Text Analysis & GenerationPlanningFinance

Rent vs. Buy Scenario Explainer

Model rent vs. buy: parse data, request missing fields, amortization, costs, rent growth, invested savings, and output recommendation with net advantage, breakdowns, and lifestyle notes.

Prompt Content

Goal: Compare the total financial outcome of renting vs. buying over the specified period using the provided inputs, and give a clear recommendation with financial breakdown and lifestyle considerations. Follow these steps: 1) Parse inputs from <buy-inputs> Buy Inputs </buy-inputs> , <rent-inputs> Rent Inputs </rent-inputs> , and <horizon-and-return> Horizon And Return </horizon-and-return> . If any required field is missing, ask for it before calculating. 2) Conventions: all percents are annual; convert to decimals; monthly rate = annual_rate/12; horizon_months = analysis_horizon_years*12. 3) Compute Buy scenario: - Upfront: down_payment = price*down_payment_percent; buyer_closing = price*closing_costs_percent_buy. - Mortgage: loan = price - down_payment; monthly_rate = interest_rate_percent/12; term_months = loan_term_years*12; monthly_payment = loan*monthly_rate*(1+monthly_rate)^term_months / ((1+monthly_rate)^term_months - 1). Sum first horizon_months payments. - Remaining balance after horizon_months (standard amortization formula). - Home value path: value_t grows by appreciation_percent_per_year; use this to compute annual property_tax = property_tax_percent*value_t and maintenance = maintenance_percent*value_t (compounded annually). Insurance_per_year constant; HOA_per_month constant. - Sale at horizon: sale_price = price*(1+appreciation_percent_per_year)^analysis_horizon_years; selling_costs = sale_price*selling_costs_percent; remaining_balance = loan_balance_at_horizon; net_sale_proceeds = sale_price - selling_costs - remaining_balance. - Opportunity cost of equity: FV_equity_tied_up = FV of (down_payment + buyer_closing) compounded annually at investment_return_percent_per_year. - Monthly owning cost baseline for savings comparison = monthly_payment + (property_tax + maintenance + insurance_per_year)/12 + HOA_per_month. 4) Compute Rent scenario: - Rent each year grows by rent_growth_percent_per_year; sum rent over horizon; add renter_insurance_per_year*analysis_horizon_years. - Opportunity for invested cash: FV_initial_cash = FV of (down_payment + buyer_closing) compounded annually at investment_return_percent_per_year. - Monthly renting cost baseline = current rent in each month (with annual step-ups) + renter_insurance_per_year/12. 5) Monthly savings investing rule: - For each month, monthly_savings = owning_baseline_monthly_cost - renting_baseline_monthly_cost. - If monthly_savings > 0, renting is cheaper that month: add FV of monthly_savings invested at monthly_rate_invest = investment_return_percent_per_year/12 to the Rent scenario. - If monthly_savings < 0, owning is cheaper that month: add FV of |monthly_savings| invested at monthly_rate_invest to the Buy scenario. 6) Totals at horizon: - Buy cash outflows = upfront (down_payment + buyer_closing) + total_mortgage_payments + total_property_tax + total_maintenance + total_insurance + total_HOA. - Buy net position = -Buy cash outflows + net_sale_proceeds + FV_monthly_savings_if_owning_cheaper - FV_equity_tied_up. - Rent cash outflows = total_rent + total_renter_insurance. - Rent net position = -Rent cash outflows + FV_initial_cash + FV_monthly_savings_if_renting_cheaper. - Net advantage = Buy net position - Rent net position (positive favors Buying). 7) Output exactly in this structure (plain text): Summary - Recommendation: Buy/Rent (state which and by how much: Net advantage = $X) - Horizon: Y years Key numbers - Buy net position: $... - Rent net position: $... - Net advantage (Buy - Rent): $... Buy breakdown - Upfront (down payment, closing): $... - Mortgage payments (total): $... - Property taxes (total): $... - Maintenance (total): $... - Insurance (homeowners) (total): $... - HOA (total): $... - Net sale proceeds: $... - FV of equity tied up (opportunity cost): -$... - FV of monthly savings credited to Buy (if any): $... Rent breakdown - Rent paid (total): $... - Renter's insurance (total): $... - FV of initial cash (down payment + buyer closing) invested: $... - FV of monthly savings credited to Rent (if any): $... Lifestyle considerations - Flexibility: renting offers easier moves; buying suits long-term stay. - Stability: buying provides housing cost predictability after loan payoff; renting tracks market rents. - Liquidity/opportunity cost: ownership ties up equity; weigh against alternative returns at your assumed rate. Notes - All amounts nominal; no income tax effects or PMI unless included in inputs. Show all rates and assumptions used. <example> BUY_INPUTS: price: 450000 down_payment_percent: 20 interest_rate_percent: 6.5 loan_term_years: 30 property_tax_percent: 1.2 maintenance_percent: 1.0 insurance_per_year: 1200 hoa_per_month: 0 closing_costs_percent_buy: 3 selling_costs_percent: 6 appreciation_percent_per_year: 3 RENT_INPUTS: current_rent_per_month: 2200 rent_growth_percent_per_year: 3 renter_insurance_per_year: 200 HORIZON_AND_RETURN: analysis_horizon_years: 7 investment_return_percent_per_year: 5 </example>

Variables

Buy Inputs: Purchase and mortgage details as key: value lines. Required keys: price, down_payment_percent, interest_rate_percent, loan_term_years, property_tax_percent, maintenance_percent, insurance_per_year, hoa_per_month, closing_costs_percent_buy, selling_costs_percent, appreciation_percent_per_year.; Example: price: 450000 down_payment_percent: 20 interest_rate_percent: 6.5 loan_term_years: 30 property_tax_percent: 1.2 maintenance_percent: 1.0 insurance_per_year: 1200 hoa_per_month: 0 closing_costs_percent_buy: 3 selling_costs_percent: 6 appreciation_percent_per_year: 3
Rent Inputs: Rent details as key: value lines. Required keys: current_rent_per_month, rent_growth_percent_per_year, renter_insurance_per_year.; Example: current_rent_per_month: 2200 rent_growth_percent_per_year: 3 renter_insurance_per_year: 200
Horizon And Return: Analysis period and investment return as key: value lines. Required keys: analysis_horizon_years, investment_return_percent_per_year.; Example: analysis_horizon_years: 7 investment_return_percent_per_year: 5

Prompt Content

Variables

Buy Inputs

Purchase and mortgage details as key: value lines. Required keys: price, down_payment_percent, interest_rate_percent, loan_term_years, property_tax_percent, maintenance_percent, insurance_per_year, hoa_per_month, closing_costs_percent_buy, selling_costs_percent, appreciation_percent_per_year.

Example: price: 450000 down_payment_percent: 20 interest_rate_percent: 6.5 loan_term_years: 30 property_tax_percent: 1.2 maintenance_percent: 1.0 insurance_per_year: 1200 hoa_per_month: 0 closing_costs_percent_buy: 3 selling_costs_percent: 6 appreciation_percent_per_year: 3

Rent Inputs

Rent details as key: value lines. Required keys: current_rent_per_month, rent_growth_percent_per_year, renter_insurance_per_year.

Example: current_rent_per_month: 2200 rent_growth_percent_per_year: 3 renter_insurance_per_year: 200

Horizon And Return

Analysis period and investment return as key: value lines. Required keys: analysis_horizon_years, investment_return_percent_per_year.

Example: analysis_horizon_years: 7 investment_return_percent_per_year: 5