Rent versus buy is a balance-sheet question
Monthly payment comparisons miss equity, transaction costs, maintenance, and what the renter could invest. A useful comparison tracks both paths to the same future date.
Compare the same household, over the same years
Buying converts part of each mortgage payment into equity, but also commits cash to a down payment, closing costs, taxes, insurance, maintenance, and eventual selling costs. Renting avoids some ownership costs and preserves upfront cash, but rent can rise and creates no home equity. The model makes both sides invest any monthly cost advantage, so cheaper housing is not treated as money that disappears.
The endpoint is projected net worth. For the owner, that is sale proceeds after selling costs and mortgage payoff, plus any invested monthly savings. For the renter, it is the invested down payment and buying costs, plus any monthly savings.
Inputs that deserve the most care
- Years before moving: short horizons magnify buying and selling costs.
- Home appreciation: a one-point change compounding over years can move the result substantially.
- Investment return: this is the opportunity cost of cash not placed in the home.
- Maintenance: long-run averages can hide irregular but expensive repairs.
- Buying and selling costs: use local estimates rather than assuming they are negligible.
If renting leads by $30,000 after seven years, the model is not saying renting is always better. It says that, under the entered price, rent, financing, growth, and cost assumptions, the renter’s modeled ending portfolio is $30,000 larger than the owner’s modeled sale proceeds and investments.
Run a range, not one forecast
Try low, middle, and high appreciation rates. Repeat with a shorter move date, a maintenance shock, and a lower investment return. If the winner changes often, the financial decision is close enough that lifestyle, stability, commute, renovation tolerance, and mobility may be more important than the modeled difference.
What the spreadsheet cannot decide
Owning can provide control and housing stability while concentrating wealth in one property. Renting can preserve mobility while exposing the household to lease changes and local rent conditions. Those are real costs and benefits, but assigning them a fake dollar value would create false precision. Keep them beside—not buried inside—the numerical result.
Confirm mortgage terms, insurance, taxes, closing costs, and likely maintenance with local professionals. Then ask whether the plan still works if the move comes earlier than expected.