Should You Rent or Sell Your Home? The Surprising Math That Could Change Your Mind

Recently, yet another homeowner was convinced that selling was their best option in a strong buyer's market surrounded by new construction. Despite presenting them with numbers and scenarios, their mind was made up. So, I thought, when will this logic get through to people?

Maybe this breakdown won’t convince everyone, but it’s worth a try.

Let’s explore scenarios across multiple Arizona cities to illustrate the long-term impact of keeping a property as a rental versus selling it. I'll highlight the income potential, tax benefits, mortgage payoff, and property appreciation over 1, 5, and 10 years. I'll also discuss what selling and reinvesting the proceeds could look like and why Arizona’s rental laws make holding onto your home an appealing option for many homeowners.

Scenario 1: Queen Creek, AZ

Home Value: $450,000
Remaining Mortgage: $250,000
Rental Income: $2,500/month
Market Conditions: Strong buyer’s market with abundant new construction.

Renting It Out

• Year 1:

  • Total rental income: $30,000

  • Remaining mortgage: $245,000

  • Estimated home value: $460,000

  • Tax benefits: Depreciation deduction of ~$15,000 annually (not included into equations, added bonus).

• Year 5:

  • Total rental income: $150,000

  • Remaining mortgage: $200,000

  • Estimated home value: $500,000

  • Tax benefits: Depreciation deduction of ~$15,000 annually.

• Year 10:

  • Total rental income: $300,000

  • Remaining mortgage: $150,000

  • Estimated home value: $575,000

Selling It

• Proceeds after closing costs: ~$180,000

• Investment Options:

  • $180,000 invested at a 6% return = ~$241,000 in 5 years and ~$322,000 in 10 years.

  • $180,000 invested at a 9% return = ~$277,000 in 5 years and ~$426,000 in 10 years (higher risk).

Scenario 2: Goodyear, AZ

Home Value: $500,000
Remaining Mortgage: $300,000
Rental Income: $2,800/month

Renting It Out

• Year 1:

  • Total rental income: $33,600

  • Remaining mortgage: $295,000

  • Estimated home value: $510,000

  • Tax benefits: Depreciation deduction of ~$17,000 annually (not included into equations, added bonus).

• Year 5:

  • Total rental income: $168,000

  • Remaining mortgage: $250,000

  • Estimated home value: $525,000

• Year 10:

  • Total rental income: $336,000

  • Remaining mortgage: $200,000

  • Estimated home value: $600,000

Selling It

• Proceeds after closing costs: ~$190,000

• Investment Options:

  • $190,000 invested at a 6% return = ~$255,000 in 5 years and ~$340,000 in 10 years.

  • $190,000 invested at a 9% return = ~$294,000 in 5 years and ~$450,000 in 10 years (higher risk).

Scenario 3: Scottsdale, AZ

Home Value: $850,000
Remaining Mortgage: $400,000
Rental Income: $4,000/month

Renting It Out

• Year 1:

  • Total rental income: $48,000

  • Remaining mortgage: $390,000

  • Estimated home value: $870,000

  • Tax benefits: Depreciation deduction of ~$25,000 annually (not included into equations, added bonus).

• Year 5:

  • Total rental income: $240,000

  • Remaining mortgage: $350,000

  • Estimated home value: $950,000

• Year 10:

  • Total rental income: $480,000

  • Remaining mortgage: $250,000

  • Estimated home value: $1,100,000

Selling It

• Proceeds after closing costs: ~$400,000

• Investment Options:

  • $400,000 invested at a 6% return = ~$537,000 in 5 years and ~$680,000 in 10 years.

  • $400,000 invested at a 9% return = ~$617,000 in 5 years and ~$900,000 in 10 years (higher risk).

Why This Works in Arizona

You can’t argue with the math. Rentals carry some risks, of course, and they aren’t for everyone. But the difference in long-term financial outcomes is often staggering, as the numbers clearly show.

Arizona’s rental laws heavily favor homeowners! With fewer restrictions and landlord-friendly policies, managing rental properties here is more straightforward than in many other states. High demand for rental homes—especially in sought-after areas like Scottsdale, Phoenix, and Queen Creek—ensures strong income potential and stable occupancy rates.

That said, renting out your home isn’t always the best choice for every homeowner. If your property was recently purchased and the monthly payment exceeds the rent you could charge, or if you plan to leverage the primary residence tax exemption and have a clear strategy for the proceeds, selling might make more sense. Additionally, if you’re not comfortable with the risks involved in rentals or lack the time to manage them effectively, selling could better align with your financial goals.

When Selling Makes Sense

Selling your home can be the right decision under certain circumstances, but it’s essential to have a plan for how you’ll use the proceeds. Simply sitting on the money may cause you to miss out on the long-term appreciation you could gain by holding onto the property. Selling may be a better option if:

• You need the proceeds for a significant investment or to pay off debt.
• The property is in an area with declining rental demand.
• The home requires substantial repairs or upgrades to be a viable rental.

The Bottom Line

In Arizona, renting out your home is often a no-brainer. Between rental income, tax advantages, and long-term appreciation, the financial benefits are hard to ignore. While selling may seem like the simpler route, the math often tells a different story, one where holding onto your property sets you up for greater financial freedom.

Before making a decision, let’s run the numbers together. You might be surprised at just how much you could gain by keeping your home and renting it out.