Your two plans
Start from
Plan A
Plan B
Shared assumptions: years, homes, costs, tax
Dollars shown
Bitcoin scenario?The series’ four Power Law paths: Floor, the channel’s lower line; Stay at today’s multiple (the default); Trend; Upper, a stress test. The table under the cards adds two plain what-ifs.
The difference
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The two plans over time
Each line is a plan’s wealth each year: its house (if it owns one) less the loan, plus its bitcoin, less anything it had to find from income. If sold, after tax sells both that year; Held is before any sale. The heaviest, light line is the difference, Plan B minus Plan A.
What the numbers leave out
Owning
- One asset, borrowed against. A mortgage is leverage on a single house in a single town. The page grows every house at the same rate; yours won’t.
- Hard to leave. Selling costs about 6.6% and takes months. A smaller down payment means a bigger loan, more interest, and less room if prices fall.
- Costs the page averages. A new roof is a lump, not 1% a year.
Renting and holding bitcoin
- Rent can outrun the model. The page grows rent at the home-appreciation rate; local rents jump, and leases end.
- Buying later means selling bitcoin then. A plan that buys in year three sells bitcoin for the down payment at that year’s price, which could be in a deep fall. If the bitcoin doesn’t cover it, the rest comes from income and the card says so.
- Prices can run away. Waiting costs more if house prices rise faster than the setting.
- Bitcoin can fall a long way: 73% or more four times between month-end closes since 2011. The table above shows the plans if it halves, or goes nowhere.
How the page computes
- The same savings, the same spending. Both plans start with the larger of their two up-front needs (a down payment plus closing costs for a plan that buys today). Each month both spend what the dearer plan’s housing costs that month; the cheaper plan puts the difference into bitcoin. That is the rule the other real-estate pages use, stated for two plans.
- Owning costs the 30-year loan’s payment, property tax, insurance and maintenance, the last three following the home’s value; renting costs market rent for the same house, growing at the home-appreciation rate. A plan that buys later rents until the start of its purchase year, then buys at that year’s price, selling bitcoin for the down payment and closing costs.
- At the end each plan’s house is sold, less selling costs, the loan and any tax above the home-sale exclusion (and only after two years of owning), and its bitcoin is sold, less the trading cost and the tax on its gain. Money a plan had to find from income is subtracted.
- The engine is the one behind Bitcoin vs. Real Estate; set Plan A to buy and Plan B to rent the same house and the page’s check reproduces that page’s figures to the cent.
- Not modelled: private mortgage insurance on a down payment under 20%, typically a fraction of a percent of the loan a year until enough is paid off, which leaving out flatters the smaller down payment; moving costs; renters’ insurance; refinancing; and rates or prices that differ from the settings.