Current Real Estate Market
Massachusetts
In 2024, the median sale price for single-family homes reached $615,000, reflecting a 7.9% increase over the previous year. In Greater Boston, prices have surpassed $1 million for the first time ever, with homes selling in just 9 days, and over 50% above listing price in many cases.
Renting, meanwhile, is soaring. The average rent is $2,557/month, and in Boston, $4,500/month is common for 3-bedroom single-family homes.
Rhode Island
The 2024 median sale price reached $475,000–$512,750, marking an impressive 11.8% year-over-year increase. Providence rents average $2,092/month for a 1-bedroom, while many suburban homes lease for over $2,300/month.
25% of sales in Rhode Island went to out-of-state buyers in 2024, pushing prices even higher.
Key Factors to Decide: Should I Rent Out My House or Sell It?
| Factor | Sell | Rent |
|---|---|---|
| Liquidity | Receive all capital in cash | Monthly income, capital remains tied up |
| Capital Gains | Up to $250,000 or $500,000 excludable (IRS) | Recapture of depreciation may apply |
| Costs | Agent commissions, pre-sale repairs, closing | Repairs, taxes, insurance, vacancies, management fees |
| Appreciation | No further gains after selling | Benefit from annual price growth (2–4%) |
| Responsibility | None | Must deal with tenants or hire a property manager |
| Future Use | Not planning to return | Plan to live there again later |
Ideal Scenarios
Selling is better if:
- You need liquidity now to buy a new property or pay debts.
- You’re unwilling to manage tenants or deal with maintenance.
- You’re in a hot market like Boston or Providence.
- You qualify for the IRS capital gains tax exclusion.
Renting works well if:
- Rental income comfortably covers expenses and leaves a profit.
- Your mortgage rate is low and worth preserving.
- You’re in a high-demand area or plan to return within 2–5 years.
- You’re building long-term wealth and have a stable financial position.
Comparative Example (5-Year Horizon)
Massachusetts Property
- Value: $600,000
- Rent: $3,000/month
- Annual net income (after 30% expenses): ~$25,200
- Appreciation: 3% annually
- Total rental income: $126,000
- Equity increase: ~$95,000
- Total projected wealth: $221,000 (before taxes)
Rhode Island Property
- Value: $475,000
- Rent: $1,960/month
- Appreciation (2024): 11–12%
- Lower cash flow, but potentially higher long-term gains
Immediate sale of MA property nets ~ $582,000, while renting and selling later brings ~$221,000 in pre-tax wealth over 5 years.
Should I Sell My House or Rent It Out Calculator
Use tools like:
- NARPM Rent vs Sell Calculator
- MassLandlords Excel Rent vs Buy Calculator
- Zillow Rent-vs-Buy Calculator
- Calculator.net rental property tool
Inputs needed:
- Home value, cost basis, and improvement history
- Monthly rent and annual expenses
- Appreciation rate
- Your tax bracket and desired comparison period (5 or 10 years)
6. Profitability Metrics – Cap Rates and Cash Flow
City / Type | Typical Cap Rate |
Providence (RI), Class A–C | 4.84%–6.71% |
Boston (multifamily, Core) | 4.25%–4.50% |
Boston (B–C Class) | 5.5%–6.5% |
Springfield / Worcester (MA) | 8%–9% |
Formula:
Cap Rate = Net Operating Income / Current Property Value
The “1% Rule” suggests rent should equal at least 1% of the property’s price—often difficult in MA or RI.
Tax Implications in Both States
Selling (IRS Section 121):
- Up to $250,000 (single) or $500,000 (married) gain exclusion
- Must have lived in the home 2 of the last 5 years
- Can only claim once every 2 years
Renting Then Selling:
- Depreciation recapture taxed at 25–30%
- IRS partial exclusion if rented >2 years
- Potential 1031 exchange to defer taxes if reinvesting in rental property
Local Laws and Regulations
Massachusetts:
- No statewide rent control
- Landlords can raise rent freely with proper notice
- Rent stabilization bills under review (H.1507 / S.1447)
Rhode Island:
- No statewide rent control
- Providence considering caps up to 4% annually
- 2025: transparency rules for application fees and protections for tenants over 55
5-Year Numeric Models
| Location | Property Value | Rent | Net Income (5 yr) | Appreciation | Total Wealth | Sell Now |
|---|---|---|---|---|---|---|
| Rhode Island | $500,000 | $2,200 | $85,800 | $108,000 | $193,800 | $455,000 |
| Massachusetts | $660,000 | $3,000 | $117,000 | $69,000 | $186,000 | $600,000 |
Despite the potential for rental income, selling offers higher immediate wealth in most short-term scenarios—especially when demand is high and prices are peaking.
Common Mistakes or Myths
- “Rent always covers the mortgage” – not true without detailed cost analysis.
- “Capital gain is always tax-free” – renting too long may reduce or eliminate IRS exclusions.
- “Selling in a hot market is always best” – not if long-term appreciation and income outperform quick cash.
Practical Tips
- Use real numbers from your property and run multiple scenarios.
- Talk to a local real estate agent in MA/RI.
- Consult a CPA about depreciation, capital gains, and exclusions.
- Budget a repair fund of 5–10% of annual rental income.
- Consider using a property manager if you plan to rent.
Conclusion
There is no one-size-fits-all answer to whether you should sell or rent out your house in Massachusetts or Rhode Island. If you need liquidity, want peace of mind, or see record-high prices, selling may be the most rational choice.
But if you prefer building long-term wealth, enjoy cash flow, and can manage (or delegate) property operations, renting can be a highly rewarding path.
Use calculators, consult experts, and base your decision on your specific goals, risk tolerance, and tax situation.