Rent vs Buy
Compare the true costs of renting versus buying a home over your planned time horizon.
On invested down payment
Investment Scenario
If you rent, your down payment ($80,000.00) could be invested instead. At 7% return over 10 years, it could grow to approximately $417,759.29.
Renting is Better
Net worth difference: $187,046.36
Break-Even Point
Year 1
Buying becomes advantageous after 1 year
Total Cost
$475,000.35
Avg: $3,958.34/month
Total Cost
$223,106.48
Avg: $1,859.22/month
$230,712.93
Home equity minus selling costs
$417,759.29
Investment portfolio value
Net Worth Difference
$-187,046.36
Renting + investing builds more wealth
| Year | Buy Net | Rent Net | Winner |
|---|---|---|---|
| 1 | $353,858.98 | $116,384.08 | BUY |
| 2 | $344,317.62 | $142,280.68 | BUY |
| 3 | $335,403.85 | $169,791.64 | BUY |
| 4 | $327,147.16 | $199,025.92 | BUY |
| 5 | $319,578.69 | $230,100.14 | BUY |
| 6 | $312,731.33 | $263,139.11 | BUY |
| 7 | $306,639.85 | $298,276.42 | BUY |
| 8 | $301,341.03 | $335,655.04 | RENT |
| 9 | $296,873.74 | $375,428.04 | RENT |
| 10 | $293,279.13 | $417,759.29 | RENT |
Understanding the Rent vs Buy Decision
Key Factors for Buying
- Building equity over time
- Protection from rent increases
- Potential appreciation
- Mortgage interest deduction
Key Factors for Renting
- Flexibility to relocate
- No maintenance costs
- Can invest the difference
- Lower upfront costs
Time Horizon Matters
Transaction costs (closing costs, selling fees) mean buying usually only makes sense if you plan to stay 5+ years. The longer you stay, the more buying typically wins.
Consider Non-Financial Factors
Beyond numbers: stability, customization freedom, school districts, lifestyle preferences, and career flexibility all matter in this decision.