Landlord vs Tenant Cost Comparison

Landlord vs tenant cost comparison shows long-term financial position of buying vs renting. 400k property with 25% deposit (100k), 1,800/month mortgage vs renting equivalent for 1,500/month over 10 years. Owner builds equity through appreciation + paydown. Renter invests deposit at 7%. Outcome depends on local market and assumptions.

Example: 400k property, 25% deposit (100k), 1,800 monthly mortgage. Versus renting equivalent at 1,500/month, investing 100k at 7%. Over 10 years: owner has 537k equity (3% appreciation × 400k - mortgage balance). Renter has 197k investment growth. Owner ahead by 340k - but only if appreciation materialises.

Owning advantages: forced savings (mortgage paydown), appreciation, control, no rent rises. Renting advantages: flexibility, no maintenance, lower upfront cost, capital available for other investments. Key variable: local property appreciation. Long-term: 3-5% annually, slightly favouring buying. Hot markets (2010-2017): 8%+, strongly favours buying. Falling markets (1991-2020): renting wins decisively. Personal factors: stability, family, career mobility matter beyond pure math.

Quick example

With property price of 400,000 and deposit of 25% (plus monthly mortgage payment of 1,800 and monthly rent of 1,500), the result is 220,851.42. Change any figure and watch the output shift — it's often more useful to see the pattern than to memorise the formula.

Which inputs matter most

You enter Property Price, Deposit %, Monthly Mortgage Payment, Monthly Rent (equivalent property), and Time Period. Two inputs usually tip the answer one way or the other. Identify which ones matter most by flipping each value past a round threshold and watching whether the option with the lower calculated total changes.

What's happening under the hood

Owner: equity from appreciation + mortgage paydown. Renter: deposit invested at alternative return. The formula is listed in full below. If the number looks off, you can retrace the calculation by hand — that's the point of showing the working.

Why investors run this

Most people's intuition for compounding is wrong — not because the math is hard, but because linear thinking doesn't account for curves. Running numbers through a calculator like this one is the cheapest way to recalibrate that intuition before making an irreversible decision about contribution rate, asset mix, or retirement age.

What this doesn't capture

Steady-rate math ignores real-world volatility. Actual returns are lumpy; sequence-of-returns risk matters most in drawdown; fees and taxes drag on compound growth; and behaviour changes in drawdowns can reduce outcomes below the projection. The number represents one scenario rather than a forecast.