I created an application that allows you to calculate and compare the future estate value given two scenarios:
- Sell a house and reinvest the proceeds at a fixed percentage for specified number of years and re-investing earned interest
- Keep the house, and invest the cash flow from rent minus expenses
The code accounts for capital gains taxes paid annually, income tax from rent paid quarterly, property tax paid annually, and management fees paid monthly. It also deducts the property taxes and management fees from the amount used to calculate income tax.
The application is provided as an attachment to this post and was written in .NET 2.0 C#.
Important Disclaimer: I created this application in the matter of couple of hours, so it may have some bugs. If you find any, feel free to report them via feedback entry.
1. Fill out the left column and press ‘Calculate Future Investment Value’ button. This is your ‘sell the house’ scenario.
2. Fill out the right hand column (this is your ‘keep the house’ scenario) and modify the left hand column as needed. Note: if you have a mortgage, subtract it from the monthly rent amount. Click on ‘Calculate Reinvested Rent + House Sale’ button:
Have fun! But even more importantly, make smart financial decisions J