Should I quit renting and buy a home?

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u/deva · Joined Sep 2024

Renting and buying lead to different financial outcomes. Beyond lifestyle, find out which option can make you 'richer' and by how much with this quick guide.

Last update Oct 2024
  • Scenario 1: Keep Renting & Invest Savings
  • Scenario 2: Buy the Home and Quit Renting
  • Which One Is Higher (%)

This chart compares your 'Net Worth' if you liquidate your assets, including selling your home in Scenario 2. Note that in Scenario 1, your Net Worth may decline after mortgage payoff due to continued rent without forced savings.

# Years from Now

Try your numbers:

Enter the market rent for the home you're interested in.

à =

The down payment you plan to put into buying a home.

B =

Enter the best mortgage rate you can get from the bank.

C =

One-time cost when buying a home.

D =

Municipal tax, school tax, etc.

E =

If it's a condo, it's usually the Condo Fee. If it's a house, then try to envision the ongoing costs... repairs etc...

F =

Homes get more expensive every year... Look up some news, and estimate how much the home could appreciate, on average.

G =
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  • Amount
    Any single amount ($).
  • Cash Flow
    Rent, insurance premium, salary, ...
  • Current Asset
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  • Installment Loan
    Mortgage, car loan, ...
  • Percentage
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  • Years / Months
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  • Retirement Age (requires Age)
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Time Value Assumptions

Heads Up!

If you're using Cost Basis (cb) for calculating capital gains:

Please be aware that very few countries currently use inflation-indexed cost basis. Double-check your local tax rules before publishing.

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How is Cash Value calculated?

When you keep renting, you aren't spending as much as a homeowner (initially). To make a fair comparison, don't spend the money on a Tesla, but invest, invest! Invest ALL your savings from NOT buying the home.

Decisions / Expectations

(Expressions are evaluated at Year 0 only.)

H̃ =
Ĩ =
Now
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Follow Inflation
J̃ =
Now
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Follow Inflation

Calculations

(Expressions are evaluated at every year.)

K̃ =
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  • Buy Asset
    Buy an asset growing at its own rate.
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  • Invest
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  • Expect Monthly Cash Flow
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  • Define Variable (Numerical)
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Add Intermediate Calculation
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