Does it make sense to rent as a retiree?

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delamer
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Re: Does it make sense to rent as a retiree?

Post by delamer » Tue May 08, 2018 2:58 pm

gouldnm wrote:
Tue May 08, 2018 2:32 pm
We are also trying to decide this question. We will probably rent, at least for the first few years, because we will be moving to a new city and we aren't sure which neighborhood we'll be happiest in.

Having rented for many years as well as owned several homes, I can say that there are pros and cons to each, but I personally prefer renting. Here are a few things to think about:

#1. Owning and renting both have their own unique risks. Owning can be a better inflation hedge, although you will also have many additional expenses that you won't have with renting (e.g, maintenance, taxes, etc.). If you buy a condo or live in a development, they might have special assessments that increase your monthly expenses similar to a rent increase. For example, in my development, I pay a special assessment because they needed to build a revetment to protect our beach area from erosion. We were able to get a special deal from the state, but there are several developments in my area where people are paying $2-3K in special assessments for beach protection.

#2. The nice thing about renting is that if you don't like something or your rent is being increased, you can always pick up and move with relatively little effort. You can't do that when you own a home.

#3. Some people have stated that they don't like renting because they don't want to share a wall with neighbors or have someone telling them what to do. But keep in mind that many people who retire buy condos. In a condo you also share walls with neighbors and HOAs tend to be very strict about what you can and cannot do. Even if you own your own home, neighbors can still be a problem. When I owned a house, I had neighbors that would use their chain saws to cut down trees at 8:00 A.M. on a Saturday morning, for example. Another neighbor set up a drainage system on his property that ended up flooding our yard! So the idea that buying a house will somehow protect you from difficult neighbors is a myth. Besides, having neighbors close by can be an asset to an elderly person. When I was in my 20's and renting, I used to always run errands for my elderly neighbors who had major health problems. I don't know what they would have done without me!

#4. Some people have expressed concern that apartments won't have the amenities that an older person might need. However, there are apartment complexes that specifically cater to the 55+ crowd.

#5. I was definitely happier as a renter than as a home owner. However, every person is different. It really just depends on your personal preference.

#6. As a renter, I definitely saved more money than I did as a home owner. One reason that I bought a house is that I needed more space. But I intend to seriously downsize in my retirement. I don't want to have to maintain a 2,000+ sq. ft. home any more, when 1200 sq. ft. will do just fine. It can be very hard to find a small house in a nice, upscale neighborhood. On the other hand, it can be very easy to find an apartment, even in wealthy neighborhoods. Unless you really need the space, my experience is that renting is the much cheaper option.
I certainly never made the claim that owning will protect you from difficult neighbors.

But moving from a single family home to an apartment rental is a huge lifestyle change. Having neighbors stomping around overhead or having their cigarette smoke entering into my apartment is not something I am prepared to deal with. Every “shared walls” situation I’ve been in has had minor to major issues with neighbors that would not have occurred in a single family situation.

Some people feel that the pluses of apartment living outweigh the negatives. While I understand that point-of-view, I don’t share it.

Most of us have to make some compromises in our lifestyle because we don’t have unlimited financial resources; living in a single family home is not an area where I’d compromise. Others will feel differently.

gouldnm
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Re: Does it make sense to rent as a retiree?

Post by gouldnm » Tue May 08, 2018 5:33 pm

Coincidentally, this appeared in today’s Washington Post:
https://www.washingtonpost.com/news/whe ... a0e3d4e268

SeekingAPlan
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Re: Does it make sense to rent as a retiree?

Post by SeekingAPlan » Tue May 08, 2018 6:03 pm

gouldnm wrote:
Tue May 08, 2018 2:32 pm

#3. Some people have stated that they don't like renting because they don't want to share a wall with neighbors or have someone telling them what to do. But keep in mind that many people who retire buy condos. In a condo you also share walls with neighbors and HOAs tend to be very strict about what you can and cannot do. Even if you own your own home, neighbors can still be a problem. When I owned a house, I had neighbors that would use their chain saws to cut down trees at 8:00 A.M. on a Saturday morning, for example. Another neighbor set up a drainage system on his property that ended up flooding our yard! So the idea that buying a house will somehow protect you from difficult neighbors is a myth. Besides, having neighbors close by can be an asset to an elderly person. When I was in my 20's and renting, I used to always run errands for my elderly neighbors who had major health problems. I don't know what they would have done without me!
Totally laughed at the bolded portion above. I live in and own a single family home in a dense urban area. The houses on either side are at most 5 feet away. This past Sunday morning at 5 AM the neighbor decided to use his power saw in the gangway right outside my bedroom window. I could have stuck my hand out the window and touched him he was so close. No point trying to say anything as they speak absolutely no English.

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Re: Does it make sense to rent as a retiree?

Post by rich126 » Tue May 08, 2018 7:37 pm

2. The nice thing about renting is that if you don't like something or your rent is being increased, you can always pick up and move with relatively little effort. You can't do that when you own a home.
Moving to me is a PITA so I think we have differing definitions of "relatively little effort" :)

Renting a condo to me sounds ideal if only the following were true:
1. Sound proof condo
2. Guarantee upkeep of building
3. Good neighbors

Because that isn't true I usually have a house (still could have some neighbor issues but they aren't on top of me). I'm planning to move in the next year and am trying to start the cleaning out early and it is just tedious. I really wish moving was easy (hiring movers can make things a bit easier but then you have to deal with movers and that isn't always fun).

gouldnm
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Re: Does it make sense to rent as a retiree?

Post by gouldnm » Tue May 08, 2018 8:16 pm

SeekingAPlan wrote:
Tue May 08, 2018 6:03 pm
gouldnm wrote:
Tue May 08, 2018 2:32 pm

#3. Some people have stated that they don't like renting because they don't want to share a wall with neighbors or have someone telling them what to do. But keep in mind that many people who retire buy condos. In a condo you also share walls with neighbors and HOAs tend to be very strict about what you can and cannot do. Even if you own your own home, neighbors can still be a problem. When I owned a house, I had neighbors that would use their chain saws to cut down trees at 8:00 A.M. on a Saturday morning, for example. Another neighbor set up a drainage system on his property that ended up flooding our yard! So the idea that buying a house will somehow protect you from difficult neighbors is a myth. Besides, having neighbors close by can be an asset to an elderly person. When I was in my 20's and renting, I used to always run errands for my elderly neighbors who had major health problems. I don't know what they would have done without me!
Totally laughed at the bolded portion above. I live in and own a single family home in a dense urban area. The houses on either side are at most 5 feet away. This past Sunday morning at 5 AM the neighbor decided to use his power saw in the gangway right outside my bedroom window. I could have stuck my hand out the window and touched him he was so close. No point trying to say anything as they speak absolutely no English.
This was in a neighborhood in which all the homes were on 1+ acre lots. And we could still hear it!

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celia
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Re: Does it make sense to rent as a retiree?

Post by celia » Tue May 08, 2018 8:32 pm

bloom2708 wrote:
Fri May 04, 2018 7:59 pm
On the plus side, not paying property tax, insurance (replaced with renter's insurance), maintenance, repairs, upgrades and being able to try something new or someplace new is very appealing to me.
Ummm, these costs are built into your rent. How else will the landlord cover them?

As for me, I see home ownership as a form of diversification (besides someplace you live and can customize as you wish). Do you really want all your assets in the stock and bond market? And if your home is paid off, that lowers your living expenses.

gouldnm
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Re: Does it make sense to rent as a retiree?

Post by gouldnm » Tue May 08, 2018 8:53 pm

celia wrote:
Tue May 08, 2018 8:32 pm
bloom2708 wrote:
Fri May 04, 2018 7:59 pm
On the plus side, not paying property tax, insurance (replaced with renter's insurance), maintenance, repairs, upgrades and being able to try something new or someplace new is very appealing to me.
Ummm, these costs are built into your rent. How else will the landlord cover them?

As for me, I see home ownership as a form of diversification (besides someplace you live and can customize as you wish). Do you really want all your assets in the stock and bond market? And if your home is paid off, that lowers your living expenses.
The costs still tend to be cheaper because they are spread across multiple units—similar principle to buying in bulk. If you have four apartments in a building the size of a large home, the property tax, etc. is not necessarily four times as much as the single family home.

If you want to diversify into real estate consider a REIT fund.

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Re: Does it make sense to rent as a retiree?

Post by Hulu » Tue May 08, 2018 9:05 pm

I've mostly rented and have a slight preference towards it. There are both pros and cons with either path and it's both situational and geographical. I have a young child so I'm leaning towards buying in the next years...to avoid having to move while she's in school (assuming we're in the same town). After that it would have to be a significant financial advantage to compensate me to maintain a property. I'm a huge fan of good professional property management...which I doubt I'd become unless it was a passion/profession.

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galeno
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Re: Does it make sense to rent as a retiree?

Post by galeno » Wed May 09, 2018 7:49 pm

IMHO. Renting during retirement gives flexibility. Owning a home is an anchor.
AA = 40/55/5. Expected CAGR = 3.8%. GSD (5y) = 6.2%. USD inflation (10 y) = 1.8%. AWR = 4.0%. TER = 0.4%. Port Yield = 2.13%. Term = 34 yr. FI Duration = 6.2 yr. Portfolio survival probability = 95%.

Lynette
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Re: Does it make sense to rent as a retiree?

Post by Lynette » Wed May 09, 2018 8:30 pm

oxothuk wrote:
Sun May 06, 2018 1:22 pm
Another tax consideration is that the extra income from selling your home (which will fund the rent) may push you into IRMAA territory (or a higher IRMAA bracket).
+1

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Re: Does it make sense to rent as a retiree?

Post by Lynette » Wed May 09, 2018 8:45 pm

WillRetire wrote:
Sun May 06, 2018 11:53 am
We have considered this too. Decided to remain homeowners to protect home as an asset should one of us need long term care and we run out of money. Medicaid allows healthy spouse to keep home.

A condo is a nice alternative to single-family house... less to maintain one's self.

If single, would strongly consider renting.
As others mentioned, it depends. If finances are not the main consideration, then lifestyle choices become important. I have rented for long periods of time. If I can avoid it, I will never rent again - too many bad experiences with shared walls. I like pottering around in my garden. I have an ideal situation being close to my health club, church, hospitals. I can walk to my local deli, car maintenance place. I live in a quiet, tree-line place. I have been fixing up my house so it really suits me. I am still physically active and healthy in my mid seventies but if required, I have bedrooms and bathroom on the first level that can be modified.

Maintenance - I discovered that I can do a lot myself with help from Youtube videos. I quite enjoy visiting the Big Box stores. I have a whole long list of maintenance people, lawn service, snow removal etc.

I'm amused at some comments about needing the motivation of moving to get rid of stuff. My close relatives live quite far away but there won't be much stuff to chuck away. I make frequent trips to donate stuff. The only stuff that comes into my property is plants - bought two small trees today - sigh :D

am
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Re: Does it make sense to rent as a retiree?

Post by am » Sun May 13, 2018 10:22 am

How about renting a small house as a compromise? The best of both worlds?

SeekingAPlan
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Re: Does it make sense to rent as a retiree?

Post by SeekingAPlan » Sun May 13, 2018 10:31 am

am wrote:
Sun May 13, 2018 10:22 am
How about renting a small house as a compromise? The best of both worlds?
Maybe. Renting a house often comes with responsibility for mowing, shoveling, etc which might be part of the plus side of renting. Not having those chores makes it easier to travel early in retirement and is obviously better as those chores become more difficult. For me, if I have to handle all the chores I would like to benefit from ownership.

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Sandtrap
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Re: Does it make sense to rent as a retiree?

Post by Sandtrap » Sun May 13, 2018 10:36 am

Works great for some. I rent several townhouses to retirees and they have been content for many years.
But, DW and I are hobby DIY home improvers. That would not work well as a renter. So we own.
Besides, very few landlords take horses. :D
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Re: Does it make sense to rent as a retiree?

Post by Quickfoot » Sun May 13, 2018 10:39 am

I think it does, it preserves liquidity of assets and provides living arrangement flexibility. It also minimizes expenses because you aren't responsible for fixing things like the roof, water heaters, furnace, etc.

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Sandtrap
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Re: Does it make sense to rent as a retiree?

Post by Sandtrap » Sun May 13, 2018 10:41 am

delamer wrote:
Tue May 08, 2018 2:58 pm
gouldnm wrote:
Tue May 08, 2018 2:32 pm
We are also trying to decide this question. We will probably rent, at least for the first few years, because we will be moving to a new city and we aren't sure which neighborhood we'll be happiest in.

Having rented for many years as well as owned several homes, I can say that there are pros and cons to each, but I personally prefer renting. Here are a few things to think about:

#1. Owning and renting both have their own unique risks. Owning can be a better inflation hedge, although you will also have many additional expenses that you won't have with renting (e.g, maintenance, taxes, etc.). If you buy a condo or live in a development, they might have special assessments that increase your monthly expenses similar to a rent increase. For example, in my development, I pay a special assessment because they needed to build a revetment to protect our beach area from erosion. We were able to get a special deal from the state, but there are several developments in my area where people are paying $2-3K in special assessments for beach protection.

#2. The nice thing about renting is that if you don't like something or your rent is being increased, you can always pick up and move with relatively little effort. You can't do that when you own a home.

#3. Some people have stated that they don't like renting because they don't want to share a wall with neighbors or have someone telling them what to do. But keep in mind that many people who retire buy condos. In a condo you also share walls with neighbors and HOAs tend to be very strict about what you can and cannot do. Even if you own your own home, neighbors can still be a problem. When I owned a house, I had neighbors that would use their chain saws to cut down trees at 8:00 A.M. on a Saturday morning, for example. Another neighbor set up a drainage system on his property that ended up flooding our yard! So the idea that buying a house will somehow protect you from difficult neighbors is a myth. Besides, having neighbors close by can be an asset to an elderly person. When I was in my 20's and renting, I used to always run errands for my elderly neighbors who had major health problems. I don't know what they would have done without me!

#4. Some people have expressed concern that apartments won't have the amenities that an older person might need. However, there are apartment complexes that specifically cater to the 55+ crowd.

#5. I was definitely happier as a renter than as a home owner. However, every person is different. It really just depends on your personal preference.

#6. As a renter, I definitely saved more money than I did as a home owner. One reason that I bought a house is that I needed more space. But I intend to seriously downsize in my retirement. I don't want to have to maintain a 2,000+ sq. ft. home any more, when 1200 sq. ft. will do just fine. It can be very hard to find a small house in a nice, upscale neighborhood. On the other hand, it can be very easy to find an apartment, even in wealthy neighborhoods. Unless you really need the space, my experience is that renting is the much cheaper option.
I certainly never made the claim that owning will protect you from difficult neighbors.

But moving from a single family home to an apartment rental is a huge lifestyle change. Having neighbors stomping around overhead or having their cigarette smoke entering into my apartment is not something I am prepared to deal with. Every “shared walls” situation I’ve been in has had minor to major issues with neighbors that would not have occurred in a single family situation.

Some people feel that the pluses of apartment living outweigh the negatives. While I understand that point-of-view, I don’t share it.

Most of us have to make some compromises in our lifestyle because we don’t have unlimited financial resources; living in a single family home is not an area where I’d compromise. Others will feel differently.
+1
DW and I lived like that for many many years while saving for retirement.
Also, neighbors with: electric guitars, heavy bass video game speakers, domestic issues, strange smells. :shock:
No more.
j

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Re: Does it make sense to rent as a retiree?

Post by Quickfoot » Sun May 13, 2018 10:42 am

celia wrote:
Tue May 08, 2018 8:32 pm
Ummm, these costs are built into your rent. How else will the landlord cover them?

As for me, I see home ownership as a form of diversification (besides someplace you live and can customize as you wish). Do you really want all your assets in the stock and bond market? And if your home is paid off, that lowers your living expenses.
In many cases they actually aren't. In areas where renting is the same or less expensive than buying (which it is in markets that are in balance) major maintenance is not built into the rent, landlord is going to effectively need to cover major events out of pocket. The landlord makes money from someone else paying the mortgage and appreciation, typically NOT a huge amount of money through cashflow and often very little to NO money from cashflow after maintenance / repairs.
Last edited by Quickfoot on Sun May 13, 2018 11:58 am, edited 1 time in total.

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friar1610
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Re: Does it make sense to rent as a retiree?

Post by friar1610 » Sun May 13, 2018 11:52 am

WillRetire wrote:
Sun May 06, 2018 11:53 am
We have considered this too. Decided to remain homeowners to protect home as an asset should one of us need long term care and we run out of money. Medicaid allows healthy spouse to keep home.

A condo is a nice alternative to single-family house... less to maintain one's self.

If single, would strongly consider renting.
A condo can be the best of both worlds. We (early 70s/fully retired) have been in a small "over 55" condo community (14 units) of duplex townhouses for about 5 years. Two stories but all essentials (kitchen, master bedroom, laundry, 2 bathrooms) are on first floor if mobility becomes an issue. Probably more sq. feet than we absolutely need but nice to have a second floor when we have guests. No yard work, snow shoveling, etc. When we travel we just let a couple of neighbors know and lock the door knowing that the yard won't be overgrown when we return. Of course, this comes at a price in condo fees which, due to so few units, reduce economies of scale. So far it's been worth it. I don't know what I would do for housing if I became single but agree that I would strongly consider renting (a smaller place).
Friar1610

mariezzz
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Re: Does it make sense to rent as a retiree?

Post by mariezzz » Sun May 13, 2018 12:17 pm

I personally cannot ever imagine renting again. That gives control over my life to someone else - they can decide to sell, or decide they don't want to continue renting to me, and then I'd have to pack up & move, which has its own costs. Yes, I'd pass maintenance headaches off on someone else, but that also means I give up privacy - landlords can come into the home (yes, they do have to give notice in non-emergency situations).

If I wanted to pull equity out of a house in a high COLA, I'd buy in a low COLA.

Lived in a condo once - couldn't stand the board having control over my money. Paying a property manager to hire someone to do fairly simple things drove me nuts.

Everyone has different quirks, but I don't want anyone else having control of the place I live. I'm a DIYer and do much of my own maintenance, and while it does take time, I largely enjoy the opportunity to learn as I do these things.

With a paid off house, you don't need to have money available to pay for your living expenses monthly. As someone mentioned early in this thread, if you rent, you'll need to get that money from somewhere, and you likely will incur some tax implications as a result (unless you're pulling it from a Roth or annuity of some sort - careful tax planning might address this concern).

TravelforFun
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Re: Does it make sense to rent as a retiree?

Post by TravelforFun » Sun May 13, 2018 12:29 pm

So you sell your house and move into a condo or apartment and find out many things you don't like. Neighbors are too noisy or they smoke, taking trash out to the dumpster is a real chore, management is not responsive, etc... What would you do? Grin and bear it and take a chance on another property after your lease runs out? Rinse and repeat?

We've been in our home 25 years and wish to age in place. The neighborhood is nice and our adult kids live close. We've started hiring people to maintain our yard and clean our home. The only problem we'll have to figure out how to deal with is this home's master bedroom is upstairs.

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delamer
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Re: Does it make sense to rent as a retiree?

Post by delamer » Sun May 13, 2018 6:55 pm

mariezzz wrote:
Sun May 13, 2018 12:17 pm
I personally cannot ever imagine renting again. That gives control over my life to someone else - they can decide to sell, or decide they don't want to continue renting to me, and then I'd have to pack up & move, which has its own costs. Yes, I'd pass maintenance headaches off on someone else, but that also means I give up privacy - landlords can come into the home (yes, they do have to give notice in non-emergency situations).

If I wanted to pull equity out of a house in a high COLA, I'd buy in a low COLA.

Lived in a condo once - couldn't stand the board having control over my money. Paying a property manager to hire someone to do fairly simple things drove me nuts.

Everyone has different quirks, but I don't want anyone else having control of the place I live. I'm a DIYer and do much of my own maintenance, and while it does take time, I largely enjoy the opportunity to learn as I do these things.

With a paid off house, you don't need to have money available to pay for your living expenses monthly. As someone mentioned early in this thread, if you rent, you'll need to get that money from somewhere, and you likely will incur some tax implications as a result (unless you're pulling it from a Roth or annuity of some sort - careful tax planning might address this concern).

While I have a strong preference for living in a single family house that I own, the “paid off mortgage” advantage can be overstated. With property taxes, insurance, utilities, HOA, and ongoing plus irregular maintance, it still costs about $15,000 per year to live in the house.

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Re: Does it make sense to rent as a retiree?

Post by VictoriaF » Mon May 14, 2018 5:44 pm

UpperNwGuy wrote:
Sat May 05, 2018 6:23 am
I am retired, and I rent an apartment in a high rise building. It provides the simplicity that I seek in housing arrangements. I doubt I will ever own real estate again.
I am retired, and I rent an apartment in a medium rise building in the Washington DC area. It provides the simplicity that I seek in housing arrangements. I have never owned real estate and not about to do it now.

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Re: Does it make sense to rent as a retiree?

Post by willthrill81 » Mon May 14, 2018 7:32 pm

If I compare renting a home comparable to ours in the same neighborhood and factor in taxes, insurance, and maintenance costs, we're getting over a 5% return on our home by owning instead of renting. That makes good financial sense to me. YMMV.
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Re: Does it make sense to rent as a retiree?

Post by UpperNwGuy » Tue May 15, 2018 12:47 am

willthrill81 wrote:
Mon May 14, 2018 7:32 pm
If I compare renting a home comparable to ours in the same neighborhood and factor in taxes, insurance, and maintenance costs, we're getting over a 5% return on our home by owning instead of renting. That makes good financial sense to me. YMMV.
I was a homeowner for many years. Owning a home requires work, and I’m no longer willing to do that work. I’m willing to take the 5% financial hit to avoid the work. Some things in life are more important to me than money. (By the way, I would never rent a single family home. I like being able to contact my building manager when something breaks, knowing it will be fixed within hours by the onsite maintenance team.)

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Re: Does it make sense to rent as a retiree?

Post by StealthRabbit » Tue May 15, 2018 3:43 am

many options, all with merit (to do over again... @ age 18 when I bought my first property... I would have stashed all my RE equity in a paid off commercial building with multiple NNN tenants, I would be renting in Tahiti (or more likely Cook Islands). and collecting $8-12k in positive cash flows per month. I have (2) retiree friend who do just that.

As active early retirees, we are renting out our main home and live in a cabin on the rural property (@ 3 places across USA and soon to be overseas for Healthcare). Keep a cheap car, vintage motorcycle, tractors, and a full shop in each location. Not cheap, but deductible travel between and ~ $4k / month spending money (positive cash flows) for more travel. Someone is gonna have a NICE estate auction!!! (and the WINNER is the "survivor!", excellent choice!)

Later... ~ age 70 will sell most properties 'on contract' for more income

80's hope to be in a senior cottage community (may have to build our own) Shops and community space and ~ 800sf cottages and lots of gardens (with rental apt for caregivers and caretakers. These also exist, but are tough to find.

Would like to do 'shared equity' ownership with the right people. Tough to find, but I have time to look!

90's age in place in Senior cottage, or buy a senior care 'family' home and hire a staff and rent out a few rooms to needy seniors.

90's +... I have my swimwear packed and the application filled out for WY Pioneer home (on the site of Thermopolis State Hot Springs)

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Re: Does it make sense to rent as a retiree?

Post by ENT Doc » Tue May 15, 2018 5:20 am

willthrill81 wrote:
Mon May 14, 2018 7:32 pm
If I compare renting a home comparable to ours in the same neighborhood and factor in taxes, insurance, and maintenance costs, we're getting over a 5% return on our home by owning instead of renting. That makes good financial sense to me. YMMV.
Did you calculate the opportunity cost of the equity trapped in the home in this analysis?

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Re: Does it make sense to rent as a retiree?

Post by delamer » Tue May 15, 2018 9:26 am

StealthRabbit wrote:
Tue May 15, 2018 3:43 am
many options, all with merit (to do over again... @ age 18 when I bought my first property... I would have stashed all my RE equity in a paid off commercial building with multiple NNN tenants, I would be renting in Tahiti (or more likely Cook Islands). and collecting $8-12k in positive cash flows per month. I have (2) retiree friend who do just that.

As active early retirees, we are renting out our main home and live in a cabin on the rural property (@ 3 places across USA and soon to be overseas for Healthcare). Keep a cheap car, vintage motorcycle, tractors, and a full shop in each location. Not cheap, but deductible travel between and ~ $4k / month spending money (positive cash flows) for more travel. Someone is gonna have a NICE estate auction!!! (and the WINNER is the "survivor!", excellent choice!)

Later... ~ age 70 will sell most properties 'on contract' for more income

80's hope to be in a senior cottage community (may have to build our own) Shops and community space and ~ 800sf cottages and lots of gardens (with rental apt for caregivers and caretakers. These also exist, but are tough to find.

Would like to do 'shared equity' ownership with the right people. Tough to find, but I have time to look!

90's age in place in Senior cottage, or buy a senior care 'family' home and hire a staff and rent out a few rooms to needy seniors.

90's +... I have my swimwear packed and the application filled out for WY Pioneer home (on the site of Thermopolis State Hot Springs)

So you own three properties with vehicles kept at each location, but you have to go out of the country for healthcare?

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willthrill81
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Re: Does it make sense to rent as a retiree?

Post by willthrill81 » Tue May 15, 2018 9:38 am

ENT Doc wrote:
Tue May 15, 2018 5:20 am
willthrill81 wrote:
Mon May 14, 2018 7:32 pm
If I compare renting a home comparable to ours in the same neighborhood and factor in taxes, insurance, and maintenance costs, we're getting over a 5% return on our home by owning instead of renting. That makes good financial sense to me. YMMV.
Did you calculate the opportunity cost of the equity trapped in the home in this analysis?
I compared the cost of renting the home to the cost of ownership to compute the return. To examine the opportunity cost, you would need to determine whether you could reliably earn greater than a 5% return by investing in something else.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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220volt
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Re: Does it make sense to rent as a retiree?

Post by 220volt » Tue May 15, 2018 1:36 pm

One thing no one mentioned is that by selling the house losing ability to do reverse mortgage line of credit (HECM). On a 600k house you can get 300k reverse line of credit that will grow at 5% a year, guaranteed. Not only you don't need to make any payments back, but you get to keep living in your own house while YOU'RE getting paid AND your money grows at 5%.
"If I had only followed the advice of financial analysts in 2008, I'd have a million dollars today, provided I started with a hundred million dollars" - Jon Stewart

Socal77
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Re: Does it make sense to rent as a retiree?

Post by Socal77 » Tue May 15, 2018 3:30 pm

Another benefit to owning is your mortgage (if you have one) deflates while rents rise. In effect you are reducing your personal inflation rate as long as house/condo related expenses are in check.

This can be huge for places like Socal where rents can rise significantly in a short period of time and put a big strain on your retirement income.

Has anyone buying a house/condo in middle age (wont be paid off in retirement) thought about matching their future workplace Pension immediate annuity payment with their mortgage payment? It seems to me this is a way to quasi inflation adjust your annuity payment.

delamer
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Re: Does it make sense to rent as a retiree?

Post by delamer » Tue May 15, 2018 3:42 pm

220volt wrote:
Tue May 15, 2018 1:36 pm
One thing no one mentioned is that by selling the house losing ability to do reverse mortgage line of credit (HECM). On a 600k house you can get 300k reverse line of credit that will grow at 5% a year, guaranteed. Not only you don't need to make any payments back, but you get to keep living in your own house while YOU'RE getting paid AND your money grows at 5%.
How do you get the guaranteed 5%? And what about upfront costs?

mylastdollar
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Re: Does it make sense to rent as a retiree?

Post by mylastdollar » Tue May 15, 2018 3:47 pm

I retired in 2017 @ 62. I sold my condo and now rent . I made the right choice. Take the money and run , houses are a money pit.

hoops777
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Re: Does it make sense to rent as a retiree?

Post by hoops777 » Tue May 15, 2018 3:53 pm

Rentals always seem to be classified as inferior quality which is simply not true.You can rent places you would not want your dog to live in or you can rent luxury properties that dwarf your current home.It depends what and where you want.If you live in a hcol area and are moving to a lcol area you are way ahead of the game.We are contemplating renting our small home in the Bay Area for a couple years and moving to different areas.Our situation is different because we intend on returning.
As others have said,a paid off home still has a lot of expenses,but life is more than ledger sheets.There is a peace that many have simply living in their own home.You of course also have the price appreciation depending on where you live or the reverse if you have bad luck with your timing.You are guaranteed to spend/lose money if you rent.Owning opens up the possibility of losing even more or making a nice profit.
Last edited by hoops777 on Tue May 15, 2018 4:11 pm, edited 1 time in total.
K.I.S.S........so easy to say so difficult to do.

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220volt
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Re: Does it make sense to rent as a retiree?

Post by 220volt » Tue May 15, 2018 4:10 pm

delamer wrote:
Tue May 15, 2018 3:42 pm
220volt wrote:
Tue May 15, 2018 1:36 pm
One thing no one mentioned is that by selling the house losing ability to do reverse mortgage line of credit (HECM). On a 600k house you can get 300k reverse line of credit that will grow at 5% a year, guaranteed. Not only you don't need to make any payments back, but you get to keep living in your own house while YOU'RE getting paid AND your money grows at 5%.
How do you get the guaranteed 5%? And what about upfront costs?
They tack on 1.25% to whatever the interest rate is today (around 3.75%) and your line of credit grows every year for that amount. Which today would be 5%. It sounds too good to be true, but it is true.
I honestly did not research upfront fees, but I am betting that 5% of return per year would outpace any upfront cost in very short time.
Wade Pfau had a great discussion about this on one of the Podcasts and he has a book specifically about using reverse mortgage as a supplemental retirement income.
http://retirementresearcher.pages.ontra ... retirement
"If I had only followed the advice of financial analysts in 2008, I'd have a million dollars today, provided I started with a hundred million dollars" - Jon Stewart

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