
- +$45,393
- Loan paydown
- +$33,149
- Five years of cash flow, with interest
- −$17,631
- Selling costs in year five
- −$19,824
- You'd have
- $176,087
Sell now and invest at 5%
- Sale price today
- $285,000
- Selling costs
- −$17,100
- Loan payoff
- −$150,000
- You'd walk away with
- $117,900
- Five years at 5%
- +$32,574
- You'd have
- $150,474
How we figured this
- NOI = rent collected (after vacancy) − management − property taxes − insurance − maintenance − big-ticket reserve − HOA and other. Cap rate = NOI ÷ value. Cash flow = NOI − mortgage payments.
- Cash-on-cash = year-one cash flow ÷ the cash you'd walk away with if you sold today. That's the money the rental keeps tied up, so it's the fair thing to measure against.
- Keep and rent: the house grows at the growth rate, and so do the rent and every cost. Mortgage payments follow your rate and balance month by month. Each year's cash flow — or shortfall — earns the same rate as the sale money until year five. Then we subtract selling costs and the loan balance, as if you sold.
- Sell now: sale price − selling costs − loan payoff, invested at your rate, compounded yearly for five years.
- Example assumptions — J.D. sets these: vacancy 6%, management 8%, taxes 2.1% of value, maintenance 1% of value, reserve 5% of rent, growth 3%, sale money earns 5%. Selling costs use the same numbers as our offer sheet — 2.5% listing fee, 2.5% buyer-agent concession, $1,200 escrow — plus the owner's title policy from the Texas Department of Insurance schedule effective March 1, 2026.
- Not counted: income taxes, depreciation and your time. If it's been your home, a sale can be tax-free on up to $250,000 of gain ($500,000 married filing jointly) when you owned and lived in it 2 of the last 5 years (IRS Publication 523). Rent it out for more than 3 years and that window closes. Ask a CPA before you decide.
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Sources
- Texas Department of Insurance — title insurance basic premium rates, effective March 1, 2026
- IRS Publication 523 — Selling Your Home
Rates and rules checked October 5, 2026.