Why Renting is the Newest Trend for Downsizing in Retirement Four Compelling Reasons!
Why Renting is a Smart Choice for Downsizing in Retirement 4 Key Reasons
I know what you’re thinking, dear homeowner. You’ve been living in your beloved house for four decades, and the mere thought of paying rent instead of a mortgage seems absurd. I’ve heard this argument time and time again, and I must admit, sometimes I agree. But hear me out.
Let me take you back to when I graduated from college and found myself in the wondrous city of Philadelphia. Now, I knew very little about Philly except for its enthusiastic snowball-throwing football fans. Like most recent grads, I settled in Manayunk, only to move again a year later. And then, just like that, my company whisked me away to Virginia. Life moves fast, my friend, and it’s essential to have flexible housing that can keep up with your ever-changing circumstances. That’s why I believe in the power of renting, especially when it comes to downsizing in retirement.
If you’re selling your “forever home” and pondering your next move, let me share four compelling reasons why renting could be the way to go:
1. You can try (the neighborhood) before you buy.
Imagine moving to a new location based solely on a Google search of “best retiree-friendly neighborhoods.” It’s a bit like choosing your next vacation spot blindfolded and hoping for the best. Everyone has different preferences—for my retired dad, walkability was key, while my father-in-law valued privacy. I even know two couples who bought, sold, re-bought, and re-sold during the chaos of the COVID era, losing a quarter of their initial equity in the process. Turns out, those dream vacation spots weren’t as idyllic to live in as they seemed.
Sure, this option may be more feasible in urban areas, where rental choices are abundant. But fear not! Companies like AMH (formerly American Homes 4 Rent) are working hard to bring professionalized single-family rentals to the forefront. So, in the not-so-distant future, the rental experience might become more consistent nationwide. Isn’t that something to look forward to?
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2. Your costs are more predictable.
Owning a home can be a roller coaster ride of unpredictable expenses. Take my third home, for instance—it required not one, not two, but three new basement floors within the first year due to some unruly flooding. And no, we didn’t skip the inspection like those daredevils I’ve heard about. Now, with renting, you can bid adieu to these financial surprises. Your costs are well-defined during your lease term, providing you with a sense of stability. But keep in mind, come lease renewal, you may find yourself on a moving spree again.
3. Your home is turnkey, or move-in ready.
When we think of turnkey homes, we often envision smooth moving processes where you “turn the key” and voila! You’re all settled. But what if I told you there’s another aspect of turnkey renting that gets far less credit? Picture this—before you embark on your vacation, you have to check the HVAC, sump pump, outside drains, and ensure your furry friend is taken care of. Renters, on the other hand, only have to worry about their dog! Talk about hassle-free living.
Now, I know vacations rank high on the agenda for most retirees. So why burden yourself with endless responsibilities when you can simply lock up and leave with ease?
4. Your kids won’t fight (as much).
Let me regale you with a tale from the estate attorney realm. Once, while teaching a course to a group of attorneys, a venerable trust and estate legal expert shocked us all by claiming that he had never encountered an estate with three or more children that didn’t involve some sort of conflict. And guess what? Real estate was often the root of their squabbles. Michael wants to preserve the property for grandkid get-togethers, while Katie dreams of turning it into a rental. And dear ol’ Sean? Well, he urgently needs the cash and prefers selling the place.
Here’s a common misconception: people believe inheriting real estate is more tax-friendly than a liquid taxable investment account. But that’s far from the truth. Both are considered capital assets and should receive a “step-up” in basis upon death. You can find more about this in my article Your Home Would Be a Terrible Inheritance for Your Kids.
Now, let me be clear—I’m not advocating for renting over owning or vice versa. I’m simply an advocate for keeping an open mind. Life doesn’t always follow the predictable “get married, buy a house, have kids, die happily” script. It’s far more complex than that.
In my next column, I’ll delve into the four reasons why owning a home in retirement might be the right choice. So stay tuned!
Related Content – Top 10 Metros Where It’s Cheaper to Rent a Home Than Buy – What to Do When Your Rent is Too High – Does It Make Sense to Rent in Retirement? – Three Keys to Keeping More of Your Money in Retirement – Five Things to Know if You’re Considering Early Retirement
Now, dear readers, I’d love to hear your thoughts! Are you Team Rent or Team Own? Share your experiences and opinions below. Let’s keep the conversation going!
