Buying and renting
You need Kč 1,440,000 up front (your own money + purchase costs). The mortgage is Kč 4,800,000, which is 80 % of the price. As a renter you invest that money instead.
Grow faster than 4.4 % and buying wins; slower and renting with investing does. You are assuming 5 %.
Net wealth over time
What you would walk away with if you cashed out that month
Real market data
House prices, rents, inflation and wages from official statistics. Pick a country and load them into your assumptions - or replay an actual historical period.
Assumptions
This is where the answer is decided. You can load real figures for your country from the data above.
What it all cost
Year by year
| Year | Property | Remaining debt | Buying | Renting + investing | Difference |
|---|---|---|---|---|---|
| 0 | Kč 6,000,000 | Kč 4,800,000 | Kč 1,020,000 | Kč 1,440,000 | −Kč 420,000 |
| 1 | Kč 6,300,000 | Kč 4,729,182 | Kč 1,381,818 | Kč 1,705,904 | −Kč 324,086 |
| 2 | Kč 6,615,000 | Kč 4,654,742 | Kč 1,761,808 | Kč 1,986,060 | −Kč 224,252 |
| 3 | Kč 6,945,750 | Kč 4,576,493 | Kč 2,160,885 | Kč 2,281,356 | −Kč 120,471 |
| 4 | Kč 7,293,038 | Kč 4,494,240 | Kč 2,580,006 | Kč 2,592,740 | −Kč 12,734 |
| 5 | Kč 7,657,689 | Kč 4,407,779 | Kč 3,020,180 | Kč 2,921,228 | +Kč 98,952 |
| 28 | Kč 23,520,775 | Kč 587,340 | Kč 22,227,811 | Kč 19,013,551 | +Kč 3,214,261 |
| 29 | Kč 24,696,814 | Kč 300,995 | Kč 23,654,914 | Kč 20,346,151 | +Kč 3,308,763 |
| 30 | Kč 25,931,654 | Kč 0 | Kč 25,153,705 | Kč 21,764,932 | +Kč 3,388,773 |
Both sides spend the same money every month: whatever the owner pays above the rent (instalment, upkeep, fees), the renter invests - and when rent is the pricier side, it comes back out of the fund. Wealth is always what you would walk away with if you cashed out that month: for the owner the sale price minus selling costs and the remaining debt, for the renter the fund minus tax on gains. Income tax, subsidies and return volatility are not modelled. An educational model, not investment advice.