How it works
How the math works
The buyer and the renter start with the same cash. The buyer uses it as a down payment. The renter invests it.
Every month, whoever spends less invests the difference at the same return. The buyer pays the mortgage, insurance, property tax, HOA fees and upkeep. The renter pays rent.
At the end, the buyer sells the home, pays the selling costs and the remaining balance. Investment gains are taxed. The higher net worth is the better choice.
The assumptions that matter most
How long you stay comes first. Buying and selling costs weigh heavily over a short period: under 5 to 7 years, renting often wins.
Then come the price-to-rent ratio, home price growth and the investment return. If your investments grow faster than home prices, the renter comes out ahead.
Create several scenarios, for example a cautious one and an optimistic one, and compare them side by side.
Break-even year and break-even rent
The break-even year is how long you must keep the home for buying to beat renting.
The break-even rent is the starting rent at which both options end equal over your horizon. If your rent is higher, buying is the better deal.