Rent vs Buy Opportunity Cost Calculator

This is an opportunity cost calculator. It assumes that both the renter and the buyer spend the exact same amount of money and compares the opportunity cost of buying vs renting. The comparison is input equated based on the annualised cost of ownership, so the rental investment amounts are calculated as annual cost of ownership minus rent.

Here are a few other things to consider:

Duration of simulation (years):

Buying

Home price:
Deposit (%):
Loan period (years):
Loan interest rate (%): The prime lending rate in South Africa is 11.75% ["]
Closing costs (%):
Insurance (%):
Maintenance costs (%):
Rates and taxes (%):
Levies (%): Sectional title properties tend to have levies of ~1-1.5%, freestanding houses usually do not have such levies
Management fees (%): This only applies to investment properties where an organisation manages the property on the owner's behalf. Fees tend to be ~0.8-1.25%
Property price increase (%): Cape Town historic home price increase over the past 21 years is ~6% ["]

Renting

Rent:
Rental increase (%): Cape Town historic rental increase over the past 20 years is ~2.8%, but landlords can increase by a maximum of 8% per annum ["]
Savings interest rate (%): Fixed period savings accounts are currently available with 9.6% interest. S&P 500 index tracker fund returns (on average) >15% in South Africa. ["] ["]

Results

Amount of equity owned over time (either home equity or savings amount), as well as the amount spent (either as rent, or as home purchase and associated costs). Return on investment over time (home price increase or investment returns) minus costs (either rent or home purchase and associated costs).