How the comparison works
A rent-vs-buy comparison only tells the truth when both sides invest the difference. If your mortgage payment is $3,200 and rent nearby is $2,800, the renter must invest that $400/month gap — plus the down payment they didn't spend — for the comparison to be fair.
Ledger tracks four things year by year: (1) home value with appreciation, (2) loan balance, (3) equity = value − balance, and (4) renter's portfolio compounding at the investment return you set. Net worth is equity for the owner, portfolio for the renter.
When buying usually wins
- You stay in the home for 7+ years.
- Rent is close to or above the mortgage principal + interest.
- Home appreciation is 3%+ per year in your area.
- You have 20% down and avoid PMI.
When renting usually wins
- You'll move within 3–5 years.
- The price-to-rent ratio is above 20 (buying is expensive vs renting).
- You'd invest the down payment at 7%+ instead.
- HOA + property tax + maintenance stack above 3% of home value annually.