A spreadsheet to compare renting vs buying

Discussion in 'Property Information Resources & Tools' started by jharrisonau, 26th Jun, 2020.

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  1. jharrisonau

    jharrisonau Member

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    Sharing a spreadsheet I created for calculating the financial impact of renting vs buying. Would be keen to get feedback & suggestions to improve it, and perhaps validation that the formulas are correct.

    Property Calculator: Rent vs Buy
     
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  2. Lindsay_W

    Lindsay_W Well-Known Member

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    Hi and welcome,
    Something that jumps out at me is that it assumes the $140K savings just remains in a savings account for the renter, more likely that this money would be invested in either another asset class or a better savings account/term deposit (in my opinion)
    Looks like the savings column in 'Renting' doesn't capitalise the interest earned on the $140K either?
    Location plays a large part in growth estimates and also yearly expenses (Rates, Water & Electricity)
    No maintenance costs for owning a property?
     
    Last edited: 26th Jun, 2020
  3. jharrisonau

    jharrisonau Member

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    Thanks for your feedback @Lindsay_W!
    Yes, this could be invested anywhere. The user can specify the interest earned per annum which is used to calculate the forecast. The "Savings interest rate" number could be used to represent the growth no matter where it's invested. Do you see a problem with that?

    There is a separate column for "Interest" that is added to the "Renting" column. Is that what you mean by 'capitalise the interest'?

    I haven't added this as its own field for simplicity's sake, but there is a field called "Annual expenses" which should capture all predicted costs. That way the user can get as detailed or as high level as they wish.
     
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  4. Redwing

    Redwing Well-Known Member

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    Here's another viewpoint

    Rent Or Buy?

     
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  5. The Y-man

    The Y-man Moderator Staff Member

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    Put a formula in the upfront costs - the average punter will not know what to put in (stamp, legals, etc - can be state dependent so another variable you need to put in somewhere and do a vlookup).

    The Y-man
     
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  6. The Y-man

    The Y-man Moderator Staff Member

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    Also, I tried jacking up the interest on the loan and it seems to make the "buy" better?

    The Y-man
     
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  7. jharrisonau

    jharrisonau Member

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    Good pickup, the maths was wrong. I'll fix it up now.