For years, homeowners have been told to focus on one number:
“How much is my house worth?”
But that number alone won’t tell you whether you should sell or rent.
Because just like retirement isn’t funded by net worth…
Real estate decisions aren’t funded by equity.
They’re funded by cash flow, risk tolerance, and flexibility. Recently I read an article that popped into my feed on Medium by CW Fong. It was titled The 3-Number Retirement Test That Matters More Than Your Net Worth, and it had me thinking. What would a spreadsheet for real estate look like that helped make the decision to hold or sell easier?
In Phoenix, I’ve seen:
• Owners sitting on $400,000 in equity and stressed out
• Owners with modest equity building quiet, predictable wealth
• Sellers who timed it perfectly
• Sellers who regretted giving up a 3% rate
The difference wasn’t luck.
They were measuring the right numbers.
The 3-Number Phoenix Sell-or-Rent Test
Number 1: True Monthly Carry Cost
Not your mortgage payment.
Your real monthly cost:
• Principal & Interest
• Taxes
• Insurance
• HOA
• Maintenance reserve (at least 5–10%)
• Vacancy reserve
• Property management
Most owners underestimate this by hundreds per month.
If you can’t confidently write this number down, renting will always feel riskier than it needs to.
Number 2: Realistic Monthly Rent
Not Zillow rent.
Not what your neighbor thinks they’ll get.
Actual market rent in today’s Phoenix rental environment.
Now subtract:
• Management
• Maintenance
• Vacancy
• Turnover costs
This gives you net rent, not fantasy rent.
Number 3: Equity Opportunity Score
This is where most people get stuck.
Ask:
If I sold today, how much net equity would I walk away with after commissions and closing costs?
Now ask the harder question:
What would that equity do for me?
• Pay off higher-interest debt?
• Fund a larger down payment?
• Reduce stress?
• Sit in the market?
• Buy multiple rental properties?
Equity sitting in a house is not a strategy.
It’s either working… or it’s idle.
How the Test Works
Example 1:
Carry Cost: $2,600
Net Rent: $2,750
Equity if Sold: $220,000
That property is paying you to hold it.
Renting is rational.
Example 2:
Carry Cost: $3,400
Net Rent: $2,700
Equity if Sold: $350,000
That property is costing you $700/month to keep.
That’s not an investment.
That’s an emotional attachment.
Sometimes selling is the more sophisticated move.
The Emotional Layer
Most homeowners aren’t confused about math.
They’re afraid of regret.
• “What if prices go up?”
• “What if rates drop?”
• “What if rents rise?”
• “What if I can’t buy back in?”
Hope is not a strategy.
Numbers create clarity.
Clarity reduces regret.