ð Should I sell my rental property to invest in stocks?
Compare the returns of keeping a low-yield rental property versus liquidating equity to invest in the stock market or high-yield accounts.
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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.
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.
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.
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.
ð The Verdict
Current Rental ROE
Cash if Sold Today
Market Advantage (20 Years)
Financial Winner
Keep Rental
Last updated by mahmoud (v26.2.0)
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Disclaimer: This content and any calculations provided are for informational purposes only. The views, calculations, and methodologies expressed are those of the author and do not necessarily reflect those of this platform. Not financial advice. Users are solely responsible for any decisions made based on this information.
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