Rent vs. Own Calculator
In the beginning… everyone starts out as a renter. Eventually, some will turn into “first-time” buyers. Some will continue on to become “move-up” buyers, then “investors” and then ultimately “empty-nesters” and so on and so forth.
It’s a reasonable question to always ask yourself, “Is it cheaper and better to rent or should I consider buying and owning a home?” Using this excel spreadsheet will help you determine at the baseline what you’re currently spending in rent.
If you were to consider the return on your investment (ROI) if there were interest or equity involved, this chart will help you determine the gain/loss of renting vs owning.
The rent you pay adds up to a sizable sum. For a clearer picture of how large that sum can be, consider the following:
First, consider the lost return on your investment. Real Estate that you purchase may appreciate over time, but rental payments will not. Calculate what your earnings could be if you invested your monthly rent. If your rent were $800 per month and you invested that amount each month for 10 years and received a 5% return on your investment you would earn $28,225.
Second, consider the amount of rent that you would pay over a ten year period.
$28,225 Lost return of investment +
$96,000 Rent paid over 10 years at $800 per month =
$124,225 Cost of Renting vs Investing $800
Consider that this example does not take into account the fact that rents typically increase on an annual basis. Use this chart to locate your monthly payment and to help you determine the equity you could be putting into owning your own home.
Lastly, you actually need an interactive calculator to enter in your own personal information to help you determine if renting or owning is right for you?
You need to consider things like the home price, how long you plan to stay there, what are the mortgage details, taxes, closing costs, maintenance fees etc.
Try this New York Times calculator and see if owning or renting is best for you?
Bottom Line: Enlist the Professional Services of a Licensed REALTOR for the facts and help you need to navigate the waters to make an easy transition.
In Your Corner,
Phyllis Miller – REALTOR, GRI
“Get Ready to Move! I’ve Got Your Back So You Can Pack!”