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