Renting comes out ahead by
$48,139
after 7 years: buyer’s net worth $170,625 vs. renter’s $218,765
Buying breaks even
Year 23
Break-even rent
$2,443/mo
Price-to-rent ratio
16.7
Difference in today’s dollars
$39,142
Buying would pull ahead in year 23, after your 7 years. Staying longer, or finding comparable rent above $2,443 a month, tips the result toward buying.
Monthly cost in the first year
- Mortgage principal & interest
- $2,135.42
- Property tax
- $333.33
- Homeowners insurance
- $207.50
- Maintenance
- $333.33
- Cost to own
- $3,009.59
- Cost to rent (rent + renters insurance)
- $2,015.00
Owning costs $994.59 more a month at first, so the renter invests that amount, plus the $92,000 the buyer spends upfront.
Buying over 7 years
- Down payment + closing costs (3%)
- $92,000
- Mortgage payments (principal & interest)
- $179,375
- Property tax, insurance, maintenance
- $80,379
- Total paid to own
- $351,754
- Home value if sold (3%/yr growth)
- $491,950
- Loan balance paid off
- −$291,808
- Selling costs (6%)
- −$29,517
- Buyer’s net worth
- $170,625
Renting over 7 years
- Total paid to rent (rent + renters insurance)
- $185,278
- Invested at the start
- $92,000
- Invested monthly when renting costs less
- $74,476
- Investment growth (5%/yr)
- $52,288
- Renter’s net worth
- $218,765
Net worth by year
- Buyer’s net worth
- Renter’s net worth
Year-by-year comparison
| Year | Cost to own | Cost to rent | Buyer net worth | Renter net worth | Buy − rent |
|---|---|---|---|---|---|
| 1 | $36,115 | $24,180 | $70,512 | $108,806 | −$38,294 |
| 2 | $36,430 | $24,905 | $85,597 | $126,033 | −$40,436 |
| 3 | $36,754 | $25,653 | $101,282 | $143,688 | −$42,406 |
| 4 | $37,088 | $26,422 | $117,596 | $161,780 | −$44,184 |
| 5 | $37,432 | $27,215 | $134,570 | $180,318 | −$45,748 |
| 6 | $37,786 | $28,031 | $152,235 | $199,310 | −$47,075 |
| 7 | $38,151 | $28,872 | $170,625 | $218,765 | −$48,139 |
Assumes 3% home appreciation, 3% yearly rent increases, a 5% investment return and 3% inflation on insurance, HOA and maintenance. Income taxes are not included. Net worth counts the home as if sold at the end of each year.