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The best/ most powerful rent vs buy calculator I am aware of is the one offered here: https://michaelbluejay.com/house/rentvsbuy.html https://michaelbluejay.co

The best/ most powerful rent vs buy calculator I am aware of is the one offered here: https://michaelbluejay.com/house/rentvsbuy.html https://michaelbluejay.com/house/rentvsbuy.html browsing it might give you some ideas of features you can add to your calculator. It's also a small thing but having the choice to select the downpayment based on percentage down might be nice. I don't know why your calculator tells me getting a house is not worth even if it thinks the transaction is profitable. It states my cumulative profit is $29,030 but I shouldn't get a house.

irrational 5y ago
I wonder if it is purposefully biased towards renting so he can use it to convince his wife to rent when he says that she wants to buy.
alach11 5y ago
The determination of whether to buy the house is based on the calculated rate of return. So even if you make a profit, if the time horizon is large you’d be better off investing that money in stocks. The UI doesn’t make that clear enough.
- barrkel 5y ago
  Houses are both leveraged investments (in a non-productive depreciating asset, I know, I know) and a forced savings mechanism. Investment in stocks by average people is not leveraged, and nor is there a forcing function that makes you put money into the stocks every month or you end up homeless. These two functions have some value - especially the latter.
- majormajor 5y ago
  > The determination of whether to buy the house is based on the calculated rate of return. So even if you make a profit, if the time horizon is large you’d be better off investing that money in stocks. Can you give a more detailed example? What time horizon are you picturing? After you pay off the house you lose the leverage advantage of returns on selling a house you bought with a mortgage vs selling stocks, but you also stop having to pay the mortgage at all while you'd still be renting, likely at a far higher market rate, so looking at the post-mortgage-payoff curves, it's hard for me to see where the invested down payment + (mortgage + tax + upkeep - minus - rent) returns would be expected to be high enough to make up for that. (The more rational counterargument, though, would likely be around diversification? Better to have land + stocks then just one...)
  - wonnage 5y ago
    Stock returns are generally higher than real estate. So you might start off with higher YoY values for the house initially, due to leverage (1.03x a big number vs 1.07x a small number), but stock would catch up over time.
  - anotherman554 5y ago
    It doesn't always make sense to buy rather than rent, but it all depends on your assumptions for stock returns vs house prices changes, inflation, maintenance, real estate tax increases, rent increases, how long you expect to live in a house and if there's an arbitrage in the local market between renting and buying. Also most people don't buy a house for life, and if you sell the house through a realtor they get 6% or so of the proceeds. This isn't something you can just logic an answer for without running it through a rent vs buy calculator, but investment expert and author William Bernstein suggests a rule of thumb that you should not spend more than fifteen years of market rent on a house purchase. In other words you can look up what the house you are considering buying would cost to rent, and as a rule of thumb if the sale price is more than 15 years of rent it's a bad deal. This is obviously an imprecise rule of thumb since it doesn't account for variations in real estate tax per region, but it's a starting point if you don't have a good rent vs buy calculator.

irrational 5y ago

I wonder if it is purposefully biased towards renting so he can use it to convince his wife to rent when he says that she wants to buy.

alach11 5y ago

The determination of whether to buy the house is based on the calculated rate of return. So even if you make a profit, if the time horizon is large you’d be better off investing that money in stocks. The UI doesn’t make that clear enough.

barrkel 5y ago
Houses are both leveraged investments (in a non-productive depreciating asset, I know, I know) and a forced savings mechanism. Investment in stocks by average people is not leveraged, and nor is there a forcing function that makes you put money into the stocks every month or you end up homeless. These two functions have some value - especially the latter.
majormajor 5y ago
> The determination of whether to buy the house is based on the calculated rate of return. So even if you make a profit, if the time horizon is large you’d be better off investing that money in stocks. Can you give a more detailed example? What time horizon are you picturing? After you pay off the house you lose the leverage advantage of returns on selling a house you bought with a mortgage vs selling stocks, but you also stop having to pay the mortgage at all while you'd still be renting, likely at a far higher market rate, so looking at the post-mortgage-payoff curves, it's hard for me to see where the invested down payment + (mortgage + tax + upkeep - minus - rent) returns would be expected to be high enough to make up for that. (The more rational counterargument, though, would likely be around diversification? Better to have land + stocks then just one...)
- wonnage 5y ago
  Stock returns are generally higher than real estate. So you might start off with higher YoY values for the house initially, due to leverage (1.03x a big number vs 1.07x a small number), but stock would catch up over time.
- anotherman554 5y ago
  It doesn't always make sense to buy rather than rent, but it all depends on your assumptions for stock returns vs house prices changes, inflation, maintenance, real estate tax increases, rent increases, how long you expect to live in a house and if there's an arbitrage in the local market between renting and buying. Also most people don't buy a house for life, and if you sell the house through a realtor they get 6% or so of the proceeds. This isn't something you can just logic an answer for without running it through a rent vs buy calculator, but investment expert and author William Bernstein suggests a rule of thumb that you should not spend more than fifteen years of market rent on a house purchase. In other words you can look up what the house you are considering buying would cost to rent, and as a rule of thumb if the sale price is more than 15 years of rent it's a bad deal. This is obviously an imprecise rule of thumb since it doesn't account for variations in real estate tax per region, but it's a starting point if you don't have a good rent vs buy calculator.