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Buy vs. Rent Financial Analysis Model
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PurposeHow to Use This Model
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Evaluate the financial trade-offs between renting and purchasing a home over a configurable timeframe using discounted cash flow (DCF) analysis, scenario modeling, and sensitivity analysis.1. Open InputsGo to Inputs & Assumptions sheet
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2. Select ScenarioUse the dropdown in B1 to choose Base, Optimistic, or Pessimistic
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Document Structure3. Enter InputsFill in orange-highlighted cells with your specific values
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InstructionsThis page — overview, workflow, and color legend5. Check OutputGo to Output Summary for BUY/RENT recommendation and breakeven year
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DashboardVisual hub with key metrics cards and 4 charts6. View DashboardReview the Dashboard for visual charts and key metrics
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Inputs & AssumptionsAll editable inputs with scenario selector (Base/Optimistic/Pessimistic)7. Run SensitivityUse the Sensitivity tab to see which drivers matter most
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Output SummarySide-by-side Rent vs Buy scorecard with recommendation and breakeven8. ValidateCheck the Error Checks tab — all checks should show PASS
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SensitivityOne-way and two-way sensitivity tables with tornado and breakeven charts
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Renting DCF30-year annual cash flows for renting scenarioColor Coding Legend
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Ownership DCF30-year annual cash flows for ownership scenarioUser InputsManual entry — your specific values
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Debt scheduleFull 30-year monthly mortgage amortizationModel AssumptionsDefault assumptions — can be overridden
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Marginal TaxesUS federal income tax brackets referenceCalculated ValuesComputed by formulas — do not change
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Comp AnalysisOptional home valuation comparable sales worksheetPASSValidation check passed
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Error Checks20 automated input validations (PASS/FAIL/WARN)FAILValidation check failed — action needed
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Sensitivity CalcFormula engine powering the Sensitivity tables (hidden helper)WARNINGNon-critical warning — review recommended
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Key Model Assumptions
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1.Fixed-rate 30-year mortgage only (no ARM support)
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2.Down payment below 20% has PMI implications not modeled
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3.Primary residence flag controls capital gains tax exclusion at sale
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4.Investment opportunity cost assumes equity market returns (default 10%)
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5.Long-term capital gains rate applied to investment returns (default 15%)
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6.SALT deduction cap modeled (default $40,000 for married filing jointly)
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Ownership DCF30-year annual cash flows for ownership scenarioUser InputsManual entry — your specific values
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Debt scheduleFull 30-year monthly mortgage amortizationModel AssumptionsDefault assumptions — can be overridden
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Marginal TaxesUS federal income tax brackets referenceCalculated ValuesComputed by formulas — do not change
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Comp AnalysisOptional home valuation comparable sales worksheetPASSValidation check passed
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Error Checks20 automated input validations (PASS/FAIL/WARN)FAILValidation check failed — action needed
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Sensitivity CalcFormula engine powering the Sensitivity tables (hidden helper)WARNINGNon-critical warning — review recommended
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Key Model Assumptions
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1Fixed-rate 30-year mortgage only (no ARM support)
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2Down payment below 20% has PMI implications not modeled
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3Primary residence flag controls capital gains tax exclusion at sale
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4Investment opportunity cost assumes equity market returns (default 10%)
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5Long-term capital gains rate applied to investment returns (default 15%)
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6SALT deduction cap modeled (default $40,000 for married filing jointly)
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