Analysis
Buy vs. Rent Calculator
Compare the long-term net costs of buying versus renting over a period you choose.
- Last updated:
- Editorially reviewed
Inputs
Results
- Recommendation
- Buying is cheaper
- Net Cost of Buying
- €76.620
- Net Cost of Renting
- €176.940
- Property Value at End
- €403.761
- Financial Advantage
- €100.320
Run the numbers on a real property
With the address, size and price: financing, tax, cash flow and nearby comparable rents in one analysis.
The question of whether buying or renting makes more financial sense concerns almost everyone considering home ownership. The answer depends on many factors: purchase price, down payment, interest rate, rental costs, and the holding period. Our buy vs. rent calculator compares the long-term net costs of both scenarios and provides a first orientation.
How to Use This Calculator
The calculator compares the total cost of buying with that of renting over a period you choose. Here's how to proceed:
- Step 1: Enter the purchase price of the property.
- Step 2: Enter your available down payment (equity).
- Step 3: Enter the expected interest rate for the financing.
- Step 4: Enter the comparable monthly rent for a similar apartment.
- Step 5: Set the holding period over which you want to compare the scenarios.
Understanding the Results
The calculator uses simplified assumptions (closing costs 10%, initial repayment 2%, appreciation and rent growth 2% per year each, maintenance 1% of the purchase price per year, alternative investment return 4% per year on down payment and closing costs). The results at a glance:
- Net Cost of Buying: All expenses for buying (down payment, closing costs, loan payments, maintenance) minus the property equity built up by the end.
- Net Cost of Renting: The total rent payments over the period minus the return the down payment and closing costs would have earned at 4% per year as an alternative investment.
- Property Value at End: The estimated value of the property at the end of the holding period with assumed appreciation.
- Financial Advantage: The difference between the two scenarios, i.e. how much the cheaper option saves.
- Recommendation: A classifying statement on whether buying, renting, or a roughly equivalent result applies.
Why This Comparison Matters for Investors
The buy vs. rent comparison reveals the often underestimated wealth accumulation through repayment and appreciation. Rent payments build no wealth. The buyer builds equity with every payment and additionally benefits from potential appreciation. On the other hand, buying ties up significant capital that could be invested for a return in a rental scenario, and incurs costs such as maintenance and closing costs that do not arise when renting. In the calculation, the longer the period and the lower the interest rate, the more likely the balance favors buying. Short periods tend to favor renting, as the closing costs are only spread out over the years. Note that this calculator uses flat-rate assumptions and does not replace individual advice.
Frequently Asked Questions
When does buying pay off compared to renting?
It depends on purchase price, down payment, interest rate and rent. The longer the period, the more the closing costs are offset by repayment and appreciation, faster at low rates than at high ones. Change the holding period in the calculator to see from when buying becomes cheaper for your figures.
What assumptions does this calculator use?
The calculator assumes closing costs of 10% of the purchase price, an initial repayment of 2%, an annual appreciation and rent growth of 2% each, maintenance costs of 1% of the purchase price per year, and an alternative capital return of 4% per year on the down payment and closing costs that remain free when renting. These are simplified assumptions and may vary considerably by region.
Does the calculator account for taxes?
No, this calculator provides a simplified pre-tax view. Tax effects such as depreciation (AfA) on rental properties or the speculation tax on sale are not reflected. For a complete assessment, you should consult individual tax advice.
These calculations are for informational purposes only. Consult a professional for financial advice.