Four Reasons to Rent When You Downsize for Retirement
[ad_1]
I know: You’re a homeowner. You’ve owned a home for 40 years. You’d rather pay your mortgage than someone else’s. I have heard it before. And, sometimes, I agree.
When I finished college, I moved to Philadelphia. It was a city that I knew very little about outside of its snowball-throwing football fans. I moved where most recent college grads do: Manayunk. A year later, I moved again. A year later, my company moved me to Virginia. The point is that when life is shifting quickly, it makes sense to have housing that is flexible enough to shift with it. I find the retirement downsize to be one of those times.
If you are selling your “forever home” and figuring out what’s next, here are four good reasons to rent:
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more – straight to your e-mail.
Profit and prosper with the best of expert advice – straight to your e-mail.
1. You can try (the neighborhood) before you buy.
If you’re moving to a new location, a Google search of “best neighborhoods in (fill in the blank) for retirees” probably isn’t sufficient. My retired dad loves the walkability of his neighborhood. My retired father-in-law loves the privacy his neighborhood offers him. I worked with two couples who bought and sold, sold and bought, all during COVID. This eliminated almost 25% of the equity they originally had. It turned out that the places they loved to vacation weren’t as appealing when they moved there.
This option is admittedly easier in urban locations than it is in rural ones. It’s possible that the home style, layout or location is only available for purchase. That said, there are a number of companies, such as AMH (formerly American Homes 4 Rent), that are attempting to institutionalize single-family rentals. In the future, the rental experience may be more consistent across the country.
2. Your costs are more predictable.
Initial homeownership costs tend to be unpredictable. The third home I bought required three new basement floors within the first year due to flooding. We weren’t even in the majority of new buyers who waive inspection on purchase. When you rent, you can reliably plan your costs during your lease term. The flip side of this is that you have no control upon renewal of the lease and may find yourself moving again.
3. Your home is turnkey, or move-in ready.
We often think of turnkey in terms of moving in. You “turn the key” and your move-in is complete. I view the benefit of renting as being turnkey more based on the fact that you can “turn the key” and leave.
It is rare that I come across a retiree who doesn’t have travel as a major line item in their annual budget. When I leave my own home for vacations, I check the HVAC, sump pump and outside drains, and I make sure my…
[ad_2]
Read More: Four Reasons to Rent When You Downsize for Retirement