# Rent-to-Own

Gypsy provides an ecosystem in which renters become investors the longer they stay in the network renting. 

## How it works

Gypsy's rent-to-own model functions very differently than traditional rent-to-own homes.

### Traditional Rent-to-own

You rent a home for a certain amount of time, with the option to buy it before the lease expires. Rent-to-own agreements consist of two parts: a standard lease agreement and an option to buy.

### Gypsy's Rent-to-own

A portion of your [rental payment](https://docs.gypsytoken.org/gypsy-protocol/renters/broken-reference) goes towards investments in Gypsy homes. These investments compound the longer you hold. Gypsy also uses [down payments](https://docs.gypsytoken.org/gypsy-protocol/renters/broken-reference) as an investment for the renter. 

#### How compounding rental income works:

{% content-ref url="broken-reference" %}
[Broken link](https://docs.gypsytoken.org/gypsy-protocol/renters/broken-reference)
{% endcontent-ref %}

## Gypsy vs Renting vs Mortgage

### Comparisons

<table><thead><tr><th>Feature</th><th data-type="checkbox">Gypsy</th><th data-type="checkbox">Renting</th><th data-type="checkbox">Mortgage</th></tr></thead><tbody><tr><td>Gain ownership </td><td>true</td><td>false</td><td>true</td></tr><tr><td>Move Effortlessly</td><td>true</td><td>false</td><td>false</td></tr><tr><td>Responsible for Maintance</td><td>false</td><td>false</td><td>true</td></tr><tr><td>Upfront costs</td><td>false</td><td>false</td><td>true</td></tr><tr><td>Tax incentives</td><td>true</td><td>false</td><td>true</td></tr><tr><td>Payments change</td><td>true</td><td>true</td><td>false</td></tr></tbody></table>

## Economic performance

To determine the economic performance of the three options, we took a hypothetical $1M home.

These results are assuming these monthly costs:

### Gypsy

<figure><img src="https://4022646630-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FinYZsl6F3DP3HXrxSZsm%2Fuploads%2FHGRmcDDBjmVmjNyDg5xh%2Fimage.png?alt=media&#x26;token=b60e07e7-8d2f-4c5a-a9e6-77be67d72301" alt=""><figcaption></figcaption></figure>

#### Assumptions

* 30 Years
* $4500 a month for base rent
* $675 to Equity
* $5175 a month total cost with no price increase
* Using compounding rental income
* 10% increase a year (home appreciation + rental income)

### Renting

#### Assumptions

* 30 Years
* $4500 a month with no price increase

#### Results

* $1,620,000.00 paid in total after 360 payments
* No ownership

### Mortgage

<figure><img src="https://4022646630-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FinYZsl6F3DP3HXrxSZsm%2Fuploads%2F1gyiACLwmLSsUo7fiq54%2Fimage.png?alt=media&#x26;token=044e8fc1-6128-4084-b7d7-d29e27d7f0e0" alt=""><figcaption></figcaption></figure>

#### Assumptions

* 30 Years
* 20% down payment ($200,000)
* 5.1% interest rate
* Paying for taxes
* Monthly payment ($4,627)
* Ownership gain is variable per month based on mortgage amortization rates\\
* 5% increase a year due to home appriciation

#### Results

* $72,000 in Taxes Paid
* $763,695 in interest paid
* $30,000 in home insurance
* $1,665,695 paid in total after 360 payments

### Results

#### Total Payments

<table><thead><tr><th width="112" data-type="number">Year</th><th>Gypsy</th><th>Renting</th><th>Mortgage (Excluding Downpayment)</th></tr></thead><tbody><tr><td>5</td><td>$310,500</td><td>$270,000</td><td>$264,959</td></tr><tr><td>10</td><td>$621,000</td><td>$540,000</td><td>$525,575</td></tr><tr><td>15</td><td>$931,500</td><td>$810,000</td><td>$786,191</td></tr><tr><td>20</td><td>$1,242,000</td><td>$1,080,000</td><td>$1,046,807</td></tr><tr><td>25</td><td>$1,552,500</td><td>$1,350,000</td><td>$1,307,423</td></tr><tr><td>30</td><td>$1,863,000</td><td>$1,620,000</td><td>$1,563,695</td></tr></tbody></table>

#### Total Ownership

<table><thead><tr><th width="109" data-type="number">Year</th><th width="201">Gypsy</th><th width="224">Renting</th><th>Mortgage (Excluding Downpayment)</th></tr></thead><tbody><tr><td>5</td><td>$69,125</td><td>$0</td><td>$94,712</td></tr><tr><td>10</td><td>$174,345</td><td>$0</td><td>$243,707</td></tr><tr><td>15</td><td>$347,463</td><td>$0</td><td>$470,317</td></tr><tr><td>20</td><td>$632,295</td><td>$0</td><td>$806,793</td></tr><tr><td>25</td><td>$1,100,932</td><td>$0</td><td>$1,297,493</td></tr><tr><td>30</td><td>$1,871,985</td><td>$0</td><td>$2,003,183</td></tr></tbody></table>

#### Total difference from rent paid to ownership gained

Red = in a loss

Green = in a profit

<table><thead><tr><th width="108">Year</th><th width="207">Gypsy</th><th width="241">Renting</th><th>Mortgage (Excluding Downpayment)</th></tr></thead><tbody><tr><td>5</td><td><mark style="color:red;">$241,375</mark></td><td><mark style="color:red;">$270,000</mark></td><td><mark style="color:red;">$170,247</mark></td></tr><tr><td>10</td><td><mark style="color:red;">$446,655</mark></td><td><mark style="color:red;">$540,000</mark></td><td><mark style="color:red;">$281,868</mark></td></tr><tr><td>15</td><td><mark style="color:red;">$584,037</mark></td><td><mark style="color:red;">$810,000</mark></td><td><mark style="color:red;">$315,874</mark></td></tr><tr><td>20</td><td><mark style="color:red;">$609,705</mark></td><td><mark style="color:red;">$1,080,000</mark></td><td><mark style="color:red;">$240,014</mark></td></tr><tr><td>25</td><td><mark style="color:red;">$451,568</mark></td><td><mark style="color:red;">$1,350,000</mark></td><td><mark style="color:green;">$9,930</mark></td></tr><tr><td>30</td><td><mark style="color:green;">$8,985</mark></td><td><mark style="color:red;">$1,620,000</mark></td><td><mark style="color:green;">$439,488</mark></td></tr></tbody></table>

### Conclusion

While Gypsy is not as profitable as a traditional mortgage, it is leaps ahead of traditional renting.&#x20;