BiggerPockets Money Podcast

Episode: Should You Keep or Sell Your House? (Best Choice for FIRE)

Hosts: Mindy Jensen & Scott Trench
Guest: Sean
Date: October 3, 2025

Overview

This episode dives deep into one of the most common and challenging questions for aspiring Financial Independence, Retire Early (FIRE) enthusiasts: Should you keep your current house as a rental or sell it when you move?
Financial experts Mindy Jensen and Scott Trench tackle this dilemma using guest Sean’s real-world numbers, exploring the impacts on cash flow, net worth, and lifestyle. By walking through Scott’s detailed spreadsheet analysis and considering personal preferences, risk, and market conditions, they illuminate a tough but universal decision-making process.

Key Discussion Points & Insights

1. The Decision Framework (00:00–05:20)

• Scenario: Sean and his family plan to move within 2–3 years and are considering keeping their current home as a rental or selling it to fund their next purchase.
• Factors at Play: Market conditions, available cash, capex (upcoming repairs), risk tolerance, and life-stage plans.
• Underlying Principle: The choice isn't just about numbers—it's also about "pain-in-the-bottom" (PITA) factors and long-term comfort.

Scott:

“This seemingly simple decision actually is embedded in a very difficult and detailed financial analysis that will require great precision and wild big assumptions... There’s big guesses we have to make in addition to getting all of the details right.” (02:59)

2. Sean’s Financial Picture (01:36–06:27)

• Net Worth: $240,000; Cash: $20,000; 401(k): $76,000
• Home Value: $320,000; Mortgage: $175,000 at 3.75%
• Income: $138,000/year; Monthly Expenses: ~$11,000
• Debts: Credit card ($5.5K, paid off monthly), auto loan (8%), student loan (3%)
• No rentals, pensions, or life insurance currently

Mindy:

“How are you going to put money down on a new property if you’ve got all this money tied up in your equity?” (05:38)
Sean:
“It would just push our timeline back... more aggressive saving... relatively light cash position because we have the equity.” (05:54)

3. Spreadsheet Modeling & Assumptions (09:26–22:39)

Key Modeling Inputs:

• Property Value: $320,000; original purchase was $205,000 (refinanced)
• Estimated Sale Expenses: Sean can use his agent license—estimates 3% commission + 1.2% closing costs
• Net Proceeds if Sold: ~$127,000 (no capital gains taxes due to Section 121 exclusion)
• Alternative Investments: Assumes 10% stock market return, 6.16% new mortgage rate
• Future CapEx: $20,000 in repairs over 5 years

Scott:

“You’ll be left with $127,000, of which $97,000 are a capital gain... You have to invest based on what you believe for these things.” (13:14, 14:31)

Mindy:

“Your mortgage will be about $500 more if you sell ... If you don’t sell, it’ll be eleven hundred more... That could be a big pill to swallow.” (21:21)

Rental Scenario:

• Potential Rent: $2,400–$2,500/mo
• Vacancy Assumption: Initially 10% (later refined to 5%)
• Monthly CapEx Reserves: $400/month (~$20,000 over 4 years)
• Result: Marginal positive cash flow (~$47/month before miscellaneous risks)

Mindy:

“The only capex that you can really count on is known. But I can guarantee you there’s going to be more than that... I like 8% vacancy because that’s a one month gap between tenants and planning for vacancy allows you to have this expectation.” (22:39)

4. Scenario Outputs & Key Results (27:09–36:29)

Two Main Comparative Metrics:

• Cash Flow Flexibility: Selling and paying down the new loan gives much more cash flow (~$6,000/year better for several years).
• Net Worth Growth: Keeping the property as a DIY landlord edges slightly ahead for several years, but the difference diminishes over time.
• Stock Market Alternative: Selling and investing (instead of paying the new mortgage) could produce higher long-term net worth, but with less immediate flexibility.

Scott:

“You’re going to have a lot less cash coming into your life every year if you don't sell the property and use the proceeds toward the new mortgage... The other component is what’s going to happen to your net worth.” (27:09)

“If it’s close, take the proceeds and pay off the new mortgage... you’ll have all this flexibility in the meantime that I think is so powerful for a lot of folks.” (39:07)

Market & Lifestyle Considerations:

• The soft benefits of moving (better schools, newer neighborhood) “aren’t reflected” in the spreadsheet but can matter more than minor cash differences (35:15–36:29).
• If the housing market softens (lower sale price), keeping the property becomes a somewhat stronger case due to the low mortgage rate leverage.

5. Recommendations & Takeaways (39:02–42:37)

• Both Scott & Mindy recommend: Sell and use proceeds for the new house.
  Main reasoning: marginal positive cash flow on the rental is too easily wiped out by unexpected repairs and vacancy, and improved cash flow via lower mortgage payments provides greater flexibility and security.
• Sean agrees: “You’re one big situation away from things sort of spiraling downward.” (40:29)

Scott:

“If it’s close, then go for the flexibility and lower risk.” (39:07, paraphrased)

Memorable Quotes

• Scott Trench:

  “This is a real killer to switch to. But life happens, life goes on. We must move… And this decision now becomes very difficult because the property is worth more on average to the current owner than it is to the new buyer because the mortgage is so low.” (38:02)

• Mindy Jensen:

  “Sell, even with this $47 in positive cash flow. That would be my recommendation.” (39:45)

• Sean:

  “Yeah, it’s… You're one big situation away from things sort of spiraling downward.” (40:29)
  “Hopefully I could be back in a couple years and we'll have a completely different set of questions to go over.” (41:19)

Important Timestamps & Segments

• 0:00–05:20: Laying out Sean’s situation and high-level dilemma.
• 09:26–18:13: Deep dive into mortgage details, capex planning, and landlord scenarios.
• 20:41–22:39: Conservative rental analysis and discussion of positive/negative cash flow.
• 27:09–36:29: Spreadsheet results, visualizing long-term net worth vs. cashflow, and market “trap.”
• 39:02–41:19: Final recommendations and consensus.
• 46:30–47:03: Meta-analysis and advice for listeners to run their own numbers.

Final Thoughts & Listener Guidance

• Run YOUR numbers: Every scenario is unique; use realistic inputs for big or small market changes.
• Build conservative models: Underestimate cash flow, overestimate vacancies and repairs.
• If the numbers are close, prioritize flexibility.
• Use tools/spreadsheets: Access Scott’s spreadsheet at biggerpockets.com/sellorkeep.

Scott:

“For many people this decision isn’t close. And the best way to determine that is to run the numbers.” (46:30)