Would you rent/buy in retirement ?

[rkser]

I am looking for advice/your opinions about future housing options.

We retired earlier this year, after meeting our financial goals for retirement & are in the process of decluttering our paid up & rather large house in order to downsize in a year or so.

I am 59 & DW is 54, both kids are launched & live on their own, and fortunately our life long savings make either option of renting a high end place or buying a 2000sq ft, $ 400k house feasible.

After going through the headaches of maintaining our house & also a rental office building with my limited handy man skills, my desire is to have some body else deal with it.
Secondarily our travel plans in retirement will suit renting a place rather than owning one.

Although searching & finding a rental place of our liking will be a challenge, the feeling that we do not own the walls we live in and the fact that we cannot hang pictures....etc will be a little strange at first after living in our own residence for 25+ yrs. Finding suitable neighbors is another factor to consider.

We may possibly come out a tad ahead financially by owning a house but finances is not a concern at this stage in our lives.

Owning a house in a 55+ community which are plenty in Florida where we live, will decrease the house & yard maintenance some, but not totally eliminate it.

So what do you think my friends, what would you do in our situation ?

Thanks in advance for your input.

 

[Alan]

We were in a very similar position and decided to sell the big house and move into a high end apartment. It has been great so far, perfect for the extensive traveling we have done over the last 6 years. Simply lock and leave.

No restrictions on hanging pictures, big screen TV's, even adding ceiling fans.

We may well buy a house again sometime in the future, renting is not a burning bridges type of exercise.

 

[jerome len]

Sell the house and buy a condo.....let them do the lawn, outside maintenance, you can decorate the inside how your want. I'd never own a home nor rent!

 

[ziggy29]

If your financial situation doesn't strongly require one or the other, it becomes simply a matter of preference. "Rent or buy" is an extremely common topic here and you can search to your heart's content and probably find dozens of threads on the topic. (You'll also find some people who are dogmatic about one or the other always being the right choice for everyone.)

But in your situation, I'd simply look at the usual list of pros and cons for renting and buying, and decide which of the pros and cons are of the highest importance to you. For me the greatest "pro" of buying would be that my cost is locked in and I can decide what inmprovements or changes I make to the property. The greatest "pro" for renting is the flexibility and freedom to be able to move around without the massive hassles of selling a home. Different people will prioritize these (and other factors) differently.

Sell the house and buy a condo.....let them do the lawn, outside maintenance, you can decorate the inside how your want. I'd never own a home nor rent!

To me this is a wonderful concept, but my only experience with condo ownership involved thin walls and noisy neighbors, so I personally would be a little gun shy about it. That said, in a senior/55+ community it's less likely to be a factor.

 

[aaronc879]

Sell the house and buy a condo.....let them do the lawn, outside maintenance, you can decorate the inside how your want. I'd never own a home nor rent!

I bought a condo and it's the worst decision I ever made. Not all condos are created equal. If you get a condo make sure that there is no one above you or that the construction is such that noise won't travel from one unit to the other. Probably need thick concrete between floors and that's only in high end condos. You could get a duplex type condo where you only share walls on one side, no one above or below. You pay a fee to have the driveway cleared(if in the snowbelt) and have the lawn mowed.

 

[ziggy29]

I bought a condo and it's the worst decision I ever made. Not all condos are created equal. If you get a condo make sure that there is no one above you or that the construction is such that noise won't travel from one unit to the other. Probably need thick concrete between floors and that's only in high end condos. You could get a duplex type condo where you only share walls on one side, no one above or below. You pay a fee to have the driveway cleared(if in the snowbelt) and have the lawn mowed.

When we lived in California, a friend of my wife's had a townhouse where the only actual shared walls were on one side of the garage, and there was no one living above or below you. I'd certainly consider a condo or townhouse like that, but as I said above, my condo experience makes me very hesitant to ever want to share walls with a neighbor again. It's not as big a deal in an apartment because you can move away from a noisy neighbor as soon as the lease is up (or sooner if you are willing to pay the penalty for breaking it), but in that situation, owning next to a bad neighbor can be a hopeless feeling of being trapped.

 

[bizlady]

We built a patio home-a standalone home with an HOA that takes care of mowing, garbage and shoveling. We spend much of our time traveling or at our lake home. We were 57 and 58 at the time. We also wanted someplace that I would be comfortable with if something should happen to DH. Longevity on both sides is pretty good and we figured if we live to 75 or 80 we come out way ahead financially. That said, we simply did not want to share the walls with somebody else, we have family nearby, and medical facilities are reasonable and close by our "base" home.

 

[Bamaman]

When we were nearing retirement, we sold our big house when the housing market was at its highest. We moved and downsized to lower our total expenses--upkeep, taxes utilities and insurance.

We were never fans of our local HOA, and I hear horror stories about condominium HOA's. I question whether the HOA dues are reasonable and if the association has the funds needed for present and future needs. Just painting and re-roofing a condo complex can bring additional assessments. Some condo associations are simply insolvent.

In our retail housing market, there really aren't any condos that are desirable. I'd prefer to have a fee simple or house on a very small lot rather than rent or invest in a condo. The fee simples are reselling for decent prices here.

 

[karen1972]

I suggest you check around at all your options. To me renting has changed a lot since I last rented. I was able to find a place where we get no noise from neighbors, its high end luxury so I get all the amenities without any of the hassle of maintaining, and the kitchens and bathrooms were way bigger in the apartments than I could find in similar housing without having to go to gigantic houses again.

That being said, rentals are very expensive in many markets right now due to a housing shortages in several markets and certain new rules making builders not want to build certain types of houses. In our area they are only building massive homes, which is not what we wanted, so our only choice was rent or buy something small and have to completely gut/re-hab it.. the latter wasn't something I was willing to do, so rent it is.

For us renting was the best option 1) due to lack of reasonable sized newer homes 2) exceptional amenities in the apartment (which I didn't have to worry about HOA issues) 3) location.. now that our lifestyles changed, being within walking distance of cafes/restaurants/movie theaters vs. out in the burbs was more appealing.

The apartments we are in do everything for us, besides maintenance, they will change light bulbs, smoke detector batteries, and even hang pictures or shelving/cabinets for you. Its a full service operation which was a perk I never thought of using until I realized I didn't even own a ladder any longer so hmm can't reach the track lighting anyway.

If you need a lot of storage, you will also have to consider that. Downsizing is one thing, but getting everything to fit into an apartment is another. Many units include garages and you can find on-site storage as well, but depending on your level of comfort, you may not fit into the smaller rooms that most apartments provide. I had to give up 2/3 of what I owned (not a biggy for me, but I know lots that its not easy nor desired).

 

[brett]

We sold, downsized, travelled, and now we are renting.

We are happy renters especially since real estate in our market is tanking (oil country). We may buy something when the market shows signs of improvement. Until then it is a pleasure to lock the door and leave.

The condo we rent has had two assessments in two year. This has made us a little gun shy of condos.

 

[rkser]

Thanks every one for posting, we are learning a lot from the different perspectives expressed. We welcome more opinions.



Best

 

[urn2bfree]

Just to further complicate things there is the question of taxes. Owning outright reduces your ongoing income needs.

If you rent or have a mortgage that is a monthly amount you have to withdraw. That could be $12,000-$36,000+ more a year. that raises your withdrawal rate. yWhatever the amount is and depending on where you get it you likely have to pay taxes on it
...that could be enough to tip one from one tax bracket to another. That could be enough to put your capital gains and dividends from 0% taxability to 15-20-23+% taxable.


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[daylatedollarshort]

We've run the numbers, looked at condos and town homes and for now we've decided to stay in the single family home. Because of Prop 13 and high rents in our area, for us owning is much cheaper. We also think we would miss our backyard. Condos certainly have their advantages though and it was not an easy decision.

We went to open houses for years and decided at least for now there is no place like home. But looking around helped us appreciate what we have and realized we weren't ready to give up sitting on the patio in the wooded backyard just yet.

 

[FIREd]

We were in a very similar position and decided to sell the big house and move into a high end apartment. It has been great so far, perfect for the extensive traveling we have done over the last 6 years. Simply lock and leave.

No restrictions on hanging pictures, big screen TV's, even adding ceiling fans.

We may well buy a house again sometime in the future, renting is not a burning bridges type of exercise.

Similar experience for us. We owned a large-ish house for years, but we have been renting a high-end apartment for the past 3.5 years. We really enjoy it. No issues with noisy neighbors and few restrictions with regards to decorating the place. It feels like home to us, just as the house did.

 

[Sunset]

If you are going to live in a new City/State, then rent for the first year to be sure you like the area.
Landlords are raising rents at about 2x inflation right now.

 

[kcowan]

We have been renting for 18 years. We paint and make modifications like we own. Every few years there is turnover in property managers so we have to educate the new ones. There are some problems but they seem small when compared to owning. We live in a penthouse so the only common wall is in the master bedroom.

Bur most of our friends recognize that we have a sweet deal. YMMV

 

[robertf57]

We downsized when the kids went off to college into a condo (ok, we really didn't downsize much as the place is 3400 square feet) but absolutely love the structure is concrete and we never hear anything from our neighbors. Love the freedom of condo life.

 

[folivier]

We sold the large house a few years ago, upgraded our motorhome to a 45' double slide and saw the country for a couple years. Bought a new house in a 55+ community (part of a larger mixed country club), sold the motorhome. We love it, smaller house, smaller yard but with a 2 acre pond out back, only 1 other neighbor on the pond. Our 2 sons and other extended family live nearby. We spent the summer in Utah and Colorado doing monthly rentals. We'll continue monthly rentals in various parts of the country whenever and wherever we want.
Our community is gated and we feel very comfortable locking the door and leaving for a month or more.

 

[clifp]

Just to further complicate things there is the question of taxes. Owning outright reduces your ongoing income needs.

If you rent or have a mortgage that is a monthly amount you have to withdraw. That could be $12,000-$36,000+ more a year. that raises your withdrawal rate. yWhatever the amount is and depending on where you get it you likely have to pay taxes on it
...that could be enough to tip one from one tax bracket to another. That could be enough to put your capital gains and dividends from 0% taxability to 15-20-23+% taxable.


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In general, since retirees are typically in lower tax bracket than workers, it makes more sense to own while you are working and rent while you are retired. Plus as you get older I think the appeal of doing maintenance decreases.

However, with things like ACA subsidies (and potentially means testing for social security in the future) I think in general there is a strong financial advantage to having a paid off home in retirement.

Plus it is a really good inflation hedge.

 

[Nodak]

four years ago I decided to rent out my house and move to a town where I would be closer to relatives. Rented an apartment in a new building run by a property management company that promised many ammenities. Every 6 months the rent increased by $25 to $50 per month and the ammenities never appeared. This past June I returned to my house. Will not rent again.

 

[Fedup]

It depends on the area. In high COL area, it makes sense to own but not so much in areas that house price is depressing.


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[Rick_Head]

Yep, it depends on a lot of things. Your problem, not ours.

 

[Car-Guy]

Since my late 20's I have always own my own home(s) and until recently I thought that's the way it would be until I "depart". However, I'm beginning to wonder how long I'll be able (physically) to maintain my own home/property the way I like it. If we ever move back to civilization from the "open country" I may give renting a try. Or, maybe I'll just buy again in "the city" and just pay folks to maintain it like I want. Something to think about in the future.

If I'm renting and I don't like the level of maintenance, I'll just pack up and move again. (Although I hate moving)

 

[W2R]

Since my late 20's I have always own my own home(s) and until recently I thought that's the way it would be until I "depart". However, I'm beginning to wonder how long I'll be able (physically) to maintain my own home/property the way I like it. If we ever move back to civilization from the "open country" I may give renting a try. Or, maybe I'll just buy again in "the city" and just pay folks to maintain it like I want. Something to think about in the future.

If I'm renting and I don't like the level of maintenance, I'll just pack up and move again. (Although I hate moving)

It's possible that when you are aged, you may find it fairly easy to pick up your cell phone while sitting in your easy chair, and call someone to do whatever maintenance is needed at that time. In fact, that might conceivably be easier for you than moving from one home to another. Just a thought... Personally I don't ever want to move again because I thought it was pretty hard as a senior. Even with help, there is so much physical work to be done.

 

[Car-Guy]

It's possible that when you are aged, you may find it fairly easy to pick up your cell phone while sitting in your easy chair, and call someone to do whatever maintenance is needed at that time. In fact, that might conceivably be easier for you than moving from one home to another. Just a thought... Personally I don't ever want to move again because I thought it was pretty hard as a senior. Even with help, there is so much physical work to be done.

That's my primary line of thinking "at this time". However, I'll need to make "one more move" back to a large town or small city since getting much help of any kind out here can be an issue. Hopefully that's still a ways out before I need to cross that bridge.