For agents
Rent vs buy, with the parts showing
A client who says renting is cheaper is usually right about the monthly number and wrong about the decade. Show them both, with assumptions they choose, so the answer survives the drive home.
Net gain by buying
$401,767
Over 10 years, against renting the same home. Buying pulls ahead in year 5. Change anything below and both numbers move.
The purchase, and the rent it replaces
What renting the same house would cost today.
Held flat for the whole period — see the note under the table.
Commission and transfer costs, charged on the value at sale.
Your two estimates — adjustable
Both of these are guesses about the future and both are your client's, not a live feed and not a guaranteed forecast from this site. They move the answer a long way, which is exactly why they are editable and not fixed numbers.
Optional. Enter one and this shows what prices there actually did over the last 30 years.
An assumption — your client's, not a forecast and not a promise from this site. It drives what the home is worth at the end, and so the gain on selling it. A ZIP code above sets the starting point; change it to whatever you actually believe, including a negative number.
No ZIP code entered, so the assumption on the right is starting from this site's default rather than from local history.
What it means: the rent goes up by this percentage every year for the whole 10-year comparison — $5,000.00/mo today becomes $6,523.87/mo in year 10. Your estimate, adjustable, starting at 3%/yr.
The single biggest driver of this comparison. A short stay rarely favors buying.
After 10 years
Appreciation gain
$2,000,000 becomes $3,257,789 at 5.00%/yr.
$1,257,789
Amortization gain
Loan down from $1,600,000 to $1,384,869.
$215,131
Cash flow difference
$687,833 of rent against $1,576,096 of owning.
−$888,264
Less: purchase closing costs
Paid once, at the start.
−$20,000
Less: cost to sell
5.0% of $3,257,789 — charged on the grown value, not the price paid.
−$162,889
Net gain by buying
$401,767
Buying may also lower your taxable income if you itemize mortgage interest and property tax — that's not included in the number above. This isn't tax advice; talk to your tax preparer about your specific situation.
Owning, per month
$13,134.14
$11,050.80 principal & interest + $2,083.33 tax, insurance & maintenance. Loan $1,600,000 after $400,000 down.
Renting, per month
$5,000.00
Today. By year 10 it is $6,523.87/mo at 3.0%/yr — which is the point: one of these two numbers is fixed for thirty years and the other is not.
Net gain by buying, year by year
The line crosses zero in year 5. Before that, the costs of getting in and out are still bigger than everything owning has returned.
Tax, insurance and maintenance is held flat at 1.25% of the original price for the whole period. It does not escalate and there is no reassessment model, so the later years understate what owning costs — this comparison errs against buying, not for it. Appreciation and rent growth compound at the flat annual rates you set. Every figure is an illustration generated from the numbers above — not a quote, an approval, or an offer of credit.
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