Calculate the investment value of renting versus home owners

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Question - Pierre is deciding whether he should rent or buy a house. Assuming that renting an apartment will cost of him $1,500 per month and the mortgage on a house is $3,500 per month.

If he rents, he considers investing the difference between monthly rental cost and mortgage cost in a Balanced Fund earning 8% per year. If the house he purchases in Oshawa, Ontario costs about $800,000 and he intends on paying off the mortgage after 25 years.

If he decides to sell the house in 25 years and the house appreciates at a rate of 4% per year.

Required -

What would be the better outcome, renting or buying and by how much? (Show your work and include all financial calculators)

Calculate the investment value of renting versus home ownership.

Reference no: EM133112573

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