1. What is the Breakeven Calculation?

The breakeven calculation determines when buying a property becomes financially advantageous compared to renting. It compares upfront and ongoing costs of both options to find the point where buying becomes cheaper.

2. How Does the Calculator Work?

The calculator uses the breakeven formula:

Where:

• Buy Costs — Total upfront costs of purchasing (down payment, closing costs, etc.)
• Rent Costs — Upfront costs of renting (security deposit, first/last month rent)
• Annual Difference — Yearly savings from owning vs renting (mortgage + expenses vs rent)

Explanation: The equation shows how many years it takes for the upfront cost difference to be offset by the annual savings from owning.

3. Importance of Breakeven Analysis

Details: This analysis helps determine whether buying makes financial sense based on your expected time in the property. A shorter breakeven period favors buying.

4. Using the Calculator

Tips: Enter all costs in dollars. The annual difference should be positive (when owning is cheaper annually) for meaningful results.

5. Frequently Asked Questions (FAQ)

Q1: What's included in buy costs?
A: Down payment, closing costs, moving expenses, and any immediate renovations needed.

Q2: What's included in rent costs?
A: Security deposit, first/last month rent, and any broker fees.

Q3: How to calculate annual difference?
A: (Annual rent + renter's insurance) - (Annual mortgage + taxes + insurance + maintenance)

Q4: What's a good breakeven period?
A: Typically 3-5 years or less suggests buying may be favorable, but depends on local market.

Q5: Does this account for home appreciation?
A: No, this is a simplified cash flow analysis. For complete analysis, include equity buildup and price changes.