Lease vs Buy Property Calculator

How it is calculated

Both options are totalled over the same horizon of n = years × 12 months. Lease: lease total = monthly lease × n. Buy: the down payment is price × down% ÷ 100, the loan is the rest, and the loan is repaid in equal payments over the same number of years as the horizon: payment = loan × r × (1 + r)^n ÷ ((1 + r)^n − 1), with r = rate ÷ 100 ÷ 12. Buy total = down payment + payment × n. The tool then states which is cheaper and by how much. It does not count property tax, insurance, maintenance, rent increases, the property's resale value or what the cash could earn elsewhere, so it compares cash paid only. Down payment must be 0 to 100, the rate cannot be negative or empty, and years must be above zero up to 100 and make a whole number of months (10.5 works, 10.4 does not). Amounts are in dollars.

Common mistakes

• Treating the buy total as a loss. The tool does not subtract the property's resale value, so the buying figure looks high for a short horizon; compare it against an estimate of what the building would sell for.
• Entering the down payment as a dollar amount (180000). The field is a percentage from 0 to 100, and anything above 100 gives no result.
• Expecting the loan to run longer than the horizon. The loan is repaid over the same years you enter, so a 10-year horizon means a 10-year loan with much higher payments than a 25-year one.
• Entering the monthly lease as annual rent, or the reverse. The field is the monthly amount.
• Entering years that do not make whole months, such as 10.4, or leaving the rate empty for an interest-free case. Both give no result; type 0 for no interest.