The unrecoverable cost of owning vs. renting calculator
In short
The unrecoverable cost of each, per year.
Interactive: the unrecoverable cost of owning vs. rentingEasy
Comparing a mortgage payment to a rent is the wrong comparison, because part of a mortgage payment buys equity. The right comparison is the money that disappears either way: interest, running costs and the return forgone on the deposit, against rent.
- Mortgage interest
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- Forgone on the deposit
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- Running costs
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- Assumed appreciation
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- Cost of owning, per year
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- Cost of renting, per year
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- Breakeven appreciation
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- Reading
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- What it leaves out
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The breakeven appreciation line is the most useful output: it states the annual house-price growth required for owning to match renting on your own inputs, and leaves you to judge whether that is plausible. Transaction costs are deliberately excluded and are large — in many markets 5–10% of the price round trip, which dominates any holding shorter than several years. Nothing here is advice about a housing decision.
The idea behind it
This calculator belongs to Alternatives & Private Markets, where the mechanism it computes is explained step by step, with the formula, what each input means and where the simple model stops being right. Everything is computed in your browser; nothing you type is sent anywhere.
Instruments it applies to
- Private Credit — The shadow banking success story: funds replaced banks as lenders to the buyout world, and kept growing.
- Catastrophe Bond — Earn double-digit yields for insuring hurricanes — the asset class genuinely uncorrelated with markets.
- Timberland & Farmland — Assets that grow while you wait. The only investment whose inventory increases in volume when you decline to sell it — and the reason institutions treat them as a category of their own.
- P2P & Marketplace Loan — Retail investors funding consumer and business loans through a platform. Real credit risk, real yields, and a business model that has repeatedly discovered it was a lender all along.
- Venture Debt — Lending to companies that lose money, secured on the expectation that someone else will fund them again. Cheaper than equity for the founder, and a bet on the next round for the lender.
- Litigation Finance — Funding a lawsuit in exchange for a share of the award. Genuinely uncorrelated with markets, entirely correlated with a judge — and priced like a portfolio of binary options.
- Life Settlement — Buying someone's life insurance policy, paying its premiums, and collecting when they die. Genuinely uncorrelated, and the asset class where the modelling error has a name and a face.
- Prediction Market — A contract paying $1 if an event happens and nothing otherwise, so its price reads as a probability. A forecasting instrument that is also, unavoidably, a wagering one.
More calculators from Alternatives & Private Markets
- MOIC ⇄ IRR converter — private-fund return arithmetic.
- Fee drag over time — what 2-and-20 compounds into.
- Sharpe & Sortino ratio — return per unit of risk taken.
- PE fund waterfall (simplified) — gross to LP-net, past fees, pref and carry.
- Discount, re-rating and total return — what closing the gap is actually worth.