The Break-Even Concept
Buying costs more upfront. Renting is cheaper early on.
At some point, owning wins.
Break-even = when cumulative buy cost < cumulative rent cost
← Renting wins
Break-even year
Buying wins →
Year 5Typical break-even on a $350K home · $2,200/mo rent
🏢 Renting ($2,200/mo)
Year 1 cost$26,400
Year 5 total$132,000
Equity built$0
FlexibilityHigh ✅
🏠 Buying ($350K home)
Year 1 cost$38,500
Year 5 total$128,000
Equity built~$48,000
Tax deductionsYes ✅
📊 Example Scenario
$2,200
Monthly rent
comparable home
5 yrs
Break-even
if staying 5+ yrs → buy
↑ Stay 5+ years → favor buying
↓ Move in <3 years → favor renting
↑ Home appreciation → buy sooner
↓ High rent growth → buy sooner