Anyone else plan to rent vs. own in retirement?

[Scuba]

I would have no problem renting, but would likely not rent in an apartment complex. Would much rather rent an individually owned condo or SFR. If you rent in a nice development/neighborhood, you’re less likely to have problems with loud neighbors, etc. Our friends who rent in an apartment complex have several neighbors who have loud parties, are smokers, or various other issues.

 

[fasteddie911]

I'm nowhere near retirement but am a renter and previously owned. Maybe you could consider a trial run renting the apt you're interested in before selling the house. I think sometimes people have tunnel vision when it comes to renting, i.e. only apartments can be rented or landlords suck, etc. I've rented the type of place you're speaking of and it can be nice. On-site maintenance is very quick, onsite management, upscale and professional type of place, mix of young professionals, families and older folks. At least in that particular city I rented in, it was a renter's market with tons of options fo renters and competition for landlords, as such they had to stay on top their game, offer nice perks/services and competitive rent. My rent never increased for years. It really depends on the complex. Noise and personal space wasn't an issue. Being in a rental also made me to simplify, reduce the urge to modify or even really decorate. The only thing I missed was a good-sized personal outdoor space. I can certainly see the benefits, as one ages or becoming widowed, in living in an apartment complex, either owned or rented.

 

[Music Lover]

It depends where you live and whether you own your home free and clear. Rents in our area of Southern California for a home comparable to what we have will cost you about $4500 per month plus utilities. It costs us less than $950 a month for our home (property taxes, insurance, maintenance, utilities). But if I had to buy one for $1.1-1.3M and did not have the cash, it would be a totally different situation comparing renting vs owning. The same thing for our condo in Florida. Rents in our building for an unfurnished unit like our floor plan is about $2400 per month with a minimum 1 year lease. It costs us about $1000 per month for condo fees, utilities, and property tax. If we had to buy a new unit for about $400K and mortgage it, renting becomes more attractive.

It's hard to compare rent vs. owning based on square footage because most people who rent will rarely pick a place as large as what they would buy. The average apartment is much smaller than the average house.

 

[Surewhitey]

We've rented and owned (currently own a 70 yr old cottage). I'm the live-in maintenance guy unless it's major plumbing or electrical; then I have a "guy" for that.

Renting a home or duplex was not a biggie and nice to not have to take care of the lawn or major repairs (albeit few).

We have a $280k home 1 street over from DD & DGD, so location takes on another level for us. I've found maintenance is another word for updating / upgrading to your liking in many cases, so I don't mind doing those. I do 80% of most things and typically enjoy it. Just takes twice as long as my HDL is very long.

I could rent in my neighborhood, but it would cost at least $1,800 / mo for comparable. $21,600 annually sounds like so much more...

 

[Bestwifeever]

I was wondering if anyone else plans to or has sold their primary residence with the intention of renting simply because renting give you a little more freedom and fewer headaches. I know there are pros and cons to both and with renting...Yes... you could have noisy neighbors but that is also true with condo or single family home living.

....

So....anyone sold the house or even condo and currently renting? How do you like it? Regrets?

My relatives did just this—sold their Northern home in their sixties and rented apartments for several years not far from their former home. Pretty sure the proceeds from the house almost generated enough income to pay the rent. They were spending several months renting in Florida and worried about the Northern house. They did change apartment developments once when there was a problem—no big deal financially to do so. After 2008 they bought a very well-built new townhouse also near their former home at a great price (and had been out if the housing market long enough that they even got a tax break as “first time buyers”). They do no outside maintenance and you cannot hear the neighbors on the one common wall.

So why not try it? You can always change your mind and buy again.

 

[indiajust]

Property taxes in many locations make owners feel like renters.

The stagflation days in the 70's were extremely beneficial for homeowners. That value mindset persists. Whether it is valid in today's economy or not, time will tell.

This really is more of an emotional decision, since if you have enough assets for ER, you likely have the option of either or both.

My real estate investment is in REITs, not personal housing. Personal real estate cost me a career and 2 relationships. Emotionally, never again. Financially, the spreadsheet shows I would have been better off renting and investing.

Houses have an awful lot of emotional inertia. The signaling value of housing for success and relationship potential is unmatched.

 

[Dean56]

If your home is paid for it doesn't make any sense to rent. Your rent will only go up over time.

I totally agree. I rented when I was just starting out. Having been a homeowner for over 30 years, I'm not sure I could go back to apartment life. Noisy neighbors, crowded parking lots. No thanks!

 

[Music Lover]

Personal real estate cost me a career and 2 relationships. Emotionally, never again. Financially, the spreadsheet shows I would have been better off renting and investing.

Houses have an awful lot of emotional inertia. The signaling value of housing for success and relationship potential is unmatched.

I was better off buying than renting, but every situation is different.

There are a lot of people that can't save money, but will never consider missing a mortgage payment. Many of them may be better off owning than renting if the numbers work, because once the house is paid off they now own an asset worth a few hundred thousand that can be sold at any time.

A lot of people I know that were homeowners all their lives that are now retired and are either thinking of selling now, or are planning to stay in their house for a few more years and then sell, and enjoy the windfall.

 

[Jombox50]

The one about you're a landlord renting to yourself - Love it.

 

[bloom2708]

This place tickles me - pretty rare to see this much original and un-remuddled and it reminds me of several places we have redone. When you redo a place like this you do have pride of ownership because you were responsible for the way it turned out. . I don't have any pride in our bank accounts or stocks.

https://www.zillow.com/savedhomes/f...782,26.431228,-134.25293_rect/4_zm/1_rs/1_fr/

A superficial remodel on a house gives you more pride than saving/investing for retirement? Interesting.

As soon as you remodeled each house, they were "out". The next style, next paint color, next trend, next next was in.

Both owning and renting have good and bad traits. Most buy too much house and it hampers everything they do from that point on. The same would be said about renting too much house/apt.

Many paths.

 

[razztazz]

I've noticed landlords take more pride in their bank accounts than the properties and units they rent to other people. Must be a -business ethics meets private property- thing

 

[indiajust]

Big shock for me was opportunity cost of having all that capital tied up in house anchor. I was so focused on what I made I did not see what I was missing. Higher returns in 3 years than I had in 20 with the house, and with much less misery. Since I more than doubled the house, I was expecting a return better than a stock market that tanked twice. Instead it was marginally worse. If I had been able to keep work the returns would have been better. Still.

I did enjoy the remodel, and the 95% finished product looked and worked much better than the original rentadump income property, historic or not.

Even if house had been completely paid up, strictly financially, I would have been better renting and investing the capital. A house can be dead money. Saw that in Vermont often, family homestead that owners were unwilling to sell, rent, or live in. Just antique box to hold memories with tax bill.

 

[Music Lover]

Big shock for me was opportunity cost of having all that capital tied up in house anchor. I was so focused on what I made I did not see what I was missing. Higher returns in 3 years than I had in 20 with the house, and with much less misery. Since I more than doubled the house, I was expecting a return better than a stock market that tanked twice. Instead it was marginally worse. If I had been able to keep work the returns would have been better. Still.

Owning a home is often a lifestyle choice and it's not always about maximizing gain. For example, you could also argue that people could invest their money in the market instead of spending it on travel.

 

[JDARNELL]

I've noticed landlords take more pride in their bank accounts than the properties and units they rent to other people. Must be a -business ethics meets private property- thing

It’s actually a rational self interest. Not
Much incentive to update property during a booming market.

 

[calmloki]

A superficial remodel on a house gives you more pride than saving/investing for retirement? Interesting.

As soon as you remodeled each house, they were "out". The next style, next paint color, next trend, next next was in.

Both owning and renting have good and bad traits. Most buy too much house and it hampers everything they do from that point on. The same would be said about renting too much house/apt.

Many paths.

Superficial. OK. We like old places and do them to suit ourselves, not the style color, or trend du jour. Foundation, drain and supply lines, wiring and on and on. Superficial.
We were up $40k or so on our market holdings, now we are back to about November of last year. Were we up because of some brilliant thing I did? Are we down because I failed in some way? No. We are up or down because the herd is trending in certain directions. If you think the herd tends to survive or thrive it's dumb to bet against the herd. But proud because I followed the herd with my index funds? No.

 

[EvrClrx311]

The reason I plan to rent for the long haul...

Real Estate has a long term (30+ years) habit of returning: inflation minus property taxes. Inflation is about 3.2% in the long run and property taxes are about 1% (at least where I am). So in my mind real estate (mortgage or not) is getting you 2.2% return a year. I can think of a few ways of producing a better return then that for the long haul. Since I'm fairly young (36), and can look at 30 year horizons. Mortgage and tax incentives still don't make equity math add up faster than savings of the difference compared to rent prices...

It's nice not to worry about things breaking, and being able to move when I need to. There are plenty of things that can also make renting annoying (many mentioned above). I guess it just depends what works for a given persons situation. I enjoy the flexibility and I enjoy managing cash and investments, more so than tenants (myself included)

 

[Retch The Grate]

Depends on where we end up and what makes financial sense... oh wait, DW really wants to own property and put down roots (she's moved countries twice) somewhere, so I expect it will likely be driven by us moving from the SF Bay Area to somewhere more affordable and then buying there. Fortunately castles in Germany are cheaper than dinky houses in the bay, so hopefully that will work out.