Is buying or renting + ETF investing better long-term?

There is no blanket answer — it depends on three variables: property appreciation, ETF return, and the gap between rent and mortgage payment. In Germany with historical ~2 % p.a. property appreciation and 6–7 % p.a. ETF returns, the ETF path mathematically wins almost every time — provided the renter invests the difference consistently. In hot urban markets (Munich, central Berlin) with 4–6 % appreciation, the picture flips toward buying. The calculator shows you the threshold for your assumptions.

What closing costs apply when buying property in Germany?

In Germany typical closing costs add 9–12 %: real estate transfer tax 3.5–6.5 % depending on federal state, notary + land register ~1.5 %, broker commission ~3.57 % (since 2020 split half between buyer and seller). These costs are due immediately but do NOT add to the property value — pure capital outflow. The calculator deducts them from your equity before calculating the down payment, and treats them as forgone investment for the renter scenario.

How is the monthly mortgage payment calculated?

Annuity = Loan × (interest rate + amortization rate) / 12, monthly. For €350,000 loan, 3.5 % interest, 2.5 % amortization: 350,000 × 6 % / 12 = €1,750/month. The annuity stays constant during the rate-fixed period, but the ratio of interest to principal shifts: at the start you pay almost only interest, at the end almost only principal. The remaining loan balance after n years is computed exactly month by month (initial × (1+i)^n − annuity × ((1+i)^n − 1)/i).

What happens after the fixed-rate period ends — does the calculator account for it?

No, the calculator assumes a constant interest rate over the full term. In reality the fixed-rate period (Zinsbindung) ends after 10 or 15 years — then refinancing happens at the then-current market rates. If rates rise (as in 2022/23 from 1 % to 4 %), the new payment can be substantially higher. This is the biggest unforeseeable risk in home ownership — budget a buffer of 1–2 percentage points.

Why does the calculator include maintenance costs?

A property wears out: heating, roof, windows, bathroom — over 30 years each component needs replacement. Rule of thumb: 1.0–1.5 % of property value per year as maintenance reserve. For €400,000 value that is €4,000/year (~€333/month). Ignoring this compares apples to oranges — the renter calls the landlord, the owner pays. The calculator adds this to the mortgage payment and compares the delta to rent.

How does the renting + ETF comparison work exactly?

In the renting path, the renter invests (1) the full equity (which the buyer spent on down payment + closing costs) as a lump sum in an ETF, and (2) the monthly difference between the buyer's payment (annuity + maintenance) and rent as a savings plan. Both components compound at the entered ETF return. At the end, gains are taxed at 26.375 % capital gains tax + solidarity surcharge. Rent grows with 2 % inflation per year, maintenance costs likewise.

What about tax benefits for landlords / owner-occupiers?

For owner-occupiers: in Germany since 2006 there is no Eigenheimzulage and no deductibility of mortgage interest. The only subsidies: KfW programs for energy retrofits and Wohn-Riester (very limited use). The calculator ignores these as they vary widely individually. In Austria you can deduct part as Sonderausgaben — also not modeled.

Which input has the biggest impact on the result?

Property appreciation. At 0 % appreciation the ETF path wins almost always (even at just 4 % ETF return). At 4 % appreciation buying often wins — primarily due to leverage: a buyer with €80,000 equity controls a €400,000 property — a 4 % appreciation is €16,000/year, i.e. 20 % return on equity. The sensitivity table in the calculator shows you exactly where the threshold lies.

RENT VS. BUY CALCULATOR

Buying or renting + ETF — which is better for you?

Live comparison: you buy the property versus you rent and invest equity + monthly difference into ETFs. With sensitivity analysis for property appreciation and inclusion of closing costs + maintenance.

BETTER STRATEGY FOR YOU

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Net worth after your horizon

Final net worth € 0

Advantage over alternative € 0

Your inputs

Property & financing

Purchase price

Pure property price excluding closing costs

€

Equity available

Available capital for down payment + closing costs

€

Closing costs

Transfer tax + notary + broker (DE typical 9–12 %)

Mortgage interest rate

Effective rate p.a. (fixed period)

Initial amortization

Amortization rate p.a. — together with interest defines the monthly payment

Property appreciation

Expected annual property price growth

Maintenance p.a.

% of property value (rule of thumb: 1.0–1.5 %)

Comparable rent & ETF

Comparable rent (cold)

What a comparable apartment costs to rent per month

€

Rent inflation p.a.

Expected annual rent increase (DE avg 2 %)

ETF return expectation

Realistic p.a. return after fees (MSCI World ~7 %)

Time horizon

Investment horizon — typically 10–30 years

years

Both scenarios side by side

Metric	Buy	Rent + ETF

Net worth growth over time

Sensitivity analysis: property appreciation

The biggest unknown is future property appreciation. Here you see how final net worth changes under different scenarios — Rent + ETF stays constant because appreciation only affects the buy path.

Appreciation p.a.	Net worth Buy	Net worth Rent + ETF	Advantage Buy vs. Rent

Recommendation & context

How the comparison works

Path A: Buying the property

You pay equity for the down payment (price − loan) plus closing costs (~10 %). Over the term you pay monthly annuity (interest + amortization) and maintenance (~1 % of value p.a.). At the end you own the property at current market value minus remaining loan. Appreciation is your leverage: €80,000 equity controls a €400,000 property — 2 % appreciation equals €8,000/year, i.e. 10 % return on equity.

Path B: Renting + investing in ETF

Instead of down payment + closing costs you invest the full equity into an ETF immediately. Instead of annuity + maintenance you pay only the (lower) rent — the monthly difference flows additionally into the ETF. ETF returns compensate for the missing property appreciation. At the end gains are taxed at 26.375 % capital gains + solidarity surcharge. Advantage: full flexibility, no concentration risk, no interest-rate risk.

Leverage effect when buying

Leverage makes the difference. €80,000 equity in an ETF at 6 % return: €4,800/year. The same €80,000 as down payment on a €400,000 property at 2 % appreciation: €8,000/year on equity, i.e. 10 %. The catch: the mortgage interest eats this advantage because interest is sunk money. Buying only pays off when appreciation × leverage > ETF return + rent savings.

Risks the calculator does NOT show

Refinancing: after 10–15 fixed years rates may shock — a doubling of payment is possible. Concentration risk: location-dependent — a declining region (structural decline) can halve the value. Geographic lock-in: a job change abroad becomes a forced-sale trap. Prepayment clauses, deferred renovation, unexpected repairs (heating system replacement €30k). These risks reduce the real performance of the buy path but vary widely between individuals.

Related tools & academy articles

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Frequently asked questions about rent vs. buy

Is buying or renting + ETF better long-term?

Depends on three variables: property appreciation, ETF return, difference rent vs. mortgage. At DE-historical 2 % appreciation and 6 % ETF, ETF wins almost always — at 4 %+ appreciation buying flips ahead.

What closing costs in Germany?

9–12 % extra: transfer tax 3.5–6.5 % per state, notary/land register ~1.5 %, broker ~3.57 %. Due immediately, do NOT add to property value.

How is the mortgage payment calculated?

Annuity = Loan × (interest + amortization) / 12 monthly. At €350k loan, 3.5 % interest, 2.5 % amort: €1,750/mo. Remaining loan after n years computed exactly month by month.

What about the end of the fixed-rate period?

The calculator ignores it — assumes constant rate. In reality the fixed period ends after 10–15 years, then refinancing at market rates. Biggest unforeseeable risk.

Why include maintenance?

A property wears out — 1.0–1.5 % of value per year as maintenance reserve. Ignoring it compares unfairly: renter calls landlord, owner pays themselves.

How does Rent + ETF work in detail?

Renter invests (1) full equity immediately as lump sum in ETF and (2) monthly difference between buy payment (annuity + maintenance) and rent as savings plan. Both compound at ETF return, end taxed at 26.375 % capital gains tax.

Which variable matters most?

Property appreciation. Due to leverage (€80k equity on €400k property), each %-point of appreciation moves the buy path massively. Sensitivity table shows the threshold.

Are the calculations binding?

No. Simplified model with constant inputs, without refinancing risk, concentration risk or regional factors. Not investment or financing advice.

Important notice. This calculator is a model with constant interest rate, constant appreciation, constant ETF return and 2 % inflation. Real property transactions are highly regional, individual and interest-cycle dependent. Refinancing risk, concentration risk, location specifics and personal life situation are not modeled. This is not investment, tax or financing advice. A binding recommendation can only be provided by independent fee-based advisers.

Rent vs. Buy Calculator — Buy or Rent + Invest in ETF?