Buy or Rent?
motivated by email from George S.

Every once in a while there's a discussion about whether to buy or rent and ...

>Buy or rent ... what?
Buy a house or a condo - rent a house or apartment. We'll pretend it's Buy a House versus Rent an Apartment.
Anyway, I haven't the faintest idea of the costs involved so I invented them and the user can fill in his / her own numbers.

The spreadsheet looks like this:

I assume you have some money, like $20K, which you can use as a downpayment for a house (then mortgage the rest)
... or you can invest the $20K and rent your accommodations.

After umpteen years, Mr. BUY has paid $X in House expenses and Ms. RENT $Y in Apartment expenses.
The difference in plotted: $Y - $X in the lower chart. Note that it's cumulative: the TOTAL expenses over umpteen years.

Each year, either BUY or RENT pays more in expenses. The person with the lesser expense can invest that excess money at some rate of return (cell B41).

To compare Net Cost, we assume BUY sells the House, pays off the mortgage balance, cashes in investments and subtracts from $X.
For the Apartment, RENT cashes in investments (including the $20K?) and subtracts from $Y.

>What's that question-mark expense ???
I've already told you! Stick in your own expenses. How should I know what you spend and where you spend it? Change the headings in column A to whatever you think is appropriate.

>So I click on the picture to download?
Always ... and in cell B2 you stick in a number, like 20 years, and you get a pertinent explanation.

>And all this makes sense to you?
Uh ... no. Extrapolating umpteen years into the future is a risky business.
I should also mention that, in my opinion, financial considerations shouldn't be the motivating factor when it comes to deciding whether to buy a house or rent an apartment.
Do you want to mow the lawn, shovel snow, pick weeds, grow veggies, wander your own property admiring the roses, play frisbee with the grandkids, walk ... ?

>Okay, okay ... so it's life-style, eh?
Yup! Nevertheless, playing with the spreadsheet is fun. You can do it on your laptop while gazing out at your flower beds and waiting for the steaks to blacken on the BBQ.

>But I can rent a house, right?
Then go for it, but remember that the spreadsheet gives a "rough" estimate of the difference between BUY and RENT.
Perhaps a better way to compare is to assume both RENTer and BUYer have the same amount to spend each year, say $30K.
BUYer spends it all on expenses plus mortgage payments.
RENTer spends, say, $22K on expenses, but since there are no mortgage payments, the $8K excess can be invested.

Then, too, the spreadsheet ignores many things you'll have to include yourself.
For example, if'n you live in the U.S. there may be tax on capital gains on the sale of a house.
Then again, you may have a second mortgage. Then again you may have ...

>Yeah, I get it. The rest is up to me.
You got it.

There's a quick-and-dirty Calculator here.