Calculations on the annoying topic of buying/building vs. renting

Hello everyone,

since there is always the discussion about what is better for me, renting or buying/building, I have done some calculations here based on my financing example that might also be interesting for others.

For me, the decisive factor in construction financing is the factor interest+possibly closing costs+real estate transfer tax+notary. That is what the house really costs me, as these costs are not included in the actual value of the property in the event of a possible house sale. So in the end, for example, I will have paid a maximum of 30,200 euros all-in for a house+land+kitchen+outdoor facilities (600 sqm, 151 sqm living space), i.e. interest + closing costs for home savings contracts + real estate transfer tax + notary and will have no remaining debt in 12 years and thus will have paid it off. If interest rates remain low in 6-7 years, these costs will even be reduced. I have to say that we only had to finance 220k and were really lucky with the timing of the financing as well as the construction prices.

Since the value of land and house is not fixed in the future, this is the only reliable value of what living will cost us in the near future. The substance of the house will probably lose value and the value of the land will increase, but this is speculative and difficult to predict, so I calculate a value here that my property could lose in order not to be worse off than with renting.

If I now divide the above-calculated (30,200) by my term, I come to a cost of 157.29 euros per month. In addition, there are the additional costs (which I would also have similarly in a comparable rental property) and future necessary investments in renovations which I can hardly predict at the moment. I see this as my cost for living in my own house.

If I now take a comparable rental property in our region and calculate 1200 euros rent for the coming 12 and past 4 years, I would have 200,200 euros ((1200-157.29)×12×16) until the full ownership transfer to offset the depreciation as well as the renovation costs. Since I neither believe that my house will lose that much value in 16 years (new building) nor that the renovation costs should remain manageable in this time, building should definitely be worthwhile in my case. With every month living then in the paid-off house compared to the rental house, one can then add 1200 euros or more in case of rent increases to the 200,200 euros.

These are of course the pure numbers, regardless of advantages such as freedom, security of tenure,... or disadvantages such as location dependence,...

Can it be seen this way or have I missed/forgotten something crucial?

Has anyone of you done similar calculations?

Regards from Franconia

That the additional costs are similar to the tenant's, I somewhat doubt.

I doubt that the additional costs are similar to those of the tenant

Why?
Property tax - check!
Electricity - check!
Water and sewage - check!
Heating - check!
Maintenance - smaller things must also be paid directly by the tenant, major renovations are included in the rent

In addition, tenants have costs for the elevator, corridor cleaning, garden maintenance, smoke detector maintenance, and other small things.

Overall, the additional costs are somewhat higher because the building is usually larger than the apartment.

You can neglect the interest factor, after all, the landlord also wants to make a profit....

With two comparable properties, the question doesn't really arise. After a certain period X, during which your loan runs, the big chunk of repayment disappears, while you pay rent for your entire life and end up with nothing. It may be that renting is cheaper in the first 20 years, but after 20+x years certainly not. Moreover, you then live in your own house, which you can design according to your wishes.

Here, the argument is clearly made in one direction again. Of course, as a tenant I have to pay if someone takes care of the garden. I also have to do that for the house if I hire someone...
The additional costs for the house are higher. And not just a little bit. With ownership, almost everything costs money. And more than with most apartments.
As a tenant, I only have to pay for cosmetic repairs. With the house, EVERYTHING that breaks. Once the new building’s warranty expires, I either have to do everything myself, pay someone, or live with the condition.
Adjusting windows, small defect in the heating, shower fittings, etc., etc...
And after 20 years, larger repairs often come up.
Yes, the landlord can pass certain renovations on to the rent. But by far not everything.

And the increase in value of the house is not always and everywhere guaranteed. Especially in the first ten years, you often have little amortized, and with a sudden sale it can be difficult to cover the costs you incurred with the selling price.

And the interest rates cannot just be neglected. When renting, I pay rent and that’s it. How the landlord puts this together does not matter.
Interest is not a "whatever cost."

If ownership were so super cheap, the proportion of owners would have to be higher.

The fact is also: depending on what you want, you have more freedom in a house. No annoying neighbors wall to wall, remodeling however you want...
The fact is also: comparable apartments are usually expensive...

For the house EVERYTHING that breaks. As soon as the new building is out of warranty, I either have to do everything myself, pay someone, or live down the place.
Adjusting windows, small defect in the heating, shower fittings, etc, etc...
And after 20 years, bigger repairs often come up.
Yes, the landlord can pass certain renovations on to the rent. But by far not everything.

Only the rent is set in such a way that all this is covered. This is called provisions.

And you also cannot just disregard the interest. When renting, I just pay rent and that's it. How the landlord composes it can be irrelevant.
Interest is not a just-somehow cost.

Maybe you don’t care, but still you pay the provisions, the janitorial service, the landlord's return,... through the rent. Nobody rents out solely out of pure altruism.