NYC HOME SEARCH · AUG 2026
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Monthly Outflow & Equity Building
True cost of ownership vs. market returns: equity principal paydown, asset appreciation & rent opportunity cost.
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Financial Model Assumptions
7 Yrs · 6.5% Rate · $600k Cap
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NYC & Brooklyn Map
Geographic view of all candidate homes with subway stations, walk times, price tags, and neighborhood context.
🏆 Rankings & Compare
Head-to-head pairwise matchups to rank and discover your #1 dream home.
Pairwise Elo ratings auto-update after each head-to-head matchup.
Side-by-Side Deep Dive
Detailed specs of selected properties.
Your shortlist
The places that still feel like top possibilities.
NYC Rent vs. Buy & Wealth Engine: The Complete Guide
An exact, transparent breakdown of how Hearth models carrying costs, amortized buyer friction, seller exit drag, and $N$-year investment compounding.
NYC Real Estate Has Unique Math
Standard online mortgage calculators only look at P&I + Property Tax. In New York City, that simplistic approach misses the biggest economic factors: high monthly common charges/HOA fees, upfront closing friction (6–7%), seller exit taxes & commissions (8–10%), and the opportunity cost of tying up a $600k down payment instead of investing it in the S&P 500.
Hearth's financial engine solves this with a symmetrical balance-sheet simulation over your custom holding horizon ($1$ to $30$ years).
Monthly Cash Outflow
The total liquid dollars leaving your bank account every month to maintain the home:
Total Outflow = Principal + Interest + Tax + Common + Insurance + Parking
- P&I (Principal & Interest): 30-year fixed amortization based on your loan amount and interest rate.
- Tax & Common: Real monthly property taxes and condo/co-op maintenance charges.
- Parking: $0 if included in listing pros, or your customizable parking baseline ($300–$500/mo).
Equity Paydown (Forced Wealth)
Not all monthly outflow is lost! The principal component goes directly to your balance sheet:
Equity Paydown = Monthly PI - (Loan Balance × Monthly Rate)
- Wealth Building %:
(Principal / Total Outflow) × 100. - Amortization Curve: As your loan balance decreases, the monthly principal portion grows larger every single month.
True "Sunk" Carrying Cost
The unrecoverable cash that actually vanishes every month with zero equity built:
Sunk Cost = Interest + Tax + Common + Ins + Parking + (Buyer Costs / Months)
- Amortized Upfront Friction: Upfront closing costs (e.g. $75k) amortized over your $N$-year horizon (e.g.
$75k / 84 mos = +$893/mo). - Direct Rent Benchmark: Compare this directly against your total living baseline (
Rent + Parking) to see your true monthly living drag!
Opportunity Cost & Equity Growth
The capital you put in the home isn't idle—it grows through appreciation and saves you rent:
Monthly Market Drag = (Initial Cash × Market Return %) / 12
Monthly Asset Gain = (Home Price × Appreciation %) / 12
- Indifference Rent:
Sunk Cost + Market Drag - Asset Gain. The rent at which buying and renting are economically identical.
🗽 The NYC Transaction Friction Breakdown (14% – 17% Round-Trip)
Why holding horizon is critical: in NYC, buying and selling costs represent substantial upfront and exit hurdles.
💼 Upfront Buyer Closing Costs (6.0% – 7.0%)
Added to down payment at closing to determine Total Initial Cash:
| NYC Mansion Tax | 1.0% on purchases ≥ $1M ($1.25% on ≥ $2M) |
| NYS/NYC Mortgage Recording Tax | 1.925% for loans ≥ $500k ($1.80% for < $500k) |
| Title Insurance & Search | ~0.45% of purchase price |
| Sponsor Transfer Taxes | ~1.825% (common on NYC new dev condos) |
| Legal & Bank Escrow Fees | ~$4,000 – $6,000 |
🏷️ Future Seller Exit Costs (8.0% – 10.0%)
Deducted from future appreciated home value when calculating Net Home Equity:
| Broker Commissions | 5.0% – 6.0% standard |
| NYC Real Property Transfer Tax (RPTT) | 1.425% for sales ≥ $500k ($1.00% for < $500k) |
| NYS Transfer Tax | 0.40% – 0.65% |
| Building Flip Taxes & Legal | 1.0% – 2.0% in many co-ops & condos |
| Recording & Administrative | ~$2,500 – $4,000 |
⚖️ Symmetrical $N$-Year Horizon Wealth Simulation
Hearth compares two equal-capital paths over your active holding horizon (e.g. 7 Years):
The Buyer's Path
Initial Capital into Home PurchaseValue_N = Price × (1 + g)^N
Remaining Loan = Loan - Principal_Paid_N
Exit Costs = Value_N × Seller_Cost_%
Equity = Value_N - Remaining Loan - Exit Costs
Invested Savings = (Rent - Owning) compounded @ Market Rate
The Renter's Benchmark
Identical Initial Capital into Stock Index (e.g. 7%)Stock_N = (Down Payment + Buyer Costs) × (1 + r)^N
Invested Savings = (Owning - Rent) compounded @ Market Rate
FV = Monthly Savings × [((1 + r_m)^M - 1) / r_m]
Net Delta = Total Buyer Net Worth - Total Renter Net Worth
If Net Delta > $0, Buying builds more net worth over the horizon. If Net Delta < $0, Renting & investing in the stock market builds more net worth.
⏱️ Dynamic Year-by-Year Break-Even Calculation
Hearth does not use a rigid lookup table. It simulates your exact financial inputs across Years 1 through 30, calculating the exact inflection year $Y$ where Buyer Net Worth(Y) ≥ Renter Net Worth(Y).