We are renting on our downsized living. We originally decided to rent to check out the area (one year lease commitment). But, we have decided we really like where we are and plan on staying in this apartment. My husband is so happy to not have to go to the home depot! The rent is not cheap, but our home had high property tax and regular maintenance along with things starting to age needing repairs, was adding up.
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When you factor in all the expenses of maintaining a house, itâs really quite a lot on a per-month basis. Snow removal, landscape services, taxes, heating and cooling expenses, not to mention the mortgage payment.
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A lot of retirees considering home ownership vs renting have already paid off the mortgage. But⊠when comparing it is fair to consider the investment earning that could be made for the house sale proceeds.
Examples - Modest $300k proceeds and conservative 4% average earning is 12k/year ($1k/month). $800k house / 5% - $3300/month. And thatâs without savings from other costs - property tax (high is some places), insurance, yard upkeep, maintenance etc.
One key point is that you have to realize that rental fees will probaby increase significantly over time. Same is true for housing âother costsâ⊠but when you keep the house, there will be continued appreciation. (There could be some dips in the real estate market, but in general value should increase over time.)
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I will add that one of the FA we interviewed talked about the decision âwhen to sell the houseâ. If you stay, there could be significant appreciation (especially near his office in Boulder, a popular college town). As long as you can easily afford it, he encourages clients to stay in the house without feeling bad about not cashing in. He suggests that the point to consider selling is when you pull up to the garage and think, âI just donât want to deal with the hassles of owning this houseâ. Of course at this point you might opt to buy a smaller, one story house or condo instead of switching to rental mode.
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It depends. Mortgage and taxes and insurance are rolled into the rent. A landlord that doesnât do this is not going to be a landlord for long. Sure, there is maintenance, but amount of that work also depends. Savvy landlords tend to own properties that donât require elaborate landscaping etc.
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I think big landlords (like the one I have for my apartment) can get some things done cheaper through economies of scale.
My building has an part time maintenance guy on site. He can handle lots of stuff that I would have to hire a professional to handle in my own home - plumber, electrician, carpenter, basic landscaping, etc. Another example, when they buy HVAC replacement filters for over 50 apartments, they get them cheaper than I get my 2-3 at a time.
Landlords can also get tax abatement or reduction deals as encouragement from a city to build apartment buildings where housing is in demand.
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We sold our house in Texas, then lived in a rental apartment, then moved to the Northeast, and rented again while we worked on our modular homebuilding process. Nope, donât like renting, one bit!! Both places we stayed were decent, but the neighbors were too close and too transient, and the spaces couldnât be customized. I like home ownership, because I feel like I have options to customize, and make it my own, and it is HOME!!!. Yes, it was nice to have a big chunk of money hanging out in the bank earning healthy interest, but I was happy to trade that for a house. Psychologically, I am more comfortable owning my own cozy place.
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Those are good points. Even in a house, you canât control your neighborsâŠ. but they are further away / no shared walls (even in my area, where houses are close). And most homeowners tend to stick around a while.
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When we were shopping for houses, we would investigate the neighborhood by chatting with neighbors (always ran into them at the first open house 
) and driving to the area at night and going for a walk. While that wouldnât guarantee a problem-free neighborhood, the night check saved us a lot of headaches once⊠the whiny noise from an HVAC of a business located quite a distance away was unbearable! Phew. We passed that property.
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Agreed. We lived in an historic neighborhood in a small midwest town. While we loved our neighborhood and our house, most others did not consider it a desirable area. Home values were flat for 15 years, and the recent spike in prices barely impacted the neighborhood â we barely broke even when we sold. Our home was where we lived, but not an investment so the relief of not having to deal with major repairs or maintenance is a huge weight off my mind.
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