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Buy or Rent?
It looks like through the magic of Google Spreadsheets, I can invite readers of the blog (you) to view and collaborate on one of my decision models.
This is the one I most often use with clients. It's designed to help potential buyers compare renting to purchasing a home. Because parents sometimes buy condos for their children who attend CU and an increasing number of first time buyers look for ways to offset the cost of ownership, I included rental income that could come from having roommates or tenants.
The model lets you plug in for 10 factors.
1. Expected appreciation rate
2. Interest rate on a 30 year fixed mortgage
3. Purchase price
4. Property taxes
5. HOA fees
6. Capital gains when you sell (if applicable)
7. Maintenance costs
8. Holding period
9. Estimated tax deduction (for the full holding period)
10. Alternative monthly rent.
At this time, you can only view the model not change the assumptions. BUT, if you drop me an email with your contact info, I'll setup a special copy for you where you can play with the assumptions. OR, you can download the model now and use Excel to plug in your assumptions. When the model downloads as an .xls file, a few of the fields go wonky and you'll need to reenter the original formulas (which you can read from the Google Spreadsheet model) cell F12 goes wonky. Plug in this formula to fix the model. =C5*(1+I6)^I7
The numbers currently plugged into the model are for a purchase price of $325,000, no rental income, 20% down, 5 year holding period, 2% appreciation, and an easy loan for credit qualified buyers. Be sure to read my notes/assumptions at the bottom of the spreadsheet for more details.
Here's a link to the buy vs. rent decision model. You'll need to register for a Google account (free). Feedback is much appreciated. In particular, how can I make this more useful? Are there factors that I should include? Etc.
p.s. with the speed that Google is advancing on MS Office, do you think it's time to short MSFT?
Image: caterina
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7 Comments:
Very nicely done; a very good use of this tool on the web for prospective buyes & sellers
As to shorting MSFT, the issue is how much more "pop" is left in the stock before any "drop?"
This is a GREAT reason to use the Google spreadsheets. The sharing feature is awesome, in my opinion. However, they still lack a LOT of the features that Excel has. And you know me and my Excel obsession. If I can't merge the cells, what good is it? :)
Thanks for the comments.
On MSFT, I'm not sure what good news they'll have for a "pop." At least they started doling out their cash hoard in special distributions.
As Caroline points out, Excel is still miles ahead of Google Spreadsheets. With calendar, email, word processing, spreadsheets, blogging, and more... Office will continue to lose market share.
(1) the vast majority of users don't use the more complicated features of Office, (2)Google is catching up fast, and (3) Google is creating innovative features that add value (sharing, etc).
With that said, GOOG is wicked pricey and I have a hard time seeing how this old news isn't priced into the shares.
Caroline, Google Spreadsheets now lets you merge cells in rows but not in columns.
The feature I want in Google Spreadsheets is the ability to protect certain cells and then open the rest to collaboration.
Finally, if you don't have Excel and want to manipulate the file simply download the file as .xls and re upload to Google Spreadsheets. You may have to correct the cell that goes wonky as outlined in the post.
Excellent spread sheet. I am actually doing an analysis for myself into renting vs. owning.
If I end up renting I will be putting my saved money from lack of maintenance, mortgage, taxes, etc. into stocks. I wonder if you could incorporate this into the spreadsheet.
If you get a chance send me a reply at my blog www.whammies.blogspot.com
Thanks,
Chris
You should put the link to your site in a separate cell at the top - then it will turn into a hyperlink which people can follow directly from the online spreadsheet...
So - in F1, instead of "For more details..", just put the URL http://www.silverfernrealty.com, and that will be an active hyperlink ...
Great help! I've been using the online calculators, and am happy to have this one available for future tweaking. Your correction formula has cell references that are all one row off. Add +1 to all call row references and it'll be correct for the "Estm. Sale Price". Cell F12 is "Sale Metrics" when i download the .xls. Nobody else mentioned this issue, so maybe it's just my excel, who knows.
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