Rent vs buy calculator

{{whyLabel}}: You need a baseline of your current 'unrecoverable' costs to compare against homeownership.

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• Document your current net rent (cold rent).
• Add mandatory renter's insurance and non-recoverable utility service fees.
• Note your current monthly savings rate that could potentially go toward a mortgage.

{{doneWhenLabel}}: A spreadsheet or list exists showing the total monthly cost of your current living situation.

{{whyLabel}}: Knowing your 'cash on hand' determines your down payment and your ability to cover closing costs.

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• Sum up all liquid assets (savings, non-retirement brokerage accounts).
• Subtract an emergency fund (3-6 months of expenses) which must not be touched.
• Identify the remaining amount available for a down payment and transaction fees.

{{doneWhenLabel}}: You have a single 'Total Investment Capital' figure.

{{whyLabel}}: Transaction costs are 'sunk costs' that significantly delay the break-even point of buying.

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• Find the average price for a property meeting your needs in your specific zip code.
• Calculate local closing costs: typically 2-5% for taxes (Transfer Tax), 1-2% for notary/legal, and 0-3% for agents.
• Total these to find the 'Entry Cost' of buying.

{{doneWhenLabel}}: You have a realistic estimate of the total purchase price including all fees.

{{whyLabel}}: Buying usually only beats renting if you stay long enough to amortize the high entry and exit costs.

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• Determine how many years you realistically plan to live in the property (e.g., 7, 10, or 30 years).
• Use 7 years as a minimum benchmark for a 'Buy' scenario to be competitive.

{{doneWhenLabel}}: A specific number of years is chosen for the calculation.

{{whyLabel}}: These assumptions dictate the future value of the home versus the future cost of rent.

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• Use a conservative 2-3% for long-term annual property appreciation.
• Set rent inflation at 2.5-3% based on historical urban averages.
• Use 5-7% as the 'Opportunity Cost' (what your down payment would earn if invested in a diversified stock ETF).

{{doneWhenLabel}}: Three percentage values (Home growth, Rent growth, Investment return) are documented.

{{whyLabel}}: Owners face costs that renters don't, which are often underestimated.

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• Apply the '1% Rule': Budget 1% of the property value annually for maintenance.
• Add property taxes and non-transferable HOA fees (Hausgeld).
• Use the '5% Rule' (by Ben Felix) as a quick check: if Rent < 5% of the purchase price per year, renting is often better.

{{doneWhenLabel}}: An annual 'Cost of Ownership' (excluding mortgage) is calculated.

{{whyLabel}}: Interest is the largest unrecoverable cost of buying.

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• Check current 10-year or 20-year fixed mortgage rates from a major local lender or aggregator.
• Use your calculated down payment to determine your Loan-to-Value (LTV) ratio, as this affects the rate.

{{doneWhenLabel}}: You have a specific interest rate percentage (e.g., 3.8%).

{{whyLabel}}: This is the industry-standard tool for complex comparisons including tax implications and opportunity costs.

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• Input all gathered data: Home price, rent, stay duration, mortgage rate, and investment returns.
• Adjust the 'Advanced' settings for maintenance and tax rates as calculated in Phase 2.
• Look for the 'Break-even' rent price.

{{doneWhenLabel}}: You know the exact monthly rent amount above which buying becomes cheaper.

{{whyLabel}}: This is a quick 'sanity check' metric used by economists.

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• Formula: Purchase Price / (Annual Cold Rent).
• Interpret: 1-15 (Buy), 16-20 (Depends/Neutral), 21+ (Rent).
• Compare this result with your detailed calculator output.

{{doneWhenLabel}}: You have a single ratio number for your local area.

{{whyLabel}}: Financial plans rarely go exactly as expected.

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• Re-run the calculator with 0% property appreciation.
• Re-run it with a 2% higher interest rate (if you have a variable or short-term fix).
• Check if the decision to buy still holds up under these conditions.

{{doneWhenLabel}}: You know the 'safety margin' of your decision.

{{whyLabel}}: Real estate is a lifestyle choice, not just a spreadsheet entry.

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• Score 'Flexibility' (Rent) vs. 'Creative Control' (Buy).
• Consider the risk of 'forced moving' by a landlord vs. the risk of 'illiquidity' (difficulty selling quickly).
• Decide if the financial 'winner' aligns with your personal life goals for the next decade.

{{doneWhenLabel}}: A final decision is made based on both data and personal preference.