1. What is the Breakeven Calculation?

The breakeven calculation compares the costs of renting versus buying a property in Manhattan. It determines how many years it takes for buying to become financially advantageous compared to renting.

2. How Does the Calculator Work?

The calculator uses the breakeven formula:

Where:

• Purchase Price — Total cost of the property (USD)
• Closing Costs — Additional fees when purchasing (USD)
• Rent Savings — Annual savings from not renting (USD/year)
• Years — Time period for comparison (years)

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

3. Importance of Breakeven Analysis

Details: Understanding the breakeven point helps in making informed decisions about whether to rent or buy in Manhattan's expensive real estate market.

4. Using the Calculator

Tips: Enter all values in USD. Rent savings should be your annual rent expense. Years should be your expected time in the property.

5. Frequently Asked Questions (FAQ)

Q1: What's a good breakeven point in Manhattan?
A: Typically, if breakeven is under 5 years, buying may be favorable. Over 7 years often favors renting.

Q2: Should I include maintenance costs?
A: Yes, maintenance costs should be factored into your closing costs or rent savings calculation.

Q3: How accurate is this for co-ops vs condos?
A: Co-ops generally have higher closing costs (flip taxes) which should be included.

Q4: Does this account for property appreciation?
A: No, this is a simplified model that doesn't account for market changes or investment returns.

Q5: What's average closing costs in Manhattan?
A: Typically 2-5% of purchase price for condos, 1-3% for co-ops, plus mortgage recording taxes.