Buy vs. Rent – Maui Condo Study

With Hawaii’s tight rental market, here more than any other place in the country, it makes sense to buy a home instead of renting.

If you are currently renting, parents of kids that are currently renting, or in real estate, please share this information. Hands down, buying is significantly better – period.

All of the figures below are accurate. They are based on a current transaction about to close with our company.

Our case study today is buying a $300,000 condo on Maui. The buyers are only putting 5% down, or $15,000. Their closing costs are $3,500. So the total out of pocket at closing is less than $20,000. The mortgage is based on a rate of 5.375% with the mortgage insurance built into the rate.

The comparison is with a monthly rent of $1,250, which will increase each year by 4% – the current statistical annual rent increase for Maui County.

The comparison ends with the homeowner selling the property after 10 years. This analysis is so complete it takes into account everything – taxes, insurance, HOA fees during the time of ownership, and then also takes into account the taxes on the sale of the property, and even the real estate sales commission.

What’s the result? With less than $20,000 out of pocket, in a short 10-year period, the person that is buying versus renting will walk away $132,276 richer. The renter only rented, so they have nothing to show for their 10 years, other than paying off someone else’s mortgage.

If you would like a customized buy vs. rent comparison, please let me know. We have the data for all the islands in all different price ranges, down payments, loan programs, and how they compare you what you are currently paying in rent.