R$ 300,000 property
- Input
- entrada 20%, 20 anos
- Expected output
- equilíbrio R$ 1.790 (0,60%)
Below that rent, renting wins.
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break-even rent when does buying beat renting
The calculator returns the break-even rent and break-even appreciation just below the chart: the point at which buying and renting end with the same net worth. Compare it with the rent you pay today.
Below that rent, renting wins.
With R$ 2,500 rent, renting wins.
Nearly the same share of the value.
Money earns little, so buying gets competitive.
Money earns a lot, so invested rent weighs.
It depends on two bets: how much the property appreciates and how much invested money earns. In an example with a R$ 500,000 property, R$ 100,000 down, a 30-year SAC loan at 11.5% a year, 5% appreciation, fixed income at 10% gross and rent adjusted 4.5% a year, buying and renting tie after 20 years when the starting rent is about R$ 2,972. With R$ 2,500 rent, renting and investing finishes ahead; with R$ 3,500, buying pulls ahead from year 5. That is why the tool shows a break-even rent and a sensitivity table instead of a single number.
There are, such as comparing monthly rent with a fixed percentage of the property value, but the break-even depends on yield and appreciation. In the example it ran from 0.38% to 0.79% of the value a month depending on yield. Use the rule only as a starting point.
Yes. It depends on the horizon, and real rent is adjusted every year. The tool uses today rent and applies the adjustment you enter. That is why a longer horizon tends to lower the break-even rent in the examples.
Near the break-even the result is practically a tie, and factors outside the math decide: stability, freedom to move, renovations, the satisfaction of owning. See the sensitivity table to learn how much the assumptions would need to change.
After 20 years, Rent and invest finishes ahead of Buy with a loan by R$2,366,901 in net worth.
With these assumptions, buying does not overtake renting and investing within 20 years.
Assumptions: property appreciates 4.7% a year, fixed income yields 14.8% gross a year, rent of R$2,500 adjusted 4.7% a year, loan at 11.5% a year.
R$6,707,583
R$6,316,589
R$9,074,484
Break-even rent: the starting rent at which buying and renting end equal. Break-even appreciation: the yearly appreciation at which that happens, other assumptions unchanged.
| Appreciation \ yield | 10.8% | 12.8% | 14.8% | 16.8% | 18.8% |
|---|---|---|---|---|---|
| 0.7% | -R$812.8K | -R$1.8M | -R$2.9M | -R$4.2M | -R$5.9M |
| 2.7% | -R$584.9K | -R$1.6M | -R$2.7M | -R$4.0M | -R$5.8M |
| 4.7% | -R$244.4K | -R$1.3M | -R$2.4M | -R$3.7M | -R$5.5M |
| 6.7% | +R$256.9K | -R$776.9K | -R$1.9M | -R$3.2M | -R$5.1M |
| 8.7% | +R$986.4K | -R$59.7K | -R$1.2M | -R$2.6M | -R$4.4M |
Positive (green): buying finishes ahead. Negative (amber): renting and investing finishes ahead. The outlined cell is your scenario.
| Year | Buy with a loan | Buy in cash | Rent and invest | Property value | Loan balance |
|---|---|---|---|---|---|
| 0 | R$500,000 | R$500,000 | R$522,500 | R$500,000 | R$400,000 |
| 1 | R$584,193 | R$587,673 | R$622,358 | R$523,500 | R$386,667 |
| 2 | R$679,679 | R$682,870 | R$737,428 | R$548,104 | R$373,333 |
| 3 | R$788,270 | R$787,095 | R$870,574 | R$573,865 | R$360,000 |
| 4 | R$904,707 | R$901,268 | R$1,015,014 | R$600,837 | R$346,667 |
| 5 | R$1,033,679 | R$1,026,725 | R$1,177,158 | R$629,076 | R$333,333 |
| 6 | R$1,176,913 | R$1,165,047 | R$1,359,627 | R$658,643 | R$320,000 |
| 7 | R$1,336,386 | R$1,318,039 | R$1,565,425 | R$689,599 | R$306,667 |
| 8 | R$1,514,362 | R$1,487,767 | R$1,798,000 | R$722,010 | R$293,333 |
| 9 | R$1,713,431 | R$1,676,598 | R$2,061,310 | R$755,945 | R$280,000 |
| 10 | R$1,936,562 | R$1,887,242 | R$2,359,895 | R$791,474 | R$266,667 |
| 11 | R$2,187,154 | R$2,122,801 | R$2,698,967 | R$828,674 | R$253,333 |
| 12 | R$2,469,104 | R$2,386,832 | R$3,084,503 | R$867,621 | R$240,000 |
| 13 | R$2,787,623 | R$2,684,156 | R$3,524,116 | R$908,399 | R$226,667 |
| 14 | R$3,150,921 | R$3,022,532 | R$4,028,772 | R$951,094 | R$213,333 |
| 15 | R$3,565,448 | R$3,407,898 | R$4,608,097 | R$995,796 | R$200,000 |
| 16 | R$4,038,626 | R$3,847,082 | R$5,273,161 | R$1,042,598 | R$186,667 |
| 17 | R$4,578,947 | R$4,347,901 | R$6,036,654 | R$1,091,600 | R$173,333 |
| 18 | R$5,196,155 | R$4,919,317 | R$6,913,144 | R$1,142,905 | R$160,000 |
| 19 | R$5,901,426 | R$5,571,614 | R$7,919,355 | R$1,196,622 | R$146,667 |
| 20 | R$6,707,583 | R$6,316,589 | R$9,074,484 | R$1,252,863 | R$133,333 |
Simulation with editable assumptions, not investment advice. It leaves out capital gains tax, vacancy, FGTS and home insurance.