Hi Lorenzo,

here I would radically simplify in order to showcase a clear line of thinking! So this is what I would align/double check with the interviewer:

1. Time horizon of 20 years

2. Basic living expenditures can be covered by her running income (making sure that spending the $300k is actually an option!)

3. Constant real estate value of the house

4. No financial structure design (e.g., leveraging up via debt financing) considered

This means that it is all about the objectives of your mother. Does she want to maximize personal conumption over the next 20 years, or does she want to pass on a significant asset base to her children?

• Renting: The total cost of $800*12months*20years= $192,000 leaves room for additional consumption worth $108,000 over the 20 years time span. So her asset base at the end of the 20 years will be a cash amount of anything between $0 (full additional consumption, nothing is passed on) and $108,000 (no additional consumption, full amount is passed on).
• Buying: if she buys the house, her asset base remains nominally unchanged, it just transforms from $300,000 cash to $300,000 real estate property. There is no room for additional consumption beyond basic living expenditures. Her asset base at the end of the 20 years will still be $300,000, which she passes on.

You may want to point out that, given how the question is framed, you would advise your mother based on HER objectives, not on yours (hint hint: "Client first" ;)) )

Cheers, Sidi

(editiert)