1. What is the Buy vs Rent Breakeven Calculation?

The breakeven calculation helps determine when buying a property becomes financially advantageous compared to renting in Dubai. It considers purchase price, closing costs, rent savings, and time period.

2. How Does the Calculator Work?

The calculator uses the breakeven formula:

Where:

• \( Purchase\ Price \) — Total property purchase price in AED
• \( Closing\ Costs \) — All associated purchase fees in AED
• \( Rent\ Savings \) — Annual rent amount you would otherwise pay in AED
• \( Years \) — Time period for comparison in years

Explanation: The equation calculates the annual cost difference between buying and renting over a specified period.

3. Importance of Breakeven Analysis

Details: Understanding the breakeven point helps make informed decisions about whether to buy or rent property in Dubai, considering your financial situation and length of stay.

4. Using the Calculator

Tips: Enter all values in AED. For accurate results, research typical closing costs (usually 4-7% of purchase price) and realistic rent comparisons for similar properties.

5. Frequently Asked Questions (FAQ)

Q1: What's included in closing costs in Dubai?
A: Typically includes DLD fee (4%), agent commission (2%), mortgage fees (0.25-1%), and other administrative costs.

Q2: How does this compare to ROI calculations?
A: Breakeven focuses on cost recovery, while ROI considers potential appreciation and rental income if you lease the property.

Q3: What's a good breakeven period in Dubai?
A: Generally, buying makes sense if you plan to stay 5+ years, but this varies by area and market conditions.

Q4: Should I include maintenance costs?
A: For precise analysis, yes. You can include them in the closing costs or as a separate input if modifying the formula.

Q5: How does mortgage interest affect this?
A: The basic formula assumes cash purchase. For mortgaged purchases, interest payments should be considered in the total cost.