Thinking about selling your empty-nest home to cash in on the hot real-estate market? As lucrative as it may be, consider these 12 things to make sure you’re truly ready to return to renting.
Why renting could be right for you
Now that you’re free from the daily commute and no longer have kids in school, relocating to a rental apartment (ideally somewhere with a lower cost of living) could offer some advantages:
- Cash for travel or living expenses. If a lot of your assets are tied up in your home, listing it in this seller’s market could provide the cash you need to fund your future. You’d also unload the burden of paying rising property taxes on a fixed income.
- Convenience or fitness amenities. Your suburban home likely means a car-bound lifestyle where you need to drive for most errands. Apartments are more likely to be located within walking distance of stores, recreational centers and public transit.
- Routine maintenance is provided. Weekend chores like mowing, weeding and gutter cleaning become someone else’s responsibility in a rental. Want to take an extended vacation? Just lock the door behind you and go.
- Freedom to try out a new climate or lifestyle. Renting lets you experience a new area without the commitment and upfront expense of buying. Love it, and you can decide to stay. Not what you expected? Move on once your lease is up.
- Social opportunities with like-minded neighbors. If you choose a 55+ community, you may be able to take advantage of clubs and activities exclusively for residents.
- Assisted living, if needed. As a renter, you can choose a community that offers assisted-living and accessibility options if you or your spouse ever needs them. Renting also allows you to temporarily relocate to be closer to family – without the commitment and complications of buying – so you can give “togetherness” a trial run.
Reasons to think twice about renting in retirement
Renting as a retiree differs from what you remember as a 20-something – and so do the things that are important to you.
As a renter rather than an owner, for example, not every decision about your home will be your own. Make sure you could be comfortable when:
- You can’t customize your home. Depending on your rental agreement, you may not be able to make changes to your unit like repainting walls.
- Your neighbors are one wall away. If you’re used to being surrounded by sound-dampening acreage, you might be dismayed to discover your new neighbor likes to play the piano at 7 a.m.
- You no longer have neighborhood connections. Will you miss seeing familiar faces and traditions like creating your own outdoor holiday display?
- Your pet may not be welcome. Certain dog breeds, for example, may be excluded from some rental contracts.
Legacy considerations about renting
Downsizing and renting can affect your estate:
- You eliminate possible conflicts about inheritance. Would your children be interested in someday inheriting your home? Or, could it become a source of emotional conflict or a burden for them to sell?
- You change your tax obligations. Without the expenses of home ownership, you may lose tax deductions, particularly if you still have a mortgage. Consult your financial adviser to see if you’d be better off purchasing rather than renting your retirement home. (Condos can combine the best of the carefree renter lifestyle with some of the perks of ownership.)
Insure your retirement lifestyle
Whether you rent or own, insurance offers important protections – not just for your property but in guarding you against a liability judgment. If you’re transitioning from owner to renter, learn more about renter insurance and the added protection of umbrella coverage that can be important when you live in a multifamily structure. Talk with your local PEMCO agent or call 1-800-GO-PEMCO.
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