Should you keep renting in Draper or make the jump to homeownership? This is a big call, especially if you plan to stay put for about five years. You want a clear, apples-to-apples view of true costs, not just a monthly payment. In this guide, you’ll learn a simple way to compare rent and buy over a five-year horizon, plus what inputs matter most in Draper. Let’s dive in.
How the 5-year comparison works
You’ll run two side-by-side cases over five years: Buy vs Rent. For each, track upfront costs, yearly expenses, and the value you walk away with at the end. The goal is to see your total out-of-pocket costs and your net position after equity or savings.
- Buy case: down payment, closing costs, mortgage, taxes, insurance, maintenance, HOA, utilities, and selling costs. Then factor in equity from principal paydown and any appreciation.
- Rent case: monthly rent, rent growth, renters insurance, utilities, deposits and fees. Also track what you could invest if you do not use a down payment.
- End of Year 5: compare your net position. Owners look at sale proceeds after paying off the loan and selling costs. Renters look at savings and any investment value.
Key Draper inputs to gather
Collect local data, then plug it into your worksheet. These sources help you keep numbers current:
Note: rent and sale prices can shift quickly neighborhood by neighborhood. Use current Draper listings and recent leases from your lender and agent to ground your assumptions.
Buying costs to include
Build your buy-side numbers with these line items:
- Purchase price and down payment. Try multiple down payments, such as 3 percent, 10 percent, and 20 percent.
- Mortgage payment. Use a 30-year fixed as a baseline and test ±1 percent to ±2 percent on the rate.
- PMI if your down payment is under 20 percent. Conventional PMI can typically be removed when your loan-to-value reaches about 80 percent.
- Property taxes. Use a local effective rate from Salt Lake County and apply it to the assessed value each year.
- Homeowner insurance. Get a local quote, then enter the annual premium.
- Maintenance and repairs. A common rule of thumb is 1 percent of the home’s value per year, adjusted for age and condition.
- HOA fees. Some Draper communities have monthly dues. Enter the exact amount.
- Utilities and services. Owners often pay for items like water, trash, and yard care. Add what applies.
- Closing costs to buy. Use a default like 3 percent of the purchase price and refine with your lender quote.
- Selling costs at exit. Use a range such as 5 percent to 7 percent to cover commission and seller-side closing costs.
- Appreciation. Run conservative cases at 0 percent to 4 percent, then test a higher case.
- Tax items. The value of mortgage interest and property tax deductions depends on whether you itemize and on SALT caps. Treat this as a conservative input.
- Opportunity cost. If you put cash into the home, you give up potential investment returns. Use a reasonable annual return range to test the effect.
Renting costs to include
Set up your rent-side numbers with clear assumptions:
- Initial monthly rent and what utilities you pay. Enter any parking or pet fees.
- Rent growth each year. Test 2 percent to 4 percent as a baseline and stress-test higher or lower.
- Renters insurance. Add an annual figure.
- Security deposit and move-in fees. Treat the deposit as money that may be returned at move-out.
- Opportunity cost. If you do not put cash into a down payment, you can invest it. Track that investment over five years using a range of returns.
Exit math after 5 years
At the end of Year 5, estimate your net position.
- Owner: projected sale price minus selling costs and the remaining loan balance equals your net proceeds. That is your realized equity after costs. If you meet ownership and use tests for a primary residence, gains may be excluded up to federal limits. Consult a tax professional for details.
- Renter: add up total rent and fees paid, then compare to your invested savings value. Include the return of your security deposit if applicable.
Sample scenario walkthrough (illustrative)
The example below is a simplified demonstration. It is not Draper-specific and not advice.
- Purchase price 600,000, down payment 10 percent, loan 540,000, 30-year fixed at 6.5 percent. PMI at 0.8 percent annually until about 80 percent loan-to-value. Property tax 0.8 percent of value, homeowner insurance 1,500 per year, maintenance 1 percent of value per year, buyer closing costs 3 percent, selling costs 6 percent, appreciation 2 percent per year.
- Rent 2,500 per month to start with 3 percent annual rent growth. Renters insurance 200 per year.
- Run the worksheet to calculate mortgage amortization, equity build, total costs, sale proceeds, and invested savings.
This example shows how transaction costs and interest rates matter a lot in a five-year window. A small change in the mortgage rate, rent growth, or appreciation can flip the result.
Important: Update the worksheet inputs with current Draper listings, mortgage rate quotes, and Salt Lake County tax rates before drawing conclusions.
Sensitivity: what moves the result
Focus your testing on these variables first:
- Interest rates. Higher rates raise monthly costs and slow principal paydown. Use the Freddie Mac PMMS as your baseline and test ±1 percent to ±2 percent.
- Appreciation and rent growth. Even a 1 percent swing per year compounds over five years. Use conservative defaults and stress-test.
- Down payment size. Lower down reduces cash needed but may add PMI and raise monthly costs. Higher down can improve cash flow but has an opportunity cost.
- Time horizon. Because of transaction costs, very short stays often favor renting. Five years is a reasonable test window, but run three and seven years too.
- Inflation and local economy. Rising costs affect both owners and renters. Review CPI trends through the Bureau of Labor Statistics and track local jobs through the Utah Department of Workforce Services.
Beyond dollars: lifestyle factors
Money is not the only factor. Consider how you live and what you value.
- Flexibility. Renting can make it easier to move for work or lifestyle. Selling has timing and market risk.
- Control and predictability. Owning gives you more control over the home and potential payment stability if you use a fixed-rate loan. Renting may see yearly adjustments.
- Maintenance responsibility. Owners handle repairs and replacements. Renters typically call the landlord.
- Neighborhood fit. Areas inside Draper vary by home type and HOA presence. Use the City of Draper resources and a local tour to pick the right match for you.
How to run your numbers
Use a simple worksheet with two columns and annual rows from Year 0 through Year 5. Then follow these steps:
- Gather inputs: loan quotes, down payment, buyer closing costs, property tax rate, insurance, HOA, maintenance, rent level, rent growth, expected appreciation, selling costs, and an investment return for savings.
- Pull local references: Freddie Mac PMMS for rates, Salt Lake County Assessor for tax details, FHFA HPI for long-run price trends, BLS CPI for inflation context, U.S. Census for housing snapshots, and Utah DWS for jobs data.
- Compare results: total cash out, net position after five years, and effective monthly cost after equity. Then do a breakeven check to see which variables flip the outcome.
If you want a personalized side-by-side, reach out. We’ll help you collect current Draper comps and lease data, set realistic assumptions, and run a clean five-year view.
Ready to talk through your numbers or tour options in Draper? Connect with Jennifer Jumbelic for a friendly, data-backed conversation about your next move.
FAQs
What is the true monthly cost of owning vs renting in Draper?
- Add mortgage principal and interest, property tax, homeowner insurance, maintenance, HOA, and subtract any tax benefits to compare with rent plus renters insurance and utilities, then consider equity gained.
How long before buying pays off over renting?
- It depends on your rate, appreciation, rent growth, and selling costs; in shorter horizons, renting often wins, while five years or more can favor buying if appreciation and equity overcome transaction costs.
How do mortgage rates change the 5-year outcome?
- Higher rates increase monthly payments and slow principal paydown, which can push breakeven further out, so always test base, plus 1 percent, and minus 1 percent cases.
What hidden costs should Draper buyers plan for?
- Budget for maintenance, possible major repairs, HOA assessments, insurance changes, and potential property tax adjustments that follow assessed value.
If I invest my down payment, could renting be better?
- Yes, if your invested savings earn a solid return and home appreciation is modest, renting can come out ahead, which is why the worksheet includes an investment return input.
How do I estimate local appreciation and rent growth?
- Use recent local trends, long-run benchmarks from reputable indices, and current listings, then run conservative, baseline, and optimistic scenarios to see how sensitive your result is.
