Saturday, September 13, 2008

You Should Buy!

The faulty buy vs. rent calculator has showed up once again, this time on the RE/MAX of Western Canada site. This calculator always returns "You Should Buy!" no matter what inputs are used.

This calculator was covered in the first post on this blog and was originally found on but has since been removed.

Here is an example of the calculator currently found on the RE/MAX site where I used some absurd numbers.

Press Calculate...

You should Buy!

It looks like you should Buy based on the assumptions you have given us.

Why? If you buy for $1940723.70 (the maximum you would qualify for) you will pay down your mortgage of $1690723.70 by $443034.79 over 10 year(s) with your Principal and Interest payments of $9833.33 per month, plus your property will increase in value by $0 for a total investment growth of $443034.79.

This total is greater than your total investment growth from renting, which is approximately $297690.39 after 10 year(s). This was calculated by growing the monthly savings from renting ($10000.00) plus your current downpayment of $250000.00 at a standard after-tax rate of 4% per annum.

Wow! According to this calculator buying a TWO MILLION DOLLAR house that will not appreciate is a better option than renting for free. The problem is the same as before the savings from renting are fully accounted for. Saving $10,000/month under a mattress will amount to $1.2 MILLION over 10 years.

Totally broken. Again.


Dali said...

Do people really fall for the broken calculator?

squidly77 said...

thats the problem with that industry they think that the public is stupid
truth is..they are so stupid that they dont know that they are stupid
thus think we must be stupid too..


Carioca Canuck said...

It told me I should RENT.....

But, I was using a $200K down payment and a 10% return over 10 years....the actual scenario on my Brasilian bonds. As well I used a $3,000 PI payment to represent the approximate mortgage on my current rental property.

Thing is......they do not allow for condo fees, insurance or utiltiies.