radekstepan / buy-vs-rent

Compare net worth when buying a property vs renting

Buy vs Rent

Compare net worth when buying a property vs renting.

How

Modify opts.js with your variables, then run npm run simulate to run a Monte-Carlo simulation of two conditions over a period of x years:

1. Saving for a deposit, buying a property and paying off the mortgage. Once paid off, investing any left-over income in a stock market.
2. Renting a property and investing any left-over income in a stock market.

Run npm start and visit 0.0.0.0:8080 to see a comparison of net worth.

Variables considered

• income, yearly income increases, income in old age
• expenses and yearly inflation increases
• federal, provincial taxes (Ontario) and RRSP allowance (for investment)
• rent and historical rent increases according to a guideline
• 60-40 stock market return adjusted for CAD exchange rate
• Toronto property value for condos/houses, historical increases, condo/maintenance fees, taxes and buy/sell fees
• historical mortgage rates, downpayment minimums and insurance

Notes

• If we default on a mortgage or don't have enough income to pay all the taxes and fees, property is sold, any equity is invested on a stock market and we continue with renting.
• All of RRSP allowance is used for stock market portfolio. At the end of the simulation it is sold in total which incurs a heavy tax, in real life we'd be withdrawing it year by year instead.

Todo

• RRSP allowance carries over to the next year if unused
• simulate raising of taxes
• link mortgage rates to inflation
• consider all payroll deducation in net income