I am calculating the costs and benefits of buying versus renting.

1. Renting option: I am paying $1,850 rent each month and I plan to stay in this area for 5 years.

2. Buying option:

a. To purchase a home: annual interest rate = 4.00% for 30 years, 0 down payment, closing cost including transaction tax = buyer pays 3.0%.

b. To maintain a home: annual property tax = 85 cents for every $100 home value, annual maintenance = 0.5% of the home value.

c. To sell a home: realtor fee = seller pays 5%, transaction tax = seller pays 1.5%.

Questions:

a. To be breakeven in 5 years between renting and buying, what is the maximum value of the property I can purchase? If I expect real estate market remains flat, increases by 2% per year?

b. What is my monthly mortgage payment?

c. What is my monthly housing expenditure, including mortgage, tax, and maintenance?

d. How much cash do I need for closing?

e. Using 4.00%, how much is my monthly opportunity cost for the cash for closing?

f. What is my monthly cash flow between renting and buying?

g. After 5 years, what is my outstanding mortgage loan?

h. Assuming the selling price is the same with the purchasing price (i.e., no appreciation), how much is my net proceed? How much is my total gain/loss after 5 years (remember that I had to pay closing cost when I purchased the home)?

i. How about personal income tax consequences? How does it affect my decision? Please provide any realistic assumptions in your analysis.