Rent or Buy a house Spreadsheet

[ak907]

I created this spreadsheet to help answer the question of should you rent or buy a house. I have seen a number of questions on the forum from member asking just that question so I thought I would make it available for people to look at. Let me know if you find any issues, or if you find it useful! :)

[payitoff]

wow this is badass!! thanks! how long did you do this spreadsheet? this is a great tool to show my husband who gave up on his american dream after we foreclose on our home and rental property when the bubble burst. to me, buying is still smart and to show him in numbers is great. Thanks again!

[ak907]

wow this is badass!! thanks! how long did you do this spreadsheet? this is a great tool to show my husband who gave up on his american dream after we foreclose on our home and rental property when the bubble burst. to me, buying is still smart and to show him in numbers is great. Thanks again!

It took me about a week on and off fiddling with it. Glad you like it, I knew there had to be other people who had the same question. If you saw you can also analyze rental income with it, either renting a room while living in it or you could even look at wholly renting it out. There are an unfortunate number of variables in this calculation so make sure to chase down all the inputs, I didn't do the best job of locating them all centrally (they are all up top or dripping down the right side in the case of salary).

[KatieSSS]

Awesome!

One question - under "Renting Inputs" on the top left, you have a place for "Invested" - you have $100,000 there. What is this number? The value of your overall investments, like stocks/bonds?

[MrCash]

Awesome!  This will come in handy when I start my analysis!  Thanks!

[ak907]

Awesome!

One question - under "Renting Inputs" on the top left, you have a place for "Invested" - you have $100,000 there. What is this number? The value of your overall investments, like stocks/bonds?

Correct, that number is your stash. For the purposes for comparison of performance the spreadsheet assumes your down payment comes out of your stash. It then basically looks at the expected performance of that money invested in the house (leveraged with a mortgage or not) vs its performance if left in the stock market.

[arebelspy]

The tool I typically link to for the "buy or rent" question is the NYT Buy vs Rent Calculator:
http://www.nytimes.com/interactive/business/buy-rent-calculator.html

For those that have used this spreadsheet, how do they compare and which do you like better?

[KatieSSS]

Awesome!

One question - under "Renting Inputs" on the top left, you have a place for "Invested" - you have $100,000 there. What is this number? The value of your overall investments, like stocks/bonds?

Correct, that number is your stash. For the purposes for comparison of performance the spreadsheet assumes your down payment comes out of your stash. It then basically looks at the expected performance of that money invested in the house (leveraged with a mortgage or not) vs its performance if left in the stock market.

Thought so - thanks for clarifying!

[poorjoy]

great work and nice summary output pages.

[ak907]

great work and nice summary output pages.

Thanks, glad you like it.

[KS]

I've also always used the NYT calculator, will need to play with both some more when I'm not on a quick snack break but initial observations:

1) if you input the same values into them both, they seem to come up with a similar timeframe for when buying becomes worth it
2) advantage to excel version: I think you can adjust more of the variables than in NYT version (possibly becomes a disadvantage if someone doesn't know what they're doing and puts unrealistic values in I guess)
3) another excel plus: all the income stuff you can include (and the "do you have enough salary for these expenses?" column)
4) advantage to NYT version: fancy graphics make it easier to see what's going on right away for those of us who need extra visual help spotting the most relevant info

Thank you ak907 for taking the time to make it! I'd been meaning to run numbers on this again soon, so now I have 2 handy tools to double check against each other when I do!