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Buy vs. Lease a Home

Buy vs. Lease a Home

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Buy vs. Lease a Home

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  1. Buy vs. Lease a Home • EGR 403, Summer 2004, Team 10 Jeffrey Scheinost – Organizer Stephen Casey – “Techie” Omabamid Odubela – Summarizer Mohammad Fazil – “Techie”

  2. Introduction • Buying vs. Leasing a home • Analysis Considerations • Buyer/Leaser- combined household income $90,000 • Invests 10% annually • Assume taxes are constant 25% • Can have money for down payment

  3. Scenario 1- Buy • Condominium in Glendale • Priced at $370,000 • 1245 s.f., 3 bedroom, 2.5 bath • Puts 20% down • Fixed Mortgage • 5.6% A.P.R. • Lender: American Home Loans • 30 Year Loan • Maintenance costs - $100/month • Cash Flow Analysis

  4. Scenario 2- Buy • Condominium in Glendale • Priced at $370,000 • 1245 s.f., 3 bedroom, 2.5 bath • 100% Financed w/ Private Mortgage Insurance • Fixed Mortgage • 5.6% A.P.R. • Lender: American Home Loans • 30 Year Loan • 30 year loan • Maintenance costs - $100/month • Cash Flow Analysis

  5. Scenario 3 - Lease • Apartment located in Glendale CA • 1235 s.f. 2 bedroom, 2.5 bath • Rental price of $2,499 per month ($1000 Security Deposit) • Annual rent increase of 6% • No Maintenance costs involved • Cash Flow Analysis