Sarah stared at her laptop screen at 2 AM, calculator in one hand, coffee mug in the other. After months of house hunting in her competitive market, she’d finally found “The One” – an $800,000 home that checked every box. But something didn’t feel right about the numbers…
If you’re like Sarah, you’ve probably been told that renting is “throwing money away” and that buying a home is the ultimate financial win. But what if I told you that in many markets today, renting could actually save you hundreds of dollars per month – and potentially hundreds of thousands over time? 
Let me walk you through the exact analysis that opened Sarah’s eyes (and might just change your perspective too).
The Real Story Behind the Numbers
When Sarah ran her rent vs. buy analysis using our spreadsheet tool, she discovered something shocking. Let’s break down her $800,000 home scenario step by step, using the same method you can apply to any property.
Understanding the Blue vs. Black Text System
Before we dive in, here’s a crucial tip for using any rent vs. buy analysis spreadsheet: anything in blue text represents data you need to input yourself – these are the variables that drive all the calculations. Text in black will calculate automatically once you’ve entered your blue inputs. This system ensures you’re always working with accurate, real-time calculations based on your specific situation.
The Property: Sarah’s Dream Home
- Median Home Price: $800,000 (blue input
) - Minimum Down Payment: 20% (blue input )
- Down Payment Amount: $160,000 (calculated automatically
) - Loan Amount: $640,000 (calculated automatically )
- Mortgage Interest Rate: 4.50% (blue input )
Here’s where most people stop calculating – but Sarah was about to discover the real story…
The Hidden Truth About PITI (And Then Some!)
When someone considers buying a house, they often focus only on the mortgage payment. But Sarah learned that her total monthly mortgage payment of $3,200 was just the beginning. What she really needed to understand was PITI – and in many cases, even more.
PITI stands for:
- Principal
- Interest
- Taxes
- Insurance
But for Sarah’s single-family home, there was also an HOA fee to consider.
Property Taxes: Finding the Millage Rate
This is where Sarah initially got stuck – and where many people give up on their analysis. She needed to find something called the “millage rate” (also called the “mill rate”).
What is a millage rate? 
It’s the amount of tax per $1,000 of assessed property value. For example, a 1.2% millage rate means you pay $12 per $1,000 of property value annually.
Where to find your millage rate:
- County assessor’s website
- PropStream (professional real estate platform)
- Zillow property details (look for “Property taxes” section)
- Redfin property information
- Local real estate agent
In Sarah’s case, the overall millage rate was 1.2% of the property value:
- 1.2% × $800,000 = $9,600 annually
- $9,600 ÷ 12 = $800 monthly property tax (calculated automatically )
Sarah’s Complete Monthly Ownership Picture
- Total Monthly Mortgage Payment: $3,243 (calculated automatically )
- Monthly Property Tax: $800 (calculated automatically )
- Monthly Insurance Premium: $100 (blue input )
- Monthly HOA Fees: $100 (blue input )
- Subtotal: $4,243
But wait – Sarah’s accountant friend mentioned something about tax deductions…
The Tax Deduction Game-Changer
Here’s where Sarah’s analysis took an interesting turn. She learned that homeowners can deduct mortgage interest and property taxes from their federal income taxes.
Sarah’s tax situation (blue inputs ):
- Income Tax Bracket: 25% (federal and state combined)
- Monthly Tax Deduction Offset: $800 (calculated automatically )
This tax benefit brought Sarah’s Total Cost to Own down to $3,443 per month (calculated automatically ).
The Rental Alternative: Sarah’s Reality Check
Now came the moment of truth. Sarah researched comparable rental units that would give her a similar living experience to the $800,000 home she was considering.
Using data from:
- Zillow Rental Manager
- Apartments.com
- RentBerry
- Local property management websites
Sarah found:
- Monthly Rent: $2,700 (blue input )
- Additional Fees: $300 (parking, utilities, etc.) (blue input )
- Total Cost to Rent: $3,000 (calculated automatically )
The Shocking 12.86% Rent Advantage
When Sarah saw the final calculation, she nearly spit out her coffee:
Premium/(Discount) to Rent: (12.86%) (calculated automatically )
This meant renting was 12.86% cheaper than buying – a monthly savings of $443!
But Sarah’s story doesn’t end there…
The Bigger Picture for Multifamily Investors
Here’s where Sarah’s analysis revealed something profound. As she dug deeper, she realized this significant cost advantage for renters creates sustained demand for rental properties.
From a multifamily investor’s perspective, this 12% discount to rent provides confidence that there will likely be continued strong demand in the market. When comparable condos or single-family homes cost significantly more to own than to rent, it drives people toward rental units.
This dynamic will definitely change depending on your market – but it’s a powerful tool for understanding local demand patterns.
Where to Get Your Data: The Complete Resource List
For Purchase Prices and Property Details:
- PropStream
: Professional real estate data platform with detailed analytics - Zillow : Comprehensive listings with price history and market trends
- Redfin : Real-time MLS data with neighborhood analytics
- Realtor.com : Official MLS listings with accurate pricing
For Rental Prices:
- Zillow Rental Manager : Rental comps and market analysis
- Apartments.com : Extensive rental listings
- RentBerry
: Real-time rental market data - Local property management websites
For Financial Information:
- Mortgage rates : Bankrate, Mortgage News Daily
- Property tax rates : County assessor websites
- Insurance quotes
: Multiple insurance providers - HOA fees
: Property listings or HOA websites
Sarah’s Decision (And What Happened Next)
Armed with this analysis, Sarah made a decision that surprised everyone, including herself. She chose to continue renting and invested her $160,000 down payment in a diversified portfolio.
Six months later, her investments had grown by 8%, while home prices in her area remained flat. Her monthly savings of $443 were building her emergency fund faster than ever. Most importantly, she had the flexibility to relocate when an amazing job opportunity arose – something that would have been much more complicated as a homeowner.
Sarah’s story illustrates why the numbers matter, but it’s not just about the math…
Important Disclosure
This analysis and spreadsheet are provided for educational purposes only. We do not provide financial advice, legal advice, or tax advice. Always consult with qualified professionals including financial advisors, tax professionals, and real estate attorneys before making significant financial decisions. Individual circumstances vary, and what works in one situation may not be appropriate for another.
Your Next Steps
- Download the spreadsheet and gather your local market data
- Research thoroughly using the data sources we’ve outlined
Consult professionals who understand your specific situation
Consider non-financial factors that matter to your lifestyle- Run scenarios for different price points and market conditions
Remember: Sarah’s 12.86% rent advantage might be very different in your market. The key is running your own numbers with current, local data.
The truth about rent vs. buy isn’t one-size-fits-all – but with the right analysis, you can make the decision that’s truly best for your financial future. 
Key Factors Beyond the Numbers
While Sarah’s analysis showed clear financial advantages to renting, the decision isn’t purely mathematical. Here are crucial factors that could influence your choice:
Market Timing Considerations
- Rising markets
: Buying may be advantageous if property values are appreciating rapidly - Stable/declining markets
: Renting might offer more flexibility and lower risk
Personal Factors That Matter
- Job stability
: How likely are you to stay in the area for 5+ years? - Lifestyle preferences : Do you want the responsibility of maintenance and repairs?
- Financial flexibility : Can you handle unexpected major expenses (roof, HVAC, etc.)?
Hidden Costs of Ownership
- Maintenance and repairs
: Budget 1-2% of home value annually ($8,000-$16,000 for Sarah’s $800k home!) - Transaction costs : Buying and selling costs can total 8-10% of home value
- Opportunity cost : Money tied up in real estate can’t be invested elsewhere
Building Your Own Analysis: Step-by-Step Guide
Ready to create your own Sarah-style analysis? Here’s exactly how to build your rent vs. buy spreadsheet:
Step 1: Gather Your Data
Use the sources mentioned above to collect:
- Target home price and down payment amount
- Current mortgage rates
- Local property tax rates (millage rates)
- Insurance costs
- HOA or maintenance fees
- Comparable rental prices
Step 2: Calculate True Ownership Costs 
- Monthly mortgage payment (use online calculators)
- Property taxes (annual rate ÷ 12)
- Insurance premiums
- Maintenance reserves
- HOA fees
- Calculate tax benefits based on your tax bracket
Step 3: Compare and Analyze
- Calculate the monthly difference
- Consider the opportunity cost of your down payment
- Factor in your personal situation and market conditions
The Bottom Line: What Sarah’s Story Teaches Us
In Sarah’s example, renting saved approximately $443 per month compared to buying. Over five years, that’s $26,580 in direct savings, plus the potential returns on investing the $160,000 down payment elsewhere.
However, homeownership offers benefits beyond pure finances: stability, the ability to customize your space, and potential long-term appreciation. The “right” choice depends on weighing these factors against the financial analysis.
Sarah chose flexibility and investment growth over homeownership stability – but your choice might be completely different based on your priorities and circumstances.
Your Complete Action Plan
- Research your local market using the data sources we’ve outlined
- Create your own spreadsheet with your specific numbers
Consider your personal timeline – staying less than 5 years often favors renting
Factor in non-financial benefits that matter to your lifestyle
Consult with professionals – a financial advisor, real estate agent, or mortgage broker can provide personalized guidance
Ready to Run Your Own Analysis?
Remember, this decision isn’t just about money – it’s about what makes sense for your life, goals, and financial situation. Use the data to inform your choice, but don’t let it make the decision for you.
What will your numbers reveal? Download the spreadsheet and find out. 