Flexibility of renting

[utrecht]

My wife and I are still 7 years away from FIRE, but are always comtemplating different options.

We will definatley be moving to S.Florida to be near family. We will also definatley want to travel alot. Housing prices are much higher in S.Florida than they are where we live now, but we have budgeted for this. Currently we are exploring the idea of renting instead of buying. Here are my thoughts. Tell me what you think.

Renting goes against all of my normal lines of thinking. We have lived in our current house for 11 years and it will be paid off next year. We will stay here until we retire. I fully understand all of the benefits of home ownership and as I said , renting goes against my normal line of thought....but...

As we move out of the accumulation phase and into the "I want to do whatever I want and not worry so much about the financial costs as long as I can afford it" phase....I think we will value the flexibility of renting more than the stability of owning. If we buy a house at 50, we would have to be 80 before we paid it off, so having a "paid off" house for years, isnt a reality for us at that point. We wont be able to afford to pay off a house in 12 years at those prices so we would basically be paying the house down for our heirs (which isnt a priority for us). Instead of paying a landlord rent, we are basically paying our hiers rent, in advance since we will likely never own the place ourselves....at least not for long.

I envision a retirement full of flexiblity. We could rent a house right near our relatives for a year or 2. Then when the lease is up, we may want to travel the country for 3 months (with no expenses back at home base since there is no home base). Then come back and rent in a highrise on the beach for a year or 2. Then when that lease is up, go to Europe for a couple months (again with no expenses at home base). You get the idea.

If all of this moving gets old after doing this for a decade, we can always buy a house at that point. Thoughts?

[W2R]

The flexibility would be great. As a renter you could always move if you got bad neighbors or if your neighborhood became less than it was, or if you became bored with a given location. Another advantage is being able to call the landlord to have repairs done. There's no yardwork, and you don't have to worry about an apartment as much as a house if you are out of town for a while.

The big disadvantage that I see is that rents do rise at a rate that sometimes exceeds inflation. Then there are quality of life issues. You might have to park your car in a lot. Noise or even crime might be more likely to present difficulties. Apartment managers sometimes are not crazy about pets, especially large dogs. You might have to prove to landlords that there is a difference between being an early retiree and being unemployed before they will rent to you. Usually you can't make substantial changes to the apartment without the landlord's consent. Some landlords make frequent visits to spray their apartments for bugs, and that can be annoying even if they warn you in advance.

But all in all, I must admit it is appealing. I love owning my own home but will probably rent for a while when I first retire, until I decide for sure what state and town I want to live in.

[Nords]

Quote:

Originally Posted by utrecht If all of this moving gets old after doing this for a decade, we can always buy a house at that point. Thoughts?

In the nearly 13 years of their retirement, my parents-in-law have owned for six years, rented for six years, and are now owners again.

My father started retirement as a homeowner but has since kept moving to better & better locations with smaller & smaller apartments. I don't think he has any desire to ever become a yard slave homeowner again.

[teejayevans]

Quote:

Originally Posted by utrecht I envision a retirement full of flexiblity. We could rent a house right near our relatives for a year or 2. Then when the lease is up, we may want to travel the country for 3 months (with no expenses back at home base since there is no home base). Then come back and rent in a highrise on the beach for a year or 2. Then when that lease is up, go to Europe for a couple months (again with no expenses at home base). You get the idea.

If you sell your furniture and rent furnish apartments or rent furniture as
well, the moving is a lot easier/cheaper. Otherwise when travel the country
you'll need to pay for the storage of the furniture. The traveling can be
much cheaper if you rent as oppose to using hotels.
First thing you have to decide is this a emotional decision or a financial
one.
TJ

[RunningBum]

There's a cost to everything when you move a few times. Landlords like to find reasons to keep deposits, and leases are costly to break. Moving and storing furniture has a cost, but renting furniture isn't cheap either. But it probably makes less sense to buy unless you know where you're going to stay for 3 to 5 years.

I tried renting a few years ago when I first moved to Texas. I would be living here only part of the year, 7 years max, and wanted to try the area before committing to stay even that long. I hated apartment living. First I tried a cheap place, but it was in bad shape, not too safe (car broken into). The next two places were nicer but still noisy and had other reasons to want to leave. I decided I like a garage, my own walls, and didn't mind some yardwork, which I could hire out when I wasn't around. With low interest rates and 20% down I could buy an 1800sf house for about the same PITI as rent+insurance on a 900sf apartment. And I'll make a profit, and not a bad one if you base it off my down payment, when I sell.

Still, renting was the right thing to do until I knew I was going to stay long enough to make it worthwhile.

[utrecht]

The furniture issue is something I need to consider.

The idea here is to

1) Rent a place for 2 years or so.
2) When lease ends, spend 2-4 months travelling the US.
3) Come back and rent a new place for 2 years or so (Im thinking houses, not apts)
4) When lease ends, maybe rent an apt in Paris for a couple months
5) Come back and rent a place for a year or 2.
6) Maybe spend 2 months in the Carribean and then 2 months travelling Europe
7) Come back and rent a new place in Florida.

ect.....all open to complete flexibility of course, depending on health, seasons, what other relatives are doing.

I hadnt thought about renting furniture, but I believe thats fairly expensive to do for 2 years at a time. I think when you rent furniture, you actually pay enough rent to buy the furniture in less than 2 years. It seems that paying to have it moved and stored would be cheaper, but I'll have to look into that. I did see a really cool highrise on Hollywood beach that was furnished so if we were going to stay there for 2 years, we could just sell everything and plan on re-buying new stuff 2 1/2 or 3 years later.

I just think this sounds like so much more fun / adventuorous than just living in the same house for 30 years. Im doing pretty close to that right now.

[RunningBum]

Getting a furnished place seems ideal since it probably doesn't cost that much more, and the furniture probably fits the place nicely.

[Zoocat]

Quote:

Originally Posted by utrecht The furniture issue is something I need to consider. The idea here is to 1) Rent a place for 2 years or so. 2) When lease ends, spend 2-4 months travelling the US. 3) Come back and rent a new place for 2 years or so (Im thinking houses, not apts)

Another reality to consider is that your landlord may decide to sell your home rental, and you would need to move early. I have young adult children who are at the mercy of a landlord who has decided to do this (after only 6 months into the lease!). So when the lease is up they will have to move again. Moving gets old very quickly.

I could never rent again because I have a dog. The only rentals in my town that allow dogs are awful. If I ever decide to travel extensively I will hire a house/dog sitter to live at my place for reduced rent.

[tryan]

Sounds like renting is a no-brainer ...try before you buy (and you may never buy).

[utrecht]

If you have a lease on a house, it can be sold and you forced to vacate before the lease is up? Thats something to consider if true.

We have no pets, so thats not an issue.

[teejayevans]

Quote:

Originally Posted by RunningBum Getting a furnished place seems ideal since it probably doesn't cost that much more, and the furniture probably fits the place nicely.

GENERALLY, resort places (beach, mountains, etc) will have furnished
houses, so it's not a problem. If you want to move to Mobile, Al, it might
be tougher.
Buy a boat/RV, take your house with you.
TJ

[W2R]

Quote:

Originally Posted by utrecht If you have a lease on a house, it can be sold and you forced to vacate before the lease is up? Thats something to consider if true. We have no pets, so thats not an issue.

That is probably not legal, but the same thing happened to me back in 2000.

The landlady would call me several times a week and stopped in for this or that every weekend or two. She was a little flaky and had put much of her stuff in the attic. I objected to that because I was paying to rent the entire place!! I also objected to the constant calls despite my punctuality with the rent and good care of her home. I actually bought an answering machine just to deal with her calls.

Finally, six months into a one year lease, she begged me to move out, because she needed to sell the house. At that point, I was actually glad to get out of the lease. I was out in a couple of weeks and got my entire deposit back, despite not bothering to clean up.

Her mother, a realtor, told me her daughter was a druggie, and that was why she was so difficult to deal with!

[utrecht]

Im sure there are lots of horror stories in both camps (rent and buy). My best friends had a house built in my subdivision a couple streets over. Their street started sinking after apparently the builder built the houses on top of an old creek and the ground wasnt compacted correctly. A couple of the houses had cracks in the walls big enough to stick your fist in. One of them had a swimming pool that imploded. Lawsuits dragged on and the builder bought back a couple of the houses but not at market value. My friends sold their house before there was any visible damage but houses on both sides of them were in bad shape.

The moral of the story is that despite this disaster, theres still nothing wrong with having a house built. Im not sure that there are more rental disaster stories than buying / building disaster stories.

[kcowan]

During retirement, a house is a lifestyle expense. You are no longer relying on it as a part of wealth accumulation if you have run your FIRECalc properly. Like you say, some rentals/purchases are good and some are not. You need to do DD on rentals as well as purchases. Talk to other renters from the same landlord. Good luck whatever your choices.

[haha]

Quote:

Originally Posted by kcowan Talk to other renters from the same landlord. Good luck whatever your choices.

I second this- for rentals or prospective purchases. You may have to rent something in the target neighborhood for a time, but then get out on the street and chat with people.

Ha

[free4now]

Another approach to the furniture dilemna is to buy used and then sell when you're done for about the same amount. It takes a lot more effort than just calling the donation truck, but if you are RE you have time. craigslist works well as a source of used furniture.

[haha]

Quote:

Originally Posted by free4now Another approach to the furniture dilemna is to buy used and then sell when you're done for about the same amount. It takes a lot more effort than just calling the donation truck, but if you are RE you have time. craigslist works well as a source of used furniture.

This appeals to me-kind of student style. But it seems that it would almost require owning a truck or van. How do you do it?

Ha

[Khan]

Quote:

Originally Posted by free4now Another approach to the furniture dilemna is to buy used and then sell when you're done for about the same amount. It takes a lot more effort than just calling the donation truck, but if you are RE you have time. craigslist works well as a source of used furniture.

That's what many military families do.

[free4now]

Quote:

Originally Posted by haha This appeals to me-kind of student style. But it seems that it would almost require owning a truck or van. How do you do it? Ha

In my case I left a downpayment for a craigslist couch, and had my movers pick it up in 2 weeks when I moved into my new place.

You can always hire movers to pick up furniture for you, and if it's a local move it probably won't cost much more than the delivery charge for new furniture.

The convention is that when you sell used furniture the buyer is responsible for the pickup.

[pedorrero]

Some thoughts: obviously both renting or owning have their pros and cons. It is definitely NOT ALWAYS true that owning a home will make you money...witness the current slump in many property markets. Some authors I've read recently (sorry, no names -- my memory is several decades older than my body ...) make a good case that a home is not the wonderful investment many people think it is. Not an argument to avoid ownership, just that many people (notably Realtors ) tend to gloss over the easily overlooked costs of homeowner ship: deferred maintenance, escalating costs (taxes, insurance (Did I mention I live in Florida), repairs and maintenance...etc.)

Even as a homeowner, it is easy to avoid having to do too many chores. I've owned two homes and have almost never done much maintenance; I pay to have most of it done.

Utrecht is wrong about worrying about being booted, unless you are month to month. In general, a lease is for a year or more, then reverts month to month. If you are within the one or two year period, the home could be sold ten times and you still have the right to live in it until a specified date. Depends on terms of the lease, of course, but that is my experience.

I admire OP (and anyone) who considers relocating. I'm likely to do the same. I'll probably sell my current home, which is in a growing, but kind of blah part of FL. I'm getting out of a failed relationship, or more precisely, trying to get the relationship out of my house, after which point I'll fix up and probably sell.

Hardly an original idea: if you sold a home that you owned free and clear, no law says you can't invest in real estate. You could put some or all of that money into investments, even those related to real estate (a REIT is a common one), and you would still be "invested" in property, as well as get an income that would offset the rent you would be paying somebody else.

I can't offer much advice about rentals. The people to the left of the Bell Curve have to live somewhere, and most renters seem to be from that category .

If the OP is a fogey, perhaps there are 55+ rental communities, or why couldn't somebody lease in one? Just keeping the <55 riff-raff out probably goes 99.5% of the way to a peaceful lifestyle.

Pity the 40-something retiree like me, who has to pay his own insurance and live with the riff-raff.