Unrecoverable Cost of Renting
$0
Unrecoverable Cost of Buying
$0
Cumulative Unrecoverable Costs
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What is a Rent vs Buy Calculator?
The Rent vs Buy Calculator is a comprehensive tool that compares the true financial cost of renting versus owning a home over time. It factors in unrecoverable costs of homeownership like property taxes, maintenance, and interest, compared to the sunk cost of rent.
How to Use the Calculator
Enter the price of the home you want to buy and compare it against the monthly rent of a similar property. Adjust the property tax, maintenance, and mortgage rates to see which option leaves you with a higher net worth after a specific number of years.
Frequently Asked Questions
Is renting always throwing money away?
No! Renting is paying for a service (shelter). Homeownership comes with its own "thrown away" money in the form of unrecoverable costs: property taxes, mortgage interest, maintenance, home insurance, and closing costs. If your rent is less than these unrecoverable costs, you can come out ahead by investing the difference.
What is the 5% Rule in Real Estate?
The 5% Rule is a quick metric to compare renting vs buying. You multiply the value of a home by 5% and divide by 12 to find the break-even monthly rent. The 5% accounts for property tax (1%), maintenance (1%), and cost of capital/interest (3%).