Renting (maybe permanently) after FIRE?

[Dtail]

When we first moved to Florida, we rented. We did not know anyone in the area and wanted to give it a test run. Well after 1.5 years, the landlord moved into the house.
So we bought a house a few blocks away in the same complex and love it. Perhaps as we get near the 80 yr old mark, we might consider renting.

 

[ponyboy]

I would never sell my home to rent a place. You can farm out tasks such as mowing the grass, plowing snow, etc. home maintenance, you can hire someone for that.
Rented an apartment in a city for 10 years. Way too noisy for me.

 

[surprising]

What do people do with all your accumulated 'stuff' when deciding to sell home and rent? Wife and I have thought about renting in various places around the country (and world) in retirement, but we have so much stuff, I don't want to pay to store it somewhere, but I also don't want to get rid of most of it. We did a downsizing 5 years ago from 4300 sqft to 2400 sqft and got rid of a lot of stuff, but we still have a lot. The idea is to use this current home (fully paid) as home base, and then go off and live and rent elsewhere whenever we want. This is still the plan but I'll probably still have around $10K yearly expenses just to own the home. Also, after a a couple years here, which we picked as our final 'forever' home, we both realized we have hobbies that require more - wife wants to garden more, we have a tiny lot. I want a big shop, there's no room to build a shop here. So.. do we move to somewhere with our wants, and then use that as home base and be away for months out of the year? We might end up enjoying nomad life so much that we don't ever get home enough to enjoy the features of the home we just upgraded to!

 

[aja8888]

What do people do with all your accumulated 'stuff' when deciding to sell home and rent? Wife and I have thought about renting in various places around the country (and world) in retirement, but we have so much stuff, I don't want to pay to store it somewhere, but I also don't want to get rid of most of it. We did a downsizing 5 years ago from 4300 sqft to 2400 sqft and got rid of a lot of stuff, but we still have a lot. The idea is to use this current home (fully paid) as home base, and then go off and live and rent elsewhere whenever we want. This is still the plan but I'll probably still have around $10K yearly expenses just to own the home. Also, after a a couple years here, which we picked as our final 'forever' home, we both realized we have hobbies that require more - wife wants to garden more, we have a tiny lot. I want a big shop, there's no room to build a shop here. So.. do we move to somewhere with our wants, and then use that as home base and be away for months out of the year? We might end up enjoying nomad life so much that we don't ever get home enough to enjoy the features of the home we just upgraded to!

1. Give stuff away
2. Throw some of it out
3. Sell some of it
4. Donate some of it.
5. Keep just necessities.

After my wife died two years ago and I downsized, I am still working it off.

 

[WhenIsItTime]

Rent vs buy primary residence: the only things we are likely to agree on is it depends.

 

[davidgo]

You could have 35 years ahead of you. What will that $1700 a month rent be in 20 years? Rents often go up faster and higher than regular inflation.

It does make sense to leverage your equity and this is a good plan but at your current age there are just too many variables, IMO. It's just too early...wait another 10 or 15 years.

Just a thought. Couldn’t a couple downsize the rental they have gradually as they age and need less space and prime location? Counteract rent increases?

 

[marko]

Just a thought. Couldn’t a couple downsize the rental they have gradually as they age and need less space and prime location? Counteract rent increases?

I'm old enough to remember when rents were $200 a month. That same place now rents for $4,000. You'd have to have some really creative downsizing to cover that gap.

As noted, OP's problem is the length of time he hopes for that money to last. With 35 years potentially ahead, that's a long time to rely upon landlords being reasonable. If he was currently paying $5000 a month, maybe he'd be able to downsize somewhat over time, but he's thinking of a rent in the range of $1700, which is already pretty low. Not a lot of cushion.

 

[Fermion]

I don't have a problem with the idea of renting...we did that for the first 5 years of our retirement so I would be a hypocrite to decry it. There is a downside of having to put up with a landlord. I did not like the inspections and visits. During the beginnings of COVID there were several times someone would need to come in to do silly tasks like move the fire extinguishers to a new location so they would be wheelchair accessible. This was annoying at a time where we were avoiding all contact.

 

[steady saver]

What do people do with all your accumulated 'stuff' when deciding to sell home and rent? Wife and I have thought about renting in various places around the country (and world) in retirement, but we have so much stuff, I don't want to pay to store it somewhere, but I also don't want to get rid of most of it. We did a downsizing 5 years ago from 4300 sqft to 2400 sqft and got rid of a lot of stuff, but we still have a lot. The idea is to use this current home (fully paid) as home base, and then go off and live and rent elsewhere whenever we want. This is still the plan but I'll probably still have around $10K yearly expenses just to own the home. Also, after a a couple years here, which we picked as our final 'forever' home, we both realized we have hobbies that require more - wife wants to garden more, we have a tiny lot. I want a big shop, there's no room to build a shop here. So.. do we move to somewhere with our wants, and then use that as home base and be away for months out of the year? We might end up enjoying nomad life so much that we don't ever get home enough to enjoy the features of the home we just upgraded to!

Surprising, I hear you. My thinking, though, is that you've done the hardest downsizing...i think you could find those decluttering muscles again. I have been following several people online (mostly YouTube) that keep me focused on downsizing and also maybe doing more traveling. We currently have a 30 acre farm (with two houses on it) AND still have our house in the city. It is crazy and crazy making. We both prefer the farm and are moving in that direction, but we really would like maybe 5 acres and a smallish (2000 sq ft more or less) cottage or farmhouse that has closer proximity to people. When we were both working, we loved getting away. While I still value my privacy and the freedom of the land, I'm also anticipating the burdens of more work as we get older (and DH's health declines). My knee jerk reaction to your note is something I need to put a mirror up to for myself. Because my thought was "find that place and move into it!" "Make it exactly how you want it. But maybe do some heavy duty travel FIRST, before you put a lot of money and effort into the garden and the shop." And my next thought was "radically downsize, put what you really love in storage and go travel the world. Pick a finite amount of time if that helps. A year maybe. You'll come back with fresh perspectives. Put your proceeds from the sale of your house back in the market or in an investment vehicle you feel comfortable with and just travel! When you get back, you'll have a clearer idea of what you want."

I'll be curious to see where your journey and decisions take you and your wife. Thanks for sharing.

 

[Koolau]

What we notice in both areas we live is that rents seem to stabilize for a while but then suddenly rents will shoot up dramatically. The cycle can be on the order of 3 to 5 years.

 

[HFWR]

Maybe in a few more years, to offload having to give a rat’s patoot about grass or weeds or termites, ad infinitum. I kept my small mortgage, because most of my stash is in an IRA, so the tax bill would have been ugly. So I refinanced, and PITI is $870ish. It’s just too cheap to stay here, compared to $1500 mo for a studio apt.

 

[livingalmostlarge]

owner here who actually is considering renting my current house to rent a bigger home nearby for 3-5 years. Kids are in 9th and 7th and we want more space and school logistics have changed. So we sort want a slightly different location. Waste of money? Probably. Our house is cheap and rent will be more. But then again we like our place but it depends on what we can find to rent. Bigger issue is rentals are hard to find even paying more.

So what happens if you rent not for downsizing but for a temporary upsize?

 

[marko]

Rent vs own can be a complex issue and OP's concern is mainly financial.

But for consideration: just because you own your property it does not mean that YOU have to cut grass, shovel snow, maintain the pool, paint or anything else.

There's professionals who'll do that for you, and who likely will do a better job at it too.

 

[Koolau]

owner here who actually is considering renting my current house to rent a bigger home nearby for 3-5 years. Kids are in 9th and 7th and we want more space and school logistics have changed. So we sort want a slightly different location. Waste of money? Probably. Our house is cheap and rent will be more. But then again we like our place but it depends on what we can find to rent. Bigger issue is rentals are hard to find even paying more.

So what happens if you rent not for downsizing but for a temporary upsize?

I kinda wish we had done this. We moved (bought) to change school districts for our kids. We could have rented instead. Turns out we picked the one 10 year period when housing didn't go up in the area. We had to put a lot of money into the house to make it serviceable for the family (and maintenance - like new AC, new windows, new roof). When we sold, we basically sold for what we paid but didn't recoup any of the improvements.

Who knew? We could likely have rented cheaper.


Good luck with your renting. I hope it w*rks out for you.

 

[imbatman]

Gotta go with the IT DEPENDS vote here. Have owned houses for 25 years and just put house on market and signed a lease on a small standalone unit on a property in a location we highly prefer. I thought it would be short term to downsize and fund a smaller home purchase without paying current market interest rates....but once I started realizing how much we plan to travel and how much I will save by eliminating home insurance, property tax, and paying much smaller utilities (much smaller place)....we will pocketing some good savings while putting the money currently tied up in the house....into something generating a good income for us to live on (at least while rates stay high). Would I want this if we were homebodies with no desire to travel? Definitely less so. Will we stay here forever? Unlikely. But a good temporary solution and perhaps we can strike opportunistically later if the housing market retracts and the rates on our money is less enticing.

 

[tmm99]

I would be afraid to get rid of my house and move into an apartment as I'd have no control over how much the rent would go up over time. We lived in an apartment for a short time before finding our current house. This was back in 2016. The monthly rent was around $ 950CAD per month, including electricity and water and heating. It was a 2-bedroom apartment but it was very, very small, a bit less than 700 sqft. I just looked up the same size apartment on their website (8 years later) and they are now charging $2,000CAD (over 100% increase). The apartment has been renovated but it no longer includes electricity in the rent.

That kind of increase in cost scares me. They do have rent control here, but I know enough folks who had to move due to their landlord wanting to upgrade/renovate their apartments and had to find a new apartment at the market rate.

But a friend of mine who lives with her partner - They seem to be barely scraping by. They are around 65. They clean houses part-time together, but they said their work is getting harder as it's physical work. They own their own house, but they said they had to replace their roof and furnace recently, and something else a while back. The maintenance cost is adding up and they are fed up. They are planning to sell their house and move to another town and move into a Co-op apartment, but evidently, the wait to get into the co-op apartment is close to 2 years.

If I rent, I still want to keep my house. You never know about those things, but my house value has doubled since our purchase in 2016.

 

[Donk2001]

We have lived in Switzerland for 15 years now and have rented the same lakeside apartment since. Rent is stabilized in Switzerland, where 61% of us rent (78% in Geneva) because buildable land is scarce and buying is extremely expensive. We have paid the same monthly rent for 15 years and will likely do so into the future.** We consider it to be a good deal. We would never be able to afford to buy our apartment in this location, even if it were for sale.

Given that I am over 65, to buy an apartment (or a house) would require a minimum down payment of 35%, taken from our income producing assets. It's not economically viable for us. We are very happy renting--we don't have to worry about building maintenance and insurance, household appliances, heating, water, real estate taxes, etc.

** Landlords may only increase rents when they pay for substantial renovations in the apartment (not the building or common areas), or when the interest rates increase above a certain rate. Interest rates in this very stable economy are currently 0.50% and averaged only 0.62% during 2000-2025. It's a renter's paradise compared to many other countries.

In the same boat. Renting in Paris for 2,200E in an apartment worth 1 mill plus. Rent cant go up, almost every appliance has been replaced by landlord as they break and a water line leak that flooded the downstairs neighbor, was handled 100% by them. These 100s of year old buildings need alot of upkeep none of what we pay. Plus the French tax upon death of the surviving spouse close to 40% of your worldwide assets. The only way they can collect from our kids is to seize French assets, so an owned home is a no go. Can't get a mortgage after age 60 and not taking the tax hit in the US either of liquidizing assets.

 

[indiajust]

I enjoy renting. I like having a few neighbors as a social club. I knock on a door if I need a ride or the car won't start. I downsized when I sold the house I renovated. I don't want to own anything I can't move myself. I could tow my life behind the 98 Jetta. Or sell that and use the 94 truck instead.

Buy low and sell high. I bought my 20 year project house with a crack house as a neighbor. Through 6 layoffs and divorce I worked through the project and walked away with 400k. Zillow tells me that fed money printing has almost doubled the house price since 2015, its now just under a million. It was built for $2000. I have done better with my investments than the new owners did with the house. The real estate taxes and mortgage interest are a big part of that. Location...

I moved to NH of cruel RE taxes and a sales tax on RE transfer. It is foolhardy to own here without a high salary whose offsetting lack of income tax justifies it. The most expensive and worst performing schools (except NYC) guarantee tax growth faster than income. This is a terrible place to own.

I see own/rent decision as analogous to the duration risk of a bond portfolio. In this regard, I find myself aligning with Koolau. The duration risk of ownership has to meld with your portfolio and your personal capabilities.

My ex did not understand this and lost 150k, finally short selling in 2016. Two other girlfriends both lost moderately. The duration of their purchase exceeded their capacity for risk.

I am unwilling to accept the decades of risk necessary to make RE a winner. If I did not live in new england and wore a younger mans clothes....

 

[masonmcd]

This has always been my repeat reading when I forget about the math. Basically, rent would be the most you'd pay, but if you own, the mortgage is the least you'll pay.

How to Decide to Rent vs. Buy Your Home — Millennial Money with Katie

Buying a home isn't always the best option. Here's when the math supports buying your primary residence (instead of renting it).

moneywithkatie.com

 

[indiajust]

I think there is a bit of an attiutide on the part of some people who have owned homes all of their lives (as we have) towards retirees and others who rent. And rent for many different reasons.

When we came home from a year 'off' one of our acquaintences made the comment half jokingly that we must have spent all of our home equity on travel and hence could not afford to buy. Imagine, downsizing from 3700 sq ft home ownership to a 1300 sq ft rental condo.....why would anyone want to do that?

What a silly comment to make!

It made us realize the mindset of some people on this rent vs. buy issue.

As an aside, what we saved on renting vs owning over those four years, and the ROI on home equity money we placed in the market more that paid for extensive international travel, 4 months or more per year, and then some! And we could lock and leave with no issues.

Virtue signaling is alive and well. Housing is deep in the social pecking order. There is always a more expensive game to play. Take the nicer neighborhood crowd and put them in with a few estate folks, watch their eyes glitter. Take the estate crowd and put them in with a few generational wealth types, hear their teeth grind. The human animal remains.

 

[bloom2708]

We are planning to downsize in 1.5 years. Rent for a period and then possibly buy later in a warmer place.

Rent is a good option if you can find the type of rental unit you can live with.

 

[Midpack]

I don't want to share walls with renters (fire, noise, parking, etc.), but if renting ever became more cost effective for us, we'd have to give it some serious consideration. Renting a SFH makes even less financial sense IME. After over 45 years of homeownership, we've never lived where renting would be at all competitive to owning (especially on a cost per sqft basis), but there may be HCOL areas where that's not true.

 

[Sanbenito1]

Rent only if you don’t mind getting an eviction notice when you’re 80, as my aunt did (owner moved back in). I like the idea of renting out your house and then using that money to rent a house somewhere else. That way you can test out new locations, and you’ll always have a home you can return to

 

[Fermion]

We have lived in Switzerland for 15 years now and have rented the same lakeside apartment since. Rent is stabilized in Switzerland, where 61% of us rent (78% in Geneva) because buildable land is scarce and buying is extremely expensive. We have paid the same monthly rent for 15 years and will likely do so into the future.** We consider it to be a good deal. We would never be able to afford to buy our apartment in this location, even if it were for sale.

Given that I am over 65, to buy an apartment (or a house) would require a minimum down payment of 35%, taken from our income producing assets. It's not economically viable for us. We are very happy renting--we don't have to worry about building maintenance and insurance, household appliances, heating, water, real estate taxes, etc.

** Landlords may only increase rents when they pay for substantial renovations in the apartment (not the building or common areas), or when the interest rates increase above a certain rate. Interest rates in this very stable economy are currently 0.50% and averaged only 0.62% during 2000-2025. It's a renter's paradise compared to many other countries.

I missed this. We have a friend who moved from Seattle to Switzerland a year or so before we early retired in 2015. She has toyed around with buying a house but is still renting because of what you described (scarce real estate). A few years back she did find a stone cottage in a village for cheap, but it was literally a stacked stone cottage, probably built 200+ years ago.

 

[imjustawarrior]

I would be fine renting. I'll use my father as an example. My DF and DM moved into a 55+ apartment a few years ago. My DM passed less than a year after moving. It has been great for my DF to have all those people around. He is now 90. He has everything there. Groceries delivered, medical care coming to his apartment, social activities, gym, swimming pool, walking path, ....

I have stayed there many times. They have apartments for family to rent when visiting. At night, that place is so quiet. It is like everyone goes to bed at 8pm. I could easily see my DW and I living there. We could lock up the apartment and hit the road whenever we wanted. It is also a nice place to age in once one doesn't go out much any more.

I think it will also make things a lot easier once my DF passes. We won't have to clean out 50 years worth of stuff from a house and then sell the house. My DF has the money from the house to spend as he chooses.

If a rental gets bad for whatever reason or one gets the itch to move, then one can easily relocate.