DoorbookBuild your own or lease a building
Put the upfront investment and the lease on one time line. The table makes escalation and the cost of capital visible before a long accommodation commitment is signed.
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01 Gather
Price the delivered beds
Use construction, land and bed figures for the proposed building. For the lease, use the current monthly price and the escalation you expect to negotiate.
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02 Model
Choose a useful comparison horizon
The owned option starts with the investment and carries upkeep plus annual cost of capital. The lease grows by its annual escalation each year.
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03 Print
Carry the crossing point into the decision
The result names the first year in which owned cumulative cost is no higher than the lease. If the crossing is outside the horizon, it says so plainly.
Build your own or lease a building
Build versus lease cost schedule
Owned cumulative cost includes the upfront investment, upkeep and annual cost of capital; lease cost escalates annually.
- Owned cost per bed per month
- £80.21
- Lease cost per bed per month
- £89.58
- Construction depreciation per month
- £750.00
- Break-even
- Owned option breaks even in year 10
| Year | Owned cumulative cost | Lease cumulative cost | Relative scale |
|---|---|---|---|
| 1 | £274,200.00 | £51,600.00 | |
| 2 | £308,400.00 | £105,264.00 | |
| 3 | £342,600.00 | £161,074.56 | |
| 4 | £376,800.00 | £219,117.54 | |
| 5 | £411,000.00 | £279,482.24 | |
| 6 | £445,200.00 | £342,261.53 | |
| 7 | £479,400.00 | £407,552.00 | |
| 8 | £513,600.00 | £475,454.08 | |
| 9 | £547,800.00 | £546,072.24 | |
| 10 | £582,000.00 | £619,515.13 | |
Questions to check
A few questions to settle the assumptions before you compare a building with a lease offer.
What does cost of capital do here?
It represents the annual opportunity cost of the money tied up in the owned option. Use the rate your finance team uses for comparable decisions, then test a lower and higher case.
Does the owned option include the land?
Yes. Land is included in the upfront owned cost and in the annual capital charge. Depreciation is shown for construction cost, while land is not depreciated in that result.
What does lease escalation change?
It raises each later year's lease payment before that year's cumulative total is added. A flat lease can be modelled with zero escalation.
Why might the result have no break-even year?
The selected horizon may end before owned cumulative cost becomes no higher than lease cumulative cost. Extend the horizon or revisit the assumptions rather than treating the end of the table as a break-even.
Does this store our investment figures?
No. The calculation is local to this browser, makes no network request and writes nothing to storage.