# Renting vs Buying Buying Calculator

This was inspired by a blog entry I made about home buying. My original goal was to work through a set of calculations about the merits of renting vs buying. After several discussions with various people about the topic, I decided I should automate the calculations.

As far as I know, all of the calculations here are correct, but I can't guarantee anything. Get some proper advice from a financial planner (while keeping in mind any economic factors that might influence their advice).

One thing that is clear: I haven't done inflation right. I was trying to keep everything in current-dollars (i.e. ignore inflation). But, the mortgage payment (at least) is inherently affected by inflation (it decreases in inflation-adjusted value since the dollar amount stays the same).

Home Buying

First step: consider the details of buying a home. These are the basic values that any mortgage calculator will come up with. You can also estimate other monthly expenses here.

Total Home Cost
\$
Down Payment
\$
Mortgage Amount
\$
Term
years
Interest Rate
%
Monthly Mortgage Payment
\$
Other Monthly Costs
\$ per month (Strata fees, basic upkeep, etc. Subtract any rental income.)
Homeowners Tax
\$ per year
Total Monthly Payments
\$
Home Appreciation

Of course, you would expect an investment in real estate to appreciate over time. Investing in only a home is inherently poorly-diversified (and thus very susceptible to market fluctuations: both up and down). Over the long term, it is probably not an excellent investment.

When estimating appreciation, do not include increases in value due to improvements in the property, unless the cost of the improvements are taken into account in “Other Monthly Costs” above.

Total Home Current Value
\$
Annual Appreciation
% (after inflation)
Term
years
Final Value
\$
Monthly Rental Activity

Alternately, you could rent a home, and invest the difference between the rent and total monthly payment. Below, we will calculate the outcome of this potential investment.

Total Monthly Payment
\$
Monthly Rent
\$ (including utilities)
Monthly Investment
\$
Rental-Remainder Investment

So, if we take the money we have left over from not buying a home and invest it instead, what would happen?

Investment Opening Balance
\$
Monthly Investment
\$
Annual Appreciation
% (after inflation)
Term
years
Final Value
\$

## Summary

### Buying

Buy a house worth \$??? with a total monthly payment of \$???. You expect it to be worth \$??? after ??? years.

### Renting

Rent a place for \$??? and invest \$??? per month. You expect this to be worth \$??? after ??? years.

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