When people think about renting versus buying a home, financial comparisons are usually made. But there are also some emotional aspects to consider.
For many people, owning their own home comes down to a sense of achievement, or peace of mind. But is owning a home always the right decision? Or could renting be a better path to take?
One major bonus of renting is that costs are capped. You know how much it will be on a weekly basis, and you roughly know the cost of the bills. When you own a home, you can’t always predict when maintenance issues will arise – like when the air conditioning unit might blow up and cost you a smooth $15,000.
But isn’t rent money dead money?
Ah, the question on everyone’s lips. Isn’t everything dead money, though? What about money spent on clothes? Cars? Travel? It simply comes down to what you choose to spend your money on. The key with renting is to put away the extra money you’re not spending on maintenance – and then make that money work for you.
Even if your house is fully paid off, there are still costs involved. Insurance, rates, ongoing maintenance – some might consider that dead money too.
But as mentioned earlier, for some people the decision is not just about money. If you’re considering keeping your home in the later stages of life, here are some things you could think about:
Many people choose to rent again once they retire, especially if they don’t exactly know the answers to these questions yet. If you sell your home to rent again, nothing is preventing you from buying again in the future. Renting has a lot of advantages, like being able to try out a new neighbourhood to see if it’s right for you. And if you have a variable income, the stable cost of renting could be perfect.
And remember: just because the last place you rented might’ve been a dingy old sharehouse back in your 20s, there’s a good chance you can afford a much nicer place later in life.
Take our client Liz for example. Liz loves to travel. She sold her house, on which she had a lot of debt, and was able to rent an apartment in a beautiful, modern complex that she could never afford to buy. Plus, she was able to free up and spend an additional $15,000-20,000 a year on travel for the first 25 years of her retirement.
That doesn’t sound terrible, does it? And, if Liz changes her mind down the track, buying a home again is not off the table.
Dallas Davison, Michael Hogue and Ali Hogue.