Suggestions

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Rent vs Buy Analysis inside Housing Asset

This could take many forms.

Simplest thing you might do: simply calculate and display “Breakeven Owner Equivalent Rent” (BOER)

So this would be a single number, which is inflation adjusted at the plan-level inflation rate, and represents Mean OER over the period of ownership. e.g. if you changed the sale date to be sooner (or sale expenses to be higher) the BOER would go up. Vice versa, the longer you hold the lower the BOER would be.

You might also want to include some optional fields (around the financing section?) for people to specify extra purchase costs (transfer taxes, title insurance, origination points, etc). Some people may finance these costs, some people may not. So you’d probably need to clarify with a label that these are only out-of-pocket expenses. If this is for a new housing asset (not in current finances) you could add these to the year’s expenses.

Related: www.investopedia.com/terms/o/owners-equivalent-rent.asp

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Tagged as Suggestion

Suggested 19 September 2022 by user Shawn S