Inspired by this question on Reddit:
Is your home equity working hard enough? Or is it "lazy capital" hiding behind a cheap mortgage. This calculator compares the true Return on Equity (ROE) of holding your rental against the potential returns of liquidating and diversifying. It specifically addresses the "cheap debt trap" and the opportunity cost of dead equity.
🏠 The Golden Handcuffs (Current Rental)
Your 2.5% mortgage is free money, but only on the debt portion. The rest of your equity is likely earning 0% inside the walls. Let's calculate the actual return on that trapped capital.
💸 The Exit (Liquidation Costs)
Selling isn't free. To compare apples to apples, we must calculate the Net Investable Capital. I.e., the actual cash hitting your brokerage account after the government and agents take their cut.
📈 The Alternative (Market)
If you liquidate, you eliminate the concentration risk of a single zip code but take on market volatility. A diversified portfolio has historically returned 7-10%, though current valuations (P/E ~30) might suggest lower future returns. Both stocks and real estate in VHCOL areas seem to be inflating quickly due to dollar devaluation, but that may diverge.
🏁 The Verdict
Current Rental ROE
Cash if Sold Today
Market Advantage (20 Years)
Financial Winner
Keep Rental
Calculator updated by mahmoud (v26.2.0) · View history
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