Google Spreadsheet of Buying vs. Renting

The Big Picture has a pointer to this Google Spreadsheet of a buying versus renting cost comparison: .

It’s neat, but you have to save a copy to your own Google account before you can modify the values. There are a couple issues, having to do with dependent variables that aren’t well linked to other cells, e.g., the estimated tax deduction probably can be a formula that takes an expected tax rate and does a calculation against the holding period and the mortgage interest payments. But these are relatively minor.

One big hole, which is alluded to in the document’s notes, is that there’s no provision to calculate the returns on “alternative investments of downpayment.” One can make simplifying assumptions to figure out what this opportunity cost of buying would be: assume you put the whole thing into a CD with a maturity equivalent to your holding period, and ignore the pre-tax/post-tax issues. Depending on the size of the downpayment, this could be many thousands of dollars.

One difficult-to-quantify issue is also the amount of effort and heartache it would take to sell the property, which is something to consider when we hear anecdotes about other people at CCF who take a year to sell a house after they’ve finished their residency and moved out of state. I suppose one could ask text to the spreadsheet that merely asks whether the benefit of buying is worth the effort you expect to put into selling (including, say, double mortgate payments for a few months, etc.). That’s something people have to figure out on their own.

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