In addition to the purely idealistic advantage of being able to live in one's own four walls, however, hard economic facts must also be taken into account to determine whether owning instead of renting really pays off. Because having to pay interest over a long period of time, to constantly build up investment reserves and to make ongoing investments in order to avoid a maintenance backlog, are costs that also add up quite a bit over the years for real estate ownership.
Thus many ask themselves again and again the justified question when actually the break even point is reached, at which interest payments with the real estate acquisition, set in relation to rent payments, which develop with the rent of a dwelling or a house, then exactly count themselves?
Rent increases make property acquisition almost inevitable
A major factor in bringing this consideration to a conclusion is the interest to be paid in relation to the rent payments to be made in the same period of time. Say: Interest payments correlate directly with rent payments. In order to specify the accuracy of the observation, potential rent increases must of course also be brought into correlation with interest rate changes during the financing period.
Beyond that, however, there is another key consideration that should not be overlooked: After interest payments have been eliminated and the property has been completely cleared of debt, owners live in their own four walls virtually rent-free. And how long they themselves will then be able to enjoy this immense benefit is only up to their personal lifespan. In order to make a realistic comparison, the purchase price of the property, the total interest to be paid for the mortgage financing and the maintenance costs and reserves must be put in relation to the total rental costs of a comparable rented property.
Not to forget, however, the rent increases within the comparison period. Without going into great detail now, it can be said off the top of my head that the long-term interest rate hedge during the financing period and, of course, the initial interest rate level will significantly influence the outcome of this comparison.
Ownership beats rent – just a matter of time
As a rule, the acquisition of ownership will win the race here. The only question for the individual then is when exactly the ominous break-even point – i.e. the point at which the costs of acquiring the property versus the rental payments – turns into a positive ratio. As a factor to take into account when deciding whether or not to own a property, the break-even point may provide some insight, though.
However in low-interest times, as they meet house builders already for quite some time in German countries, in which the rents are additionally still relatively high, the point at which the comparison curve is broken will be reached completely clearly and much faster in favor of the own four walls. Thus, the break-even point of which housing situation will ultimately prove to be the more favorable will serve only as a helpful stage consideration. In the whole consideration of the question whether property beats rent, in today's time the rental apartment will certainly draw the short straw!