Back to home

Rent vs Buy

Compare whether it's better to buy a financed property or rent and invest the difference.

How to use the Rent vs Buy comparator

  1. Enter property value, down payment, interest rate, and loan term
  2. Configure amortization system (SAC or Price) and expected annual property appreciation
  3. Enter monthly rent value and annual adjustment (e.g., IGPM)
  4. Set the annual return rate of the investment where you'll invest the difference
  5. Click 'Compare' to see which option results in higher net worth at the end

Why compare rent vs buy?

The decision between renting and buying a property is one of the most important in many people's financial lives. Each option has advantages and disadvantages that depend on factors such as interest rates, property appreciation, investment returns, and mobility needs.

Comparing both options side by side allows you to make a more informed decision, considering not only immediate cost, but also accumulated net worth over time and the opportunity to invest the difference between payment and rent.

This calculator considers all relevant factors: loan interest, property appreciation, rent adjustment, monthly difference investment, and final net worth of each scenario.

Advantages and disadvantages of each option

Understand the pros and cons of each choice:

Buy

Advantages:

  • You become an owner and build equity
  • Property may appreciate over time
  • No need to deal with moves and rent negotiations
  • Can make improvements and customize the space

Disadvantages:

  • Need down payment and commit income to payments
  • Pay loan interest (financial cost)
  • Less flexibility to change cities or neighborhoods
  • Responsibility for maintenance, taxes, and fees

Rent

Advantages:

  • More flexibility to move when you want
  • Don't need a large down payment
  • Can invest the difference between payment and rent
  • No responsibility for structural maintenance

Disadvantages:

  • Rent may increase with annual adjustment (IGPM)
  • Don't build real estate equity
  • Depend on availability and landlord's willingness
  • Can't make major modifications to the property

Investing the monthly difference

An important advantage of renting is being able to invest the difference between loan payment and rent paid:

Example:

If the loan payment costs R$ 3,500/month and rent costs R$ 2,000/month, you have R$ 1,500/month difference. If you invest this difference at 10% per year, by the end of the term you'll have accumulated significant equity that may exceed property appreciation.

The calculator shows month by month how much you invest, accumulated balance, and how this impacts final net worth. When rent is higher than payment, you need to make extra contributions, which are also considered in the calculation.

How to calculate net worth

Net worth is calculated differently in each scenario:

Net Worth when Buying

Net Worth = Property value (appreciated) − Outstanding loan balance

You have the property (which appreciated) minus what you still owe the bank. The more you amortize, the higher your net worth.

Net Worth when Renting

Net Worth = Invested balance − Extra contributions (when rent > payment)

You have invested money minus extra contributions you needed to make when rent was higher than payment. Net worth grows with investment returns.

Factors that influence the decision

Several factors can make one option better than the other:

  • Loan interest rate: the higher, the more expensive to buy
  • Investment return rate: the higher, the more advantageous to rent and invest
  • Expected property appreciation: the higher, the more advantageous to buy
  • Rent adjustment (IGPM): the higher, the more expensive to rent over time
  • Mobility needs: if you need to move frequently, renting may be better
  • Down payment availability: without sufficient down payment, renting may be the only viable option

Practical example

Let's compare a real scenario:

Example scenario:

  • Property: R$ 500,000
  • Loan: 10% per year, 180 months, SAC, R$ 100,000 down payment
  • Appreciation: 5% per year
  • Rent: R$ 2,000/month with IGPM adjustment of 6% per year
  • Investment: 10% per year on monthly difference
  • Analyzed term: 15 years (180 months)

What to look for in results:

  • Final net worth: compare which option leaves more net worth at the end of the period
  • Monthly evolution: see when each option becomes more advantageous over time
  • Investment balance: observe how much you accumulate investing the monthly difference
  • Total cost: compare total paid in each scenario (payments vs rent)

Related tools

Explore other calculators that can complement your analysis:

Loan CalculatorConsortium CalculatorLoan vs ConsortiumCompound InterestIRR Calculator

Important notice

This calculator is educational and provides estimates based on entered data. Results may vary due to factors such as changes in interest and investment rates, specific contract conditions, additional costs not considered (insurance, fees, taxes, maintenance), real estate market variations, and other external factors. Use results as an analysis tool and consult financial and real estate professionals for important decisions.

Frequently asked questions (FAQ)

Which is better: rent or buy?
It depends on several factors: interest rate, expected property appreciation, investment returns, mobility needs, and down payment availability. Use this calculator to compare specific scenarios and see which option results in higher net worth at the end of the analyzed period.
How does investing the difference work?
When you rent, the difference between loan payment and rent paid can be invested. For example, if payment costs R$ 3,500 and rent R$ 2,000, you invest R$ 1,500/month. By the end, this accumulated investment may exceed property appreciation, making renting more advantageous.
What happens when rent is higher than payment?
When rent exceeds payment, you need to make extra contributions to cover the difference. These contributions are deducted from final net worth in the rent scenario. The calculator clearly shows when this happens and how much you need to contribute.
How does property appreciation affect the comparison?
Property appreciation increases net worth in the buy scenario. The higher the expected appreciation, the more advantageous to buy. If appreciation is low or negative, renting and investing may be more advantageous, especially if you can get a good return rate on the investment.
Is rent adjustment (IGPM) important?
Yes, very important! IGPM is usually higher than inflation, so rent increases significantly over time. This can make rent exceed loan payment after a few years, requiring extra contributions. The calculator considers this annual adjustment.
Should I consider other costs besides payment and rent?
Yes. When buying, you have costs like property tax, insurance, maintenance, and possible renovations. When renting, you have rent and possible moving costs. The calculator focuses on main costs (payment vs rent), but you should consider other costs in your real decision.
How to interpret the result when there's a technical tie?
If final net worth is practically equal, consider other factors: mobility needs (renting is more flexible), stability (buying offers more stability), personal preference, and non-financial factors. The difference may be so small that other factors become decisive.
Rent vs Buy Property | Free Comparator | Which is Better? | Calculaderia