Calculator: Landlord vs. Stock Lord (BETA)

This calculator is currently in beta. Please let us know of any issues loading, running, and/or suspected bugs @ fetchingfinancialfreedom AT

Assumptions / Methodology

This calculator is meant for novices to real estate investing, especially useful for those interested in purchasing a multifamily and occupying one of the units. This page came out of an itch to fully compare buying vs renting when considering becoming a landlord.

All default settings were determined mostly based on other, similar models at this point, such as the NY Times Rent vs. Buy calculator, or the Bigger Pockets Forum. Please let us know if you have data to lead us to believe we should change any of this presets. Actually, please reach out to us for any sort of suggestion or comment – we’d love to hear from you!

The “owner-occupied” checkbox reveals two additional inputs: [Current Owner Rent] and [Market Value of Owner-Occupied Unit]. This part of the calculator lets you more fully compare between (1) Purchasing a multifamily property and (2) Renting for life and investing all the initial cash on hand. The calculator assumes you are currently renting and takes this rent ([Current Owner Rent]) into consideration for net worth and cash flow considerations.

It essentially adds the current owner rent as a positive cash inflow for the landlord scenario. The [Market Value of Owner-Occupied Unit] field subtracts the rental market value of the owner-occupied unit from the total [Monthly Rent (all units)]. This makes it easier to compare between owner-occupied and not. The [Current Owner Rent] is not included in the NOI and related equations.

NOI = ([Monthly Rent (all units)] * [Occupancy Rate]) – [Property Expenses] – [Landlord Expenses]

where Property Expenses = ([Taxes%] + [Insurance%]) * [Property Value] + [HOA/misc]

and Landlord Expenses = ([Maintenance%] + [Management%]) * ([Monthly Rent (all units)] * [Occupancy Rate])

[HOA/misc] and [Monthly Rent] are adjusted yearly based on [Rent Growth %]

[Property Value] is adjusted yearly based on [Property Growth %]

CAP Rate = NOI / [Property Value]

Cash on Cash Return = NOI / [Cash on Hand Required]

where Cash on Hand Required = [Downpayment] + [Closing Costs] + [Initial Repairs/Renovations]

Initial Repairs/Renovations add to the property value, dependent on the [Value of Repairs] field.

The equity line in the graph goes up based on both property growth and earned equity from paying off the mortgage. The equity line takes into account selling costs, as the full equity value could not be realized with some transaction costs. These transaction costs are represented by multiplying [Cost of Selling %] with the current property value.

“Cash on Hand” is a separate line on the chart, representing the cash on hand at any given month given the cash flow. A negative value means the owner would have to spend money every month. If the cash on hand exceeds the amount needed for an emergency fund (currently calculated as [Emergency Fund (months)] * ([Property Expenses] + [Landlord Expenses] + [Mortgage Payment])), the excess money is assumed to be invested in the stock market at the same rate as the “rent for life” scenario ([Investment Growth %])