Understand the result
Compare net wealth, not just monthly housing cost
Buying converts some mortgage payments into home equity, but it also creates transaction costs and ongoing ownership expenses. Renting avoids the down payment and buying costs, leaving money available to invest.
The model puts both sides on a common net-wealth basis at each year: the homeowner is treated as if the home were sold and selling costs paid; the renter’s investment account includes avoided upfront costs and monthly cash-flow savings.
Important assumptions to change
- Years you expect to stay
- Home appreciation
- Investment return
- Maintenance and property-tax assumptions
- Rent growth
- Buying and selling transaction costs