Renting vs Buying: Which Makes Sense When?
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What students do
- Calculate the total cost of renting and the total cost of buying using two labeled models
- Compare a renter's equity of zero against a buyer's equity after five years
- Find the crossover year where buying's total cost drops below renting's
- Recommend rent or buy for a client based on how long they plan to stay
What it covers
- The total cost of renting and total cost of buying formulas, including equity and appreciation
- What equity is and why renting builds none of it
- The five-year rule and how to read the crossover chart
Learning targets
- Compare renting and buying for a given life situation
- Calculate the total cost of renting and the total cost of buying over time
- Explain equity and how buying builds it while renting does not
- Use the crossover year and the 5-year rule to recommend rent or buy
From one teacher to another
By the end of this lesson, my students can size up a real rent-or-buy decision and back it with numbers instead of a gut call. They build out both cost formulas for the same client, Devon, watch his renting total and buying total cross around year five, and use that crossover to tell him whether he should sign another lease or put money down on a condo. What I want them to leave with is that it isn't about which option sounds better, it's about how long Devon's staying.
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