Rent or Buy: The Real Comparison
Calculate the break-even point of buying and compare wealth evolution whether you buy or rent and invest.
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The real comparison: buying vs renting + investing
The question "rent or buy" is often poorly framed. It is not just about comparing a rent and a monthly payment. You need to compare two wealth trajectories:
🏠 Buying Scenario
- • Down payment + notary fees paid upfront
- • Monthly mortgage + insurance + owner charges
- • Wealth = property value − remaining mortgage
- • Capital gain if the property appreciates
📈 Renting + Investing Scenario
- • Down payment + notary fees invested from the start
- • Monthly rent + tenant insurance
- • The monthly difference (if buying costs more) is invested
- • Wealth = financial portfolio with compound interest
When does buying become more advantageous?
The break-even point depends mainly on the rent/price ratio and the real estate appreciation assumption.
Rural / suburban areas
Rent/Price > 5%
Break-even ≈ 5–8 years
Major cities (Lyon, Bordeaux…)
Rent/Price ≈ 3–4%
Break-even ≈ 10–15 years
Central Paris
Rent/Price < 2.5%
Break-even ≈ > 20 years
Frequently asked questions
Should capital gains be included in the calculation?▼
Yes, that is what our simulator does. The annual property appreciation (adjustable from -5% to +15%) is applied each year. It increases the property value, hence the buyer's wealth. The primary residence benefits from total capital gains tax exemption on resale, which is a significant tax advantage.
Does the simulator account for investment taxation?▼
For simplicity, the simulator uses a net-of-tax return for the rental scenario. If you invest in PEA (exempt after 5 years) or life insurance, the net return can approach the gross return. On a securities account, the 30% flat tax applies to gains. Adjust your return rate accordingly (e.g. 7% gross ≈ 4.9% net on securities account).
Is renting really more profitable than buying in Paris?▼
With a rent/price ratio of 2 to 2.5% in Paris, the buyer pays roughly 2 to 3 times the equivalent rent in monthly payments (mortgage + charges). The renter can invest this difference at 7% in global ETFs. Over 20 years, with Parisian real estate appreciation of 2 to 3%/year, the renter-investor's wealth can exceed the buyer's. That said, buying offers financial leverage (bank loan) and residential security that financial investment does not provide.
Refine your real estate project
Once your decision is made, calculate your purchase budget and the details of your mortgage.
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