Putting in an offer, is this the right investment?

[Paulina L.]

Hi all, so I am looking to put in an offer today... But I want to be certain about the numbers. Any advice on this?

Goal: Buying a condo in CA, this is a 2-1. I would like to hold this property and sell it for equity to trade up. I don't think I can cashflow in CA for a very long time, so I'm only focused on equity. 

The unit: In the area I am buying, I’m seeing house prices increase on average at 8-9% YoY since 2015. This unit alone, I am seeing approx 10% avg YoY increase (but only based on estimate and sales price on years available). 

Math/Question: If I used 10% increase (this is hopeful in my opinion) and let’s say I held and sold in 5 years, we would be getting an approx of $224k after agency fee (assuming it grew to $600k price). However, over the span of 5 years I would be spending $222k on my mortgage (which only ~25k goes toward principal so more like $197k which is really more like $27k gain after agent compensation on the house equity). Whereas, if I continued to rent where I am in, which is rent locked. I would be spending $125k (instead of $222k over 5 years) which is a savings of $96k that we could be investing elsewhere.

Any advice on this, is my thinking right? Is it still right to build equity or is it better to consider OOS or other investment?