How to read this result
In the default example, net sale proceeds now is $160,000.00. The hold total is undiscounted and excludes taxes, changing rents, reinvestment and uncertainty. It is not directly equivalent to cash available today.
Change one assumption at a time to see how it affects the scenario. Compare periods and cost definitions consistently. Negative results show a modeled shortfall; an unavailable ratio needs a valid denominator.
Formula and methodology
Compare net sale proceeds today with an undiscounted hold scenario. The latter adds rental cash flow over the horizon to projected future net sale proceeds, using the separately entered future payoff.
Enter percentages as whole numbers: 5 means 5%. When used as a factor, the calculation divides a percentage by 100. Percentage outputs multiply the final ratio by 100. Calculations retain precision internally; displayed amounts and rates are rounded to two decimals.
Variables and input definitions
- Current property value (USD)
- Current estimated property value. Minimum: 0.
- Selling cost rate (%)
- Commission + seller closing cost assumption. Minimum: 0. Maximum: 99.9.
- Current loan payoff (USD)
- User-entered payoff amount. Minimum: 0.
- Monthly rent (USD/month)
- Potential rent. Minimum: 0.
- Vacancy rate (%)
- Vacancy assumption. Minimum: 0. Maximum: 100.
- Annual operating expenses (USD/year)
- Rental operating expenses. Minimum: 0.
- Annual debt service (USD/year)
- User-entered debt service. Minimum: 0.
- Annual appreciation assumption (%/year)
- Scenario assumption. Minimum: -100.
- Holding period (years)
- Comparison horizon. Minimum: 1. Maximum: 50.
- Estimated future loan payoff (USD)
- Default conservatively equals current payoff; user may change. Minimum: 0.
Worked example
This example uses the exact prefilled inputs above. Reset defaults to restore this scenario after making changes.
| Item | Default scenario |
|---|---|
| Current property value | $500,000.00 |
| Selling cost rate | 8.00% |
| Current loan payoff | $300,000.00 |
| Monthly rent | $3,500.00 |
| Vacancy rate | 5.00% |
| Annual operating expenses | $14,000.00 |
| Annual debt service | $24,000.00 |
| Annual appreciation assumption | 3.00% |
| Holding period | 5 |
| Estimated future loan payoff | $300,000.00 |
| Item | Default scenario |
|---|---|
| Net sale proceeds now | $160,000.00 |
| Annual rental cash flow | $1,900.00 |
| Projected future value | $579,637.04 |
| Simplified hold scenario value | $242,766.07 |
Assumptions and limitations
Illustrative scenario comparison only; excludes income/capital-gains tax, time value of money unless an optional DCF mode is added, and changing debt balance unless entered by user.
The hold total is undiscounted and excludes taxes, changing rents, reinvestment and uncertainty. It is not directly equivalent to cash available today.
The tool uses values you supply. It does not retrieve market prices, verify leases or inspect a property. Results exclude items outside the listed inputs. Review local requirements and the relevant contract when a payment, fee or allocation depends on them.
Common mistakes
Cash today and an undiscounted total years later are not economically equivalent. The model excludes tax, reinvestment of sale proceeds and changes in annual rent or costs.
Sources and method references
These references provide context for the method and terminology. They do not endorse this tool or validate your property assumptions.
- IRS — Publication 527 (2025), Residential Rental PropertyRental income and expense concepts; operating/rental expense context.
Frequently asked questions
Does the hold result discount future cash?
No. It is a simplified total, not present value or an IRR calculation. Timing matters when comparing it with sale proceeds today.
Does the future loan balance amortize automatically?
No. You supply the estimated future payoff. No mortgage schedule is generated.