“Rent is money down the drain” is one of the most repeated phrases in real estate. It is also too simple. Whether buying makes more sense than renting depends on prices, interest rates, how long you will stay and what you would do with the money otherwise. Here is how to run the numbers properly.
The costs of buying
When you buy, your monthly payment is only part of the story. A complete calculation includes:
- Mortgage interest: the true cost of borrowing. In the early years, most of your payment goes to interest.
- Property taxes: around 1.8% to 2% of the purchase price per year in Miami-Dade, with a homestead exemption that caps increases for primary residences.
- Insurance: homeowners and, if needed, flood insurance.
- HOA fees for condos and some townhouses.
- Maintenance: budget roughly 1% of the home’s value per year for a house, less for a condo.
- Transaction costs: closing costs when you buy (2% to 5%) and agent fees and taxes when you sell.
- Opportunity cost: the return you could have earned by investing your down payment instead.
The benefits of buying
- Principal repayment: part of each payment builds equity.
- Appreciation: Miami home values have historically risen over the long term, although not in a straight line.
- Stability: no rent increases and no landlord deciding not to renew.
The costs of renting
- Rent, which typically rises every year.
- Renter’s insurance, which is inexpensive.
- Moving costs whenever you have to relocate.
A Miami example
Imagine a two-bedroom condo priced at $650,000 that would rent for about $3,900 per month.
- With 20% down ($130,000) and a 30-year mortgage at 6.5%, the principal and interest payment is about $3,290 per month.
- Add property taxes (about $1,000 per month), HOA fees ($900) and insurance ($150), and the total monthly cost is about $5,340.
- Of that, roughly $485 per month goes to paying down principal in the first year.
On a monthly basis, buying costs more than renting in this example. But if the condo appreciates by 3% per year, the owner gains about $19,500 in value in the first year, plus about $5,800 in principal repayment.
The break-even point is usually somewhere between four and seven years. If you might move sooner than that, renting often wins.
Naomi Okafor, Senior Agent
How to use our calculator
Every Doorstep listing includes a mortgage calculator — try it with the example above:
Estimated monthly payment
$4,506/mo
- Principal & interest73%$3,287
- Property tax23%$1,029
- HOA dues0%$0
- Home insurance4%$190
- Loan amount
- $520,000
- Total interest
- $663,231
- Down payment
- 20%
Estimate only — not a loan offer. Taxes, insurance and rates vary; your lender will confirm the final figures.
Enter the price, your down payment, the interest rate and the loan term to see your monthly payment broken down into principal and interest, taxes, insurance and HOA fees. Compare that number with the rent for a similar home in the same building or neighborhood.
Questions the calculator can’t answer
- How long will you stay?
- How secure is your income?
- Would you invest the down payment wisely if you kept renting?
- How much do you value stability and control over your home?
Don’t forget the tax picture
The mortgage interest deduction is less valuable than it once was, because the standard deduction is now higher. Many Miami buyers find that they no longer itemize at all. Florida has no state income tax, which helps your budget either way, but you should talk to a tax adviser before counting on any deduction.
Investors and second homes
The calculation changes if you are buying a second home or an investment property. Lenders typically require larger down payments, the homestead exemption doesn’t apply and rental income, vacancy and management costs enter the equation. Our agents can share realistic rent and occupancy figures for the buildings you are considering.
The bottom line
Buying usually makes sense if you plan to stay at least five years, have a stable income and can comfortably afford the full monthly cost. Renting makes sense if you value flexibility, are new to Miami or expect to move. Neither choice is wrong — what matters is making it with the full picture in mind.
Ready to compare real homes? Browse homes for rent and homes for sale in the same buildings and neighborhoods, then run each one through the calculator.
