Our rent vs buy tracker - year 1
23 May 2026 | #housing | #japanWe recently built our home in Tokyo with Ichijo. Before deciding to build our home, I run the numbers and concluded that neither owning nor renting was clearly financially superior. (I was happy to see later that much more knowledgeable people arrived to the same conclusion.) We still decided to own our home for non-financial reasons. In this post (and future updates), I’ll track how our financial results compare to if we had continued renting.
Approach
The main argument for buying is that, in the end, you own an asset you can sell. The challenge is that a home’s value only becomes real when you actually sell it, which makes it hard to predict in advance. So asking the question of “would I have more wealth had I kept renting” is difficult to answer until one sells their home.
To work around this, I structured my calculations around a few benchmarks that can be calculated:
- At what sale price could we repay the remaining mortgage and walk away? (This is less about rent vs. buy, and more about our own peace of mind.)
- At what sale price would we end up with the same amount of cash as if we had continued renting and simply saved the difference (without investing it)?
- At what sale price would we match the outcome of continuing to rent while investing the difference in eMaxis Slim All Country?
Then if I see similar properties on sale, I can guess approximately where we stand.
Why eMaxis Slim All Country?
eMaxis Slim All Country is a popular, low-cost mutual fund tracking the MSCI All Country World Index (ACWI). The reasons I picked it is that it is easy to calculate with (it’s tracked in yen, reinvests dividends, deducts fees internally), it is popular enough that it will likely stick around for the next 30 years, and it is what I personally invest in.
Methodology
I set the closing costs when selling the home at 4% of the sale price.
I assume any newly available money gets invested immediately, and when the home owner gets more money than the renter (e.g. subsidy) then the renter sells shares on the same day to cover the difference.
I did not consider taxes on investment returns to keep things simple.
Costs for the home owner
These are the actual costs that we are paying for our house. It includes:
- any deposit or similar payments while building the house
- mortgage payments
- property tax
- maintenance
There are also some positive cash flows for the home owner:
- mortgage payout covering something paid in cash earlier (e.g. deposit for the land, garden construction)
- subsidies for energy efficient housing and solar panels
All of these are actual amounts that we pay or receive, so I have the exact numbers for them.
I considered adding furniture and home appliances here as well, but I decided against it: while some people might buy more furniture when moving to their long-term home compared to a rental, we didn’t buy that much new stuff, so it was comparable to a regular moving.
Costs for the renter
Deciding the cost for the comparable renter needs more guesswork.
Price of the rental
Deciding the price of the alternative rental is difficult. First of all there are very few houses for rent, and they usually fall into 2 categories:
- houses built to rent - these can be rented long-term, but usually have low build quality as the owners minimize their building costs
- houses built for the owner - these happen when the owner has to move (usually due to a new work assignment) and they rent it out for a few years. Build quality is higher, but rental contracts are often time limited (as they would sell if they wouldn’t be coming back).
But also in an alternative world we would probably be renting an apartment (mansion), so it’s better to compare to those. Following this approach, instead of looking for a place that’s the same size as our house, I look for one that otherwise we would rent: currently we have 2 small kids, and our house is big enough for 3 kids to be raised here. But right now we would probably rent a smaller, 3LDK mansion.
So when we would move, I search for places in the area on Suumo that would fit our needs. Then order by cheapest first, drop first 2 (to avoid outliers), average the next 5. This is a bit arbitrary, but I wanted to capture that we usually check and apply to multiple places, and only some will accept us. So simply picking the cheapest would not be realistic.
Any management fee gets added to the rent when calculating the amount for easier tracking.
If the renter doesn’t move, then we assume a 2 year renewal cycle with 1 month of extra rent paid as renewal fee each time.
Initial costs of renting
Every time we move, there is an initial fee for renting a place (key money, real estate fee, deposit, overlapping rents, moving company), so I use 4 months of rental to calculate for this.
This does raise a decision though: when should we assume that the renter moves? The owner (hopefully) stays put for a long time, but if we would to rent, we would probably move every now and then. Our previous rental was a fixed-time contract coming to an end soon, so this time it is certain that the renter had to move. I will decide later when the renter moves again.
Car parking
We bought a car last year, and since the renter is living in a mansion, they will have to rent parking space for the car. Our last mansion had an on-site parking that we could rent for 16,000 yen per month, and I found that other parking places nearby went for 20-30,000 yen a month. I will use 20,000 yen and assume the same contract and renewal fees as the mansion (so that I can simply add it to the rent).
Utilities
We have solar panels on our house and don’t have gas connected (オール電化住宅), so our utility bill is expected to be less than the comparable rental. Our last rental was a 5 years old, reinforced concrete building with double-pane windows and floor heating (using gas). Our yearly utilities were 135,000 yen for electricity and 115,000 yen for gas (for our last 12 months there), so overall around 250,000 yen for 12 months, or 20,833 yen per month.
In our house during the last 6 months (since we moved in) we paid 67,000 yen overall for electricity. This was mainly winter and spring, so I expect the solar panels to reduce this further during the summer months. On this value alone, we paid 11,167 yen per month. Moreover we might look into another electricity provider, as Ichijo hooked us up with Tepco that charges a base fee that can be significant if we don’t use much electricity in a given month (while other providers only charge for usage, but charge more for that).
This means the renter is paying almost 10,000 yen more for utilities each month, so I will add that to their monthly fee.
Up until now
Here is an overview of how the cash-flows of the buyer compare to the renter since we started building the house:
| Date | Cost | Item | Current balance of renter |
|---|---|---|---|
| 2024. January | ¥1,000,000 | Ichijo pre-contract signing deposit | ¥1,000,000 |
| 2024. March | ¥3,000,000 | Deposit for the land | ¥4,000,000 |
| 2024. May | -¥2,817,888 | Leftover from the mortgage for the land | ¥1,182,112 |
| 2024. June | ¥23,672 | Mortgage | ¥1,205,784 |
| 2024. July | ¥18,267 | Mortgage | ¥1,224,051 |
| 2024. August | ¥18,267 | Mortgage | ¥1,242,318 |
| 2024. September | ¥18,267 | Mortgage | ¥1,260,585 |
| 2024. October | ¥18,267 | Mortgage | ¥1,278,852 |
| 2024. November | ¥18,267 | Mortgage | ¥1,297,119 |
| 2024. December | ¥18,267 | Mortgage | ¥1,315,386 |
| 2025. January | ¥26,829 | Mortgage | ¥1,342,215 |
| 2025. February | ¥26,829 | Mortgage | ¥1,369,044 |
| 2025. March | ¥26,829 | Mortgage | ¥1,395,873 |
| 2025. April | ¥180,000 | Property tax of 2025 (for the empty land) | ¥1,575,873 |
| 2025. April | ¥26,829 | Mortgage | ¥1,602,702 |
| 2025. May | ¥181,287 | Mortgage | ¥1,783,989 |
| 2025. June | ¥1,225,535 | Water pipe connection construction | ¥3,009,524 |
| 2025. June | ¥181,287 | Mortgage | ¥3,190,811 |
| 2025. July | ¥1,331,000 | First half of the garden construction | ¥4,521,811 |
| 2025. July | ¥181,287 | Mortgage | ¥4,703,098 |
| 2025. August | ¥181,287 | Mortgage | ¥4,884,385 |
| 2025. September | ¥181,287 | Mortgage | ¥5,065,672 |
| 2025. October | ¥175,633 | Home insurance (5 year) | ¥5,241,305 |
| 2025. October | ¥181,287 | Mortgage | ¥5,422,592 |
| 2025. November | -¥3,171,400 | Leftover from the mortgage for the house (to cover garden and water pipe) | ¥2,251,192 |
| 2025. November | ¥181,287 | Mortgage | ¥2,432,479 |
| 2025. December | -¥1,100,000 | Would-be initial fees of renting (key money, RE agency, deposit) | ¥1,332,479 |
| 2025. December | ¥7,017 | Mortgage minus would-be-rent&parking+utilities | ¥1,339,496 |
| 2026. January | ¥6,212 | Mortgage minus would-be-rent&parking+utilities | ¥1,345,708 |
| 2026. January | ¥1,322,400 | Second half of garden construction | ¥2,668,108 |
| 2026. February | ¥6,212 | Mortgage minus would-be-rent&parking+utilities | ¥2,674,320 |
| 2026. March | ¥6,212 | Mortgage minus would-be-rent&parking+utilities | ¥2,680,532 |
| 2026. April | -¥4,100,000 | Energy efficiency subsidies | -¥1,419,468 |
| 2026. April | ¥6,212 | Mortgage minus would-be-rent&parking+utilities | -¥1,413,256 |
It starts with 1 million yen for Ichijo. Then we paid the deposit for the land (3 million yen), but we got it back mostly from the mortgage.
Our bank allowed to only pay interest during the first 12 months (as the house was being built). It took us 1.5 year from buying the land to moving in so we had to start paying back the principal as well, and overall paid 1.5 million yen for the mortgage, while still paying rent at our old place too.
So at the time of moving in we were down 2.5 million yen compared to a renter. We still had half of the garden left to pay, however the renter had to pay the initial fees of their new rental which balanced that out.
Then in April we received the energy efficiency subsidies (for the high quality house and solar panels) of more than 4 million yen, which flipped it over and made us almost 1.5 million ahead of the renter.
After the initial costs, the monthly payment difference got to a very minor 6,212 yen. This comes from the mortgage (¥291,212) minus the rent (¥255,000) minus parking (¥20,000) minus utilities saved (¥10,000).
We are still on the hook for property taxes though. And the interest rate is also going up, so after 5 years the monthly mortgage payments are expected to increase. So overall the owner will pay more per month, but (in our case) by not that much.
I also calculated how much eMaxis Slim All Country each payment could have bought on the day of the payment (luckily getting eMaxis price data into Google Sheets is as simple as =IMPORTDATA("https://www.am.mufg.jp/fund_file/setteirai/253425.csv")). In this timeframe (January 2024 to May 2026) eMaxis Slim All Country went up by a crazy 75%, and we often had to pay early and then got the money back later. So while an uninvested renter would have 1.5 million yen less than us, a renter that invested each cashflow would have 200,000 yen more than us.
Current numbers
So our current summary numbers are as follows:
| Item | Amount |
|---|---|
| Current remaining principal | 107 million yen |
| If renting and saving, the saved money (w/o investing) | -1.5 million yen |
| If renting and investing, the value of investment | 200,000 yen |
| How much to sell for to walk away with 0 | 112 million yen |
| How much to sell for to be the same as renting without investing | 110 million yen |
| How much to sell for to be the same as renting with investing | 112 million yen |
As of now I doubt we could sell for 110 million yen, as that’s more than what we paid for it ourselves and we could design it as we wished. But that’s expected, selling a new house (especially custom build) in the first 5-10 years is almost never a good financial move.
