Sold my home previously after 10 years; lost my ass. Swore I'd never own again. Moved to within 3 miles of my and my wifes work in a university town, got lucky on a cheap $1,200 apartment. It's a little crappy, but they could easily charge me $1,500 for it.
Eventually we are going to have a 3rd & 4th kid, so we'll need a 4 bedroom. SInce I live in a university town, that's $1,800-$2k per month. Obviously that's a no-go, but, and this is serious, I've looked for 18 months for better apartments within biking distance, and they don't exist at 4 bedroom for less than $1,800.
My wife and I have 7-8 years until we hit our $1M goal for FI. It depends a great deal on what happens to health care and college for my daughter (4 years off), which is why we are erring on the side of 'at least' $1M.
What surprised me is that once I crunched the numbers, I calculate myself coming out ahead by about $1k over 7 years by buying a $204k home (putting $3k in upgrades for $207k total) versus renting at $1,200... and again, I'm probably looking at $1,800+ in a few years. And FWIW, at $207k I can get a nice house next to my daughter's elementary school, new furnace, new kitchen, the works. It makes the apartment I'm living in seem like a Calcutta slum. Plus I can hold my daughter's hand while I walk her to her 1st day of school since it's across the street. And I can walk to work.
So my numbers and assumptions:
5.65% - expected after tax investment return (or opportunity cost of my downpayment)
2% housing price appreciation
Ownership length - 7 years
6% realtor commission on sale at $207k*(1.02^7)
$455/m in T&I; this is an estimated average of the 7 years
15 year mortgage at 3.375%; adding back principal paid over 7 yrs but not investing it
$63k down payment, roughly $140k mortgage
$65 increase in monthly utilities over my small apartment (probably high)
$57.60 in monthly increase in maintenance on house, expenses, lawnmowing, etc. This includes the purchase of a $300 pushmower.
I come out about $16k better off over 7 years, or over $2k per year better off, versus the $1,200 per month rent.
Please look over my assumptions and math. Be as critical as you want to be; prizes for the most flippant response if you want to play that game (it won't hurt my feeling) on my stupid assumptions or math errors.
Thanks in advance!
Edit: Included my excel in attachments. Also:
We generally put $60k into 401k/403b. Total income of $125k including bonuses. Effective federal tax rate of 1.2%.