Should you buy the house or keep renting?
Buying builds equity, but renting frees your down payment to grow in the market. Over ten years the winner depends on three numbers nobody knows in advance: home appreciation, investment returns, and upkeep. This model runs thousands of futures and shows how often each side comes out ahead.
Personal Finance Intermediate Monte Carlo Pro engine
After you install, this is the model to open.
Rent vs Buy a House
- In your spreadsheet, click the Sortia icon in the strip of icons down the right-hand edge. No strip? Click the arrow at the bottom-right to open it. You can also use Extensions, then Sortia, then Open Sortia.
- Click Start from a template and put that name in the search box.
- Pick the card with that name and click Load this template. It arrives on a new tab with real numbers already in it.
This one runs on a Pro engine, and every free install includes five full-quality runs on your own numbers, shared across all five Pro engines rather than five for each. After that, Pro is $199/year.
The answer
At middle-of-the-road assumptions, the ten-year gap between buying and renting is:
- Buy minus rent, base case
- -$39,000 renting ends ahead after 10 years
- Best case for buying
- +$275,000 7% appreciation, 1% markets, light upkeep
- Best case for renting
- -$380,000 home slips 1%/yr while markets return 12%
- Wealth either way
- $236k vs $276k buy vs rent at base-case assumptions
At typical assumptions, renting and investing ends about $39,000 ahead on this $420,000 house. But the honest answer is a spread: the same model swings from renting ahead by $380,000 to buying ahead by $275,000 depending on appreciation, market returns, and upkeep. That is why this is a simulation, not a calculator. Run it, then set the price, rate, and rent to your own market and see which side of zero your odds favor.
The model
A $420,000 starter home with 10% down at 6.5%, measured against a $2,100 rental where every dollar of cost difference gets invested.
| Home price | $420,000 |
| Down payment | $42,000 (10%) plus $12,600 closing costs |
| Mortgage | 6.5% fixed, 30 years ($2,389/mo) |
| Monthly rent today | $2,100, growing 3.5%/yr |
| Home appreciation | -1% – 3.5% – 7% per year (uncertain) |
| Investment return | 1% – 7% – 12% per year (uncertain) |
| Maintenance | 0.5% – 1% – 2% of home per year (uncertain) |
| Property tax + insurance | 1.5% of home value per year |
| Sale | year 10, minus 6% selling fees |
Once it is in your sheet
- The model arrives with real numbers in it and runs as it stands, so you can press the button first and understand it second.
- Change the numbers to yours. The sheet marks which cells are inputs and which hold formulas, and most labels carry a note explaining the row.
- Press the run button at the bottom of the panel. It is labeled for the tool you are in, and the result lands on its own tab, with a written reading of it beside the figures.
Never used Google Sheets? Start here goes the whole way, in seven steps, and assumes nothing.
Next question
- Will this rental actually cash flow?Does the Rental Property Make Money Most Months?
- Which deductible really costs you less?Which Health Plan Costs Less Over a Year?
- Can you really afford six months off?Can I Afford a Sabbatical?
- What does skipping the salary negotiation really cost you?What Does Not Negotiating the Salary Cost Over a Career?
- What's the most you should pay before you walk away?Walk-Away Price Calculator
- Should you counter, or take the offer on the table?Counter or Accept
Every model like this one, and the method behind them: Monte Carlo simulation.