Downsizing on housing or renting

[Edgar]

Hello All:

My DW and I are appx 4.5 years away from retirement. Our only child is now away at college. We live in a house that is worth appx 250K. It has more than we need ie. 3.5 bath's, etc...

We could rent some very nice 2 BR/2BA aprtments in our area for APPX $950 a month.

By going with the rent option we could put the 250K to work for us, save appx 2600 @ year in property taxes plus all the other cost asscoiated with home ownership. We have never rented but we are not the type that like to work in the yard or garden so in a way this would relieve another burden from us.

Has anyone else on this board sold to rent for financial reasons? I undersytand the quality of life issue is in the likes and dislikes of the individual.

I would appreciate any thoughts on this...

Regards,

Edgar

[chinaco]

We will downsize. But more to get a simpler situation. We intend to travel and feel that a condo may work better. We have considered renting for a while... but not for financial reasons, rather until we are sure a condo is what we want.

[aggie]

Edgar,

Our Townhome is for sale with exactly the same thing in mind as you. We will clear ~ 170K and eliminate 8.5K annually in property taxes and insurance, not to mention upkeep. A lease of ~ $1000 or less per month will replace a $1,400 mortgage payment. The lease house will then become the base of operations in between travels.

The Parade magazine in our newspaper today listed the "5 reasons to rent," rather than to own. Planning to travel was one of them.

[lazygood4nothinbum]

i think this is a topic many of us face. i could go either way on this.

i'm sitting on more equity than i care to at the same time that my portfolio requires an additional $150k in about 5 years in order to sustain my preferred swr (preferred = required cost of living plus extra for summer travel).

that leaves me with about $250k to put into either a new house in a less costly area, a condo here or there or put all the money into the portfolio and live a vagabond life of renting 6 months here & a year there.

in the meanwhile florida is deciding on how to handle future property taxes (a special session is scheduled for this summer). some future options include dropping property tax while increasing sales tax, reducing property tax & making our homesteaded "save our home" values (effectively a tax cap) portable.

portability tends to keep me in florida as it would allow me to continue to pay just $1k/yr in taxes, take $150k from equity and buy a $250k home elsewhere in florida. completely dropping property tax serves the same function but also opens the door for leaving florida, as i might not then have much of an advantage to staying.

the more i consider renting the more i like it. i'm really starting to love the idea of vagabonding. i like the idea of not being encumbered by property & things. i would imagine the chances of another real estate bubble happening would be about the same as another dot com happening and so i'm not terribly scared that i won't be able to buy back into real estate in the future if i so desire at that time.

i think much of quality of life, as you noted, is state of mind. and while there is security & comfort in home ownership, that might come at a cost of adventure and freedom.

[cute fuzzy bunny]

Make sure your new digs really fit with your lifestyle. I downsized, then got married and had a son, plus we merged six total pets into one household.

Bad plan.

Reupsized this year.

[WRBT]

We downsized and love it. 2 BR townhome paid off with equity from sale of big house, taxes ony $900 annually, easy upkeep, end unit with windows on three sides.

[Sam]

Originally Posted by Edgar

My DW and I are appx 4.5 years away from retirement. Our only child is now away at college. We live in a house that is worth appx 250K. It has more than we need ie. 3.5 bath's, etc...

We could rent some very nice 2 BR/2BA aprtments in our area for APPX $950 a month.

I'm in an almost identical situation. From a financial point of view it looks like a no-brainer. The apartment wins.

But... Last time I lived in an apartment was over 20 years ago. I like the smaller space, less work, but not sure about sharing walls/floors/ceilings with neighbors, not sure I want hear their "louder conversations". Tough choice.

[Brat]

DH and I are considering the same. Our home equity is substantial. At this time renting pencils out. If our market remains strong, and we receive something close to what others say our home is worth, we will rent in our destination community.

We know our destination community very well, DH & I are very picky (some would call him anal). If a real deal comes up on a condo we could change our minds. Long ago I learned never say never.

[free4now]

I'm selling my condo in the suburbs of San Francisco so that I can move into San Francisco and rent. Financially in the Bay Area it's pretty clear to me that renting is the way to go. And it happens to fit my stage of life of wanting to move around and see different places.

Another thing I'm considering is just putting my stuff in storage and travelling for a few months before I move into a rental.

[cute fuzzy bunny]

I agree...renting in the bay area is a good idea.

[honobob]

Originally Posted by Cute Fuzzy Bunny

I agree...renting in the bay area is a good idea.

Maybe if you're rent controlled or have other properties protecting you from the ravages of inflation. To stay in the bay area you need to be invested or you just eventually get priced out. $1500 for a studio sucks!

[jIMOh]

Originally Posted by Edgar

Hello All:

My DW and I are appx 4.5 years away from retirement. Our only child is now away at college. We live in a house that is worth appx 250K. It has more than we need ie. 3.5 bath's, etc...

We could rent some very nice 2 BR/2BA aprtments in our area for APPX $950 a month.

By going with the rent option we could put the 250K to work for us, save appx 2600 @ year in property taxes plus all the other cost asscoiated with home ownership. We have never rented but we are not the type that like to work in the yard or garden so in a way this would relieve another burden from us.

Has anyone else on this board sold to rent for financial reasons? I undersytand the quality of life issue is in the likes and dislikes of the individual.

I would appreciate any thoughts on this...

Regards,

Edgar

Townhouses and condos might work. Downsize from 250k single family home (SFH) to a 150k townhouse/condo (THC), For example.

My first house was a 2 BR, 4 BA THC (town house to be specific). 3 floor, 1 BA on each floor, each BR had a full bath. 2200 sq ft... no outside work needed, and structure insured by condo association.

Inside units will be cheaper to heat/cool, and sometimes walls are not thick enough. There is a difference between condos and luxery condos, TH and luxery TH. Double walls would be just one example.

I understand the "technical" difference between a condo and a town house are:

1) townhouse will have a door from outside to residence 1 to 1. Each residence has it's own door. Condo will have a shared door (all people in unit share same primary entrance) and a second door inside which is 1 to 1.

2) both would have fees for home owners assn

3) both could be one floor or multi story

[Brat]

In some communities townhouses are not condos. The flag would be common circulation areas (driveways for example).

In a down housing market in most communities condos historically drop faster than single family dwellings. To retain resale value attention must be paid to location and condition - just like a SFD, but remember maintenance decisions are made by committee. One of the reasons why I said that we probably wouldn't buy is that if a smoking deal came available we would consider buying. We currently own in a small planned unit development and notice that the group accommodates the most strident voice. So, I would opt for a professionally managed condo.

[kcowan]

We downsized from a 5000sqft acreage to a 2000sqft rental penthouse with 1350sqft patio. It has been great. We have missed the real estate bubble but have enjoyed the market equity runup.

We travel four times a year and have simultaneous and asynchronous home swaps to look after the cats and plants. Seems to be working great so far. We also rent in PV for 2 months each winter.

[cute fuzzy bunny]

Originally Posted by honobob

$1500 for a studio sucks!

So does paying a million bucks for a cardboard box sitting under a freeway overpass

[HFWR]

Originally Posted by Cute Fuzzy Bunny

So does paying a million bucks for a cardboard box sitting under a freeway overpass

Yeah, but it's a really nice box...

[al_bundy]

Originally Posted by honobob

Maybe if you're rent controlled or have other properties protecting you from the ravages of inflation. To stay in the bay area you need to be invested or you just eventually get priced out. $1500 for a studio sucks!

last i heard rents in most of california including SF were 1/3 to 1/2 the price of buying

[kramer]

Originally Posted by al_bundy

last i heard rents in most of california including SF were 1/3 to 1/2 the price of buying

I am renting a nice 1 bedroom apartment in downtown San Jose (I moved here 2.25 years ago), in a pleasant neighborhood a couple hundred meters from any kind of busy traffic, near parks and restaurants and any service one could want, near all manner of public transportation (train, light rail, bus) in a modern secure building, for $1000/month. There is no rent control, no nothing -- the market rules rents here as it should.

Kramer

[aenlighten]

This is something I will never do, or at least until I am so old I no longer care. Living in Socal, rents rise over 5% a year long term, more than incomes. Plus it would generate a huge income and expense and high taxes as well. Renting is cheap but you either have to move for the next sale or stay in a crappy apt, one that would take dogs.