What is Rent vs Buy Calculator?
Rent vs Buy Calculator helps you compare an all-cash home purchase with renting and investing the upfront money.
The main result is higher terminal net wealth, with a breakdown of buying: terminal wealth after ownership costs, renting: portfolio after rent withdrawals and total nominal rent. The formula, example and assumptions below explain how to interpret it.
How to use Rent vs Buy Calculator
Use the example to get familiar with the form, then enter your own figures. Any rates in the example are illustrative. Check the field labels and units before calculating.
- Gather purchase price (₹), current monthly rent (₹), annual rent increase (%), annual property appreciation assumption (%), annual ownership costs as % of initial price (%), upfront purchase costs (₹), selling cost percentage (%), alternative annual investment return (%) and comparison horizon. Use values from the same situation or reporting period.
- Replace the example purchase price with your own value, then complete the other fields. Check the displayed units.
- Select Calculate and read higher terminal net wealth with its result breakdown. Change one input and calculate again to compare a second scenario. Reset restores the original example.
- Enter purchase price in ₹, at least 0. Decimals are accepted.
- Enter current monthly rent in ₹, at least 0. Decimals are accepted.
- Enter annual rent increase in %, at least 0 and at most 100. Decimals are accepted.
- Enter annual property appreciation assumption in %, at least 0 and at most 100. Decimals are accepted.
- Enter annual ownership costs as % of initial price in %, at least 0 and at most 100. Decimals are accepted.
- Enter upfront purchase costs in ₹, at least 0. Decimals are accepted.
- Enter selling cost percentage in %, at least 0 and at most 100. Decimals are accepted.
- Enter alternative annual investment return in %, at least 0 and at most 100. Decimals are accepted.
- Enter comparison horizon, at least 1 and at most 50. Use a whole number.
Rent vs Buy Calculator: a worked example
With the inputs below, the result is Rent and invest (higher terminal net wealth). Follow the example, then replace these illustrative values with your own.
| Input or output | Example value |
|---|---|
| Purchase price (₹) | ₹50,00,000 |
| Current monthly rent (₹) | ₹18,000 |
| Annual rent increase (%) | 5 % |
| Annual property appreciation assumption (%) | 4 % |
| Annual ownership costs as % of initial price (%) | 1 % |
| Upfront purchase costs (₹) | ₹3,50,000 |
| Selling cost percentage (%) | 2 % |
| Alternative annual investment return (%) | 7 % |
| Comparison horizon | 10 |
| Higher terminal net wealth | Rent and invest |
| Buying: terminal wealth after ownership costs | ₹65,62,374.6 |
| Renting: portfolio after rent withdrawals | ₹68,71,087.07 |
| Total nominal rent | ₹27,16,824.79 |
Understanding the Rent vs Buy result
Read higher terminal net wealth alongside buying: terminal wealth after ownership costs, renting: portfolio after rent withdrawals and total nominal rent. These describe different parts of the same calculation.
Displayed results use a readable number of decimal places. When checking a result by hand, keep extra precision until the last step. To compare scenarios, change one input at a time and keep the others fixed.
- Example Buying: terminal wealth after ownership costs: ₹65,62,374.6
- Example Renting: portfolio after rent withdrawals: ₹68,71,087.07
- Example Total nominal rent: ₹27,16,824.79
Rent vs Buy Calculator: assumptions and common mistakes
A useful estimate starts with the right inputs. Check the following assumptions and limits before applying the result to your situation.
- Cash-purchase model: no mortgage, income tax or capital-gains tax. Returns and appreciation are assumptions, not forecasts.
- Keep dimensions in the displayed units and distinguish usable area from built-up area. Material estimates need a suitable allowance for site conditions and waste.
For wider guidance, visit Bureau of Indian Standards. The formula and scope of this specific tool are stated on this page.
