⚖️Rent vs. Buy
Rent vs. Buy Calculator
Compare real wealth accumulation over time: home equity appreciation versus renting combined with disciplined stock market index investing.
⚖️Rent vs. Buy Long-Term Wealth Comparison
Net wealth trajectory comparison: Home equity buildup vs. disciplined rental equity market investing.
$ / mo.
$
$
20 Yrs
5 J.35 J.
Break-Even Horizon:> 40 Years
Property Equity (20 Yrs):net of mortgage & exit fees
$4,516,909
Tenant Portfolio (20 Yrs):net of tax
$6,513,635
Total Rent Paid to Landlord:$3,059,228
Tenant Portfolio Advantage after 20 Yrs:
+ $1,996,726
Disciplined equity investing outpaces real estate equity growth.Milestones
Net Wealth by Horizon
Growth of home equity (blue) vs. stock portfolio (green)
Ø Durchschnitt$8,522,959
Ø Durchschnitt:
Home Equity:$3,497,697Stock Portfolio:$5,025,262
Home Equity
Stock Portfolio
Trajectory
Wealth Accumulation Curve
Continuous net worth trajectory over the entire holding period
Ø Durchschnitt$2,251,623
Ø Durchschnitt:
Homeowner Net Worth:$2,251,623Tenant Portfolio:$3,258,405
Homeowner Net Worth
Tenant Portfolio
FAQ & Knowledge
Frequently Asked Questions: Rent vs. Buy
Key mortgage guidelines, statutory fees, and investment benchmarks at a glance:
?How do I calculate if buying is better than renting??
Compare the unrecoverable costs of renting (pure rent payments) against the unrecoverable costs of buying (mortgage interest, property taxes, HOA fees, maintenance, and buying/selling closing costs).
?What is the price-to-rent ratio??
Price-to-Rent Ratio = Median Home Price / Annual Median Rent. A ratio under 15 indicates buying is favorable; 16 to 20 is neutral; and over 21 suggests renting is significantly more cost-effective.?How does inflation impact homeownership vs. renting??
Homeowners lock in their primary housing cost with a fixed-rate mortgage while home equity appreciates with inflation. Renters face annual lease adjustments that compound with market inflation.
?What is the opportunity cost of home equity??
The down payment tied up in real estate could alternatively be invested in an S&P 500 index fund yielding historical nominal returns of 7% to 10%. Renting and investing the surplus is a viable wealth-building path.
?How many years must I stay in a home to break even on buying??
Due to transaction friction (closing costs to buy and 5% to 6% agent commissions to sell), the typical break-even horizon is 5 to 7 years in average appreciation markets.
?What maintenance percentage should homeowners expect annually??
Budget 1% to 2% of the home's total value annually for regular maintenance, roof replacement, HVAC servicing, and unexpected capital repairs.
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