Tuesday, April 21, 2015

Why I'm Renting In Retirement-and Loving It!




 
 
Although we've had many seventy to eighty degree days already in Denver, April is in fact the snowiest month.  Friday, I woke up to the end of a very wet overnight snow, and a very huge tree branch on the ground (not quite as big as this accident from last year)!  Being me, I stood at my window, took a picture of the ground, and promptly sent it to my landlord!

That's because my sister and I are renters rather than buyers. Readers who have been stopping by for awhile know that when I first moved to Denver, I was looking to be a renter, and downsized to that level, looking to take a bedroom and den or two bedroom apartment at the apartments pictured below. 

At that point, my sister was also looking to get out from under her too old, too large home and suggested we look for a house together (promising that she would take full responsibility for any yard!).  We were offered a unique situation in that my brother and sister wanted to buy a home for investment and we wanted deep in our hearts to rent and not buy. Together we looked for a house that fit the bill for all four of us and found this one.  

Admittedly on one level, our situation is unique in that we had some input into the purchase process and the buyers considered our (actually mine, since I am the one with handicaps) needs when purchasing this house.  Still, in every way this beyond that, this is a typical rental agreement. Our lease looks like any lease might, with many stipulations, fees for late rent and other requirements. When we have moved out of the house, they will rent it again, and in fact have been looking at ways to remodel to increase the value (the Colorado market is booming, and as of today that have halved again their investment at least). This was not meant as a long term solution for anyone. We've improved the house, and they've had renters who have worked with them to make a good investment property. Both of us expect to leave after our three year commitment.

Unlike some folks, I have had fairly good experiences both with owning and with renting (except for the landlord portion of owning). Being a one income family when my husband started a new career, during my married years we rented a townhouse, owned a brownstone duplex, and rented a huge four story home in Germany.  Longtime readers know that I previously owned a home in Texas (of 2600 square feet), before my downsizing.

While I loved that home, it was difficult on so many levels. Texas may have no income tax but they have exorbitant property taxes. I am not a yard person (although my husband often was "one with the lawn"). I am also no longer a do it yourself person as such (I once owned a 1940s brownstone, but that was then, when sanding floors was an adventure).

There was a period of time where the common wisdom was that "your house is your retirement". IF you can enter retirement with a paid off house, IF you are willing to stay in the same general area for a long period of time, IF you are willing to do the work (or pay to have it all done), then for some people that may be still true. In my case I have chosen not to take that step, and the rewards of doing it the opposite way have been more than enough. And in fact, more and more people are choosing to rent when they downsize rather than buy.

First,  first the obvious. Yes, I do pay rent, and yes in theory it also includes those taxes (which are much less in Colorado). So I do have a monthly payment. Folks who have their homes paid in full, will only have the monthly property tax.


That said, for me, there are many other advantages to renting. While others may have a different perspective, this is why renting works for me.  Some of these advantages can probably be found equally well in a condo ownership situation, while others are pure rental advantages:
  • I don't do any real maintenance. Oh, we garden and I mow the lawn, however many rental options cover lawn car (as do condo agreements).  I get to leave those things (along with cleaning the gutters annually, checking the sewer line, and maintaining the heating and air conditioning units) to someone else.
  • I don't do any repairs.  This is of course, the biggie when it comes to renting vs owning.  I suppose I should qualify that by saying sure, I may put Drano down a drain on occasion, or buy a new smoke detector when I realize just a battery is not the solution. But basic and serious repairs-from fixing a broken fence piece, roof repairs after a storm, or even replacing a new appliance-are in the purvey of the homeowners. It may well be that my college student cuts up some of the branch that fell into firewood. But the homeowner will have the tree trimmed, mess hauled away, and the broken branches that did not fall out of the tree removed.
  • Although I did not make a great deal when I sold my home, that money was put into my nest egg. The housing market is up and that profit could be invested.
  • While I am not handicapped as such I do have a disability. When looking at apartments and condos to rent I had absolutely no problem finding places with all the amenities I would need, as opposed to building a ramp in a new house or installing bars in my bathroom.
  • My costs have lowered. Some might get this by downsizing to a smaller home or condo, but mine are much lower, and many rentals including the original condo I was looking at include utilities. In Denver it is only slightly cheaper to rent than own size for size, but in many areas renting is cheaper than owning.  Finally, as to the "tax deduction" in my case, at my income level I still come out well ahead.
  • The general wisdom is buying a home without living there at least five years and hopefully seven years does not make as much home ownership sense as such. Both Trulia and Zillow have studies showing that having to spread out points and closing costs over a shorter period of time often may not make the best sense. I am unwilling to commit to seven years in one location.
  • I'm unwilling to commit myself to one area, much less one home. I may want to snowbird part of the year. I have a son in Colorado who does not know where he will end up, a daughter in Texas and relatives in a variety of places. I could even see myself traveling for up to a year, living out of my car and paying no monthly expenses. I committed myself to three years maximum in this living situation, and even that is flexible.
Certainly there can be some disadvantages to renting in retirement. If you are a serious gardener. for example, you may want more space than a rental home or condo allows.  As a dog owner, I am well aware that renting with a dog can be difficult, depending on your location. And if you are a retiree who likes puttering around the house with a hammer, nails and a level, then home ownership is probably the best for you.  Obviously just as when buying a home, certain research must be done. In my case, my landlord is happy for us to paint and plant, and even hang quilts and curtains, as he believes in the end those are improvements to the house (although he would prefer bright colors be in smaller doses, as do we).

In my case renting has made sense on every single level. Your experience may be different, but it's worth looking at all the options in retirement!!

10 comments:

  1. Loved this post! I hear so many people talk about you HAVE to *OWN*, that it's the "end all, be all", so it's nice to hear the 'other side', especially with positives!! :)

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  5. Eileen Hopkins Said (sorry Eileen)

    Such a timely post Barbara! My sister and her hubbie are in this boat right now. My husband and I were asking similar questions a year ago and decided to buy down in the warmest area of Canada because we did not want to live in the USA (for medical reasons!) but we did want a warmer climate in the winter. I can see the pro's and con's of both sides and I think we might consider renting the next go. For now, we are cozy and secure in a small, 1000 sq ft one level home in a 50+ strata with only the amt of gardening my husband wants. Our yard looks like one in Arizona! I have you listed on my retirement blog reading list. You are certainly welcome to check it out at Boomers Pot of Gold.

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    1. Hi Eileen, sorry I posted you as me, but in the publishing process something happened-so I copied and pasted from my email.

      Looking forward to checking out your blog, it sounds like you are happily settled in for now!

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  6. As you say in some instances renting can work out to be better for the pocketbook. Not often here in Canada, but once in awhile, especially renting from family.

    God bless.

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    1. Hi jackie, I would be the first to admit that renting from family is different on some levels, but I believe I will always choose to rent now.

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    1. Cristina, I apologize for the confusion, and am going back to check where I may have somehow caused this. Although we did all look for the house and pick it out together, we are not the owners, by choice. I can appreciate wanting to leave the hassles behind. Honestly If I was not a widow, I'm not sure where I would be in this situation because he was the ultimate do it yourselfer house and garden wise.

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