Is it time to cash out or become a landlord?

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Should you sell your house or keep it as a rental?

We’ve been in a broken housing market for three to four years now. What do I mean by “broken”? Homeowners are stuck. The move-up buyer is gone and locked-in mortgage rates are holding people back from listing their homes—even when life events are changing their need.

It’s a big question I see a lot of folks struggling with right now:

If you are one of the lucky people who bought your home and secured a sub-3% fixed-rate mortgage, should you sell your current home and use the equity to buy the next one, or keep it as a rental?

If you are in this position, that doesn’t mean you’re trapped. It just means you’ve got a choice to make—and you need to run the numbers, not just follow a rule of thumb.This week, I spoke with Matt the Mortgage Guy about what you should consider if you are struggling to choose between selling your current home for the equity or keeping it as a rental property.

1. Don’t default to “keep it”—do the math.

Yes, that 2.75% mortgage is a beautiful thing. But if you’re holding onto the property just for that reason, without considering cash flow or goals, you might be making a mistake.

2. Ask: Does this property make sense as a rental?

A home that cash flows $200 a month after all expenses may not be worth keeping, especially if you’re sitting on $300K in equity. If you really want to get into the real estate investing game, could that cash buy you better-performing properties elsewhere?

3. Consider your life, not just your rate.

Got a third kid on the way? Blending families? Relocating for work? In those cases, holding onto your old house might not serve your bigger picture—even if the rate is “perfect.”

4. Use your equity strategically.

Selling a house you owe $185K on and walking away with $300K in equity could slash your new monthly mortgage by $2,000 or more. That might be the difference between stress and stability in your next chapter.

5. Consider your capital gains tax break.

If you lived in your home for 2 of the last 5 years, you can exclude up to $250K (single) or $500K (married) in capital gains. But here’s the catch: once you move out and start renting it, the clock starts ticking. If you wait too long to sell, you could lose the exclusion. So if selling is on your radar, don’t wait too long—timing matters.

6. Don’t assume your primary makes a good rental.

Some $900K homes rent for just $2,800/month. You could take the equity from one of those and buy two solid cash-flowing properties instead. Always evaluate opportunity cost.

7. At the end of the day, it’s personal.

There’s no blanket answer here. It comes down to your financial picture, your goals, and your next move. Work with someone who’ll help you see the full picture—not just the interest rate. If this is a question you’re wrestling with right now, don’t just sit on it. Build your spreadsheet. Run the numbers. Talk to someone who gets it.

The bottom line is that smart investors don’t let a low rate define their life. They let the numbers—and their goals—do the talking.

ResiClub chart of the week:

Last week, ResiClub’s Lance Lambert published an analysis, investigating how the share of U.S. active inventory listings that have had price cuts has fluctuated historically.

ResiClub: “Just because a home listing gets a price cut doesn’t necessarily indicate that the home actually sold for less than its comps. Some agents use pricing strategies that intentionally list too high to test the market or create negotiation room. After all, even during the Pandemic Housing Boom—when home prices were surging—18.7% of U.S. homes for sale in March 2021 still saw a price cut. That said, if the share of inventory receiving a price cut rises beyond typical seasonal patterns, it can suggest a market where homebuyers are gaining leverage. Conversely, if the share of inventory receiving a price cut falls beyond seasonality, it can indicate a market where home sellers are gaining leverage.”

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