The traditional path to downsizing is to sell a large family home in favour of buying one that is much smaller. Often, this means moving to a condo or townhouse where you no longer have to worry about yard maintenance or shovelling the snow. In some cases, downsizers will choose a small detached home or bungalow where everything is all on one level. Some maintenance is still necessary, but to a much smaller degree, and you still have a yard to relax and entertain in.
However, once you sell your family home, a world of options opens up to you, and there is no law stating that you must follow a traditional path. In fact, many people are forgoing homeownership altogether and choosing to downsize to rent instead. In this post, we’ll explore the advantages and disadvantages of this possibility.
Can Renting Be Good for Your Financial Health?
The main benefit of buying is that real estate is a relatively safe investment that allows you to build equity over time. However, depending on your situation, this advantage may not be worth the investment of your time or money. Getting into the market as soon as possible can be critical for a first-time buyer with no foot on the property ladder. It provides stability and allows them to grow their wealth over time instead of getting trapped in the rent cycle.
But what if you already own a home that has been building your equity for years? Perhaps you have even paid it off and are now living mortgage free. In this case, you are in a much better position than someone who is just starting out.
If you liquidate your home by listing it for sale, the interest alone could be enough to cover your living expenses and then some, including your monthly rent. For some former homeowners, paying rent provides a sense of freedom and carefree living rather than feeling stuck.
Downsizing can be complicated. Here are some resources that will make it a little easier:
- How Seniors Can Navigate an Ever-Changing Real Estate Market
- Why Work with an SRES® Agent as a Senior?
- Essential Decisions to Make Before You Downsize
The Advantages of Renting Rather Than Buying
Financial experts may not extol the benefits of renting rather than buying, but that doesn’t mean they don’t exist. For many seniors and retirees who want to life life to the fullest, renting can be the best choice by far. Here are just a few of the advantages.
- Renting means little to no maintenance to worry about. All repairs are the landlord’s responsibility, not yours.
- You need less cash upfront to secure a rental unit. First and last month’s is much easier to come up with than a deposit for a house. And remember, the more you leave in your account, the more interest you will earn each month.
- You’ll have more freedom to get up and go at a moment’s notice. If you want to leave for months at a time to become a snowbird, there’s no need to make arrangements for someone to take care of your property.
- Renting requires less commitment. If you want a change at the end of your lease, it’s just a matter of giving your notice and moving on. There’s no need to renovate or upgrade your home to sell it.
What You Need to Be Aware of Before Renting
Every choice in life will always present some downsides and challenges. Renting instead of buying will also limit you to a certain degree. Here’s what you should be aware of before making your decision.
- You have less freedom to renovate or mould your home to your tastes. Any significant upgrades must have the green light from your landlord. And, of course, these updates are at your expense, but you won’t benefit from any increase in the property value. Your landlord enjoys any equity gains, not you.
- Your landlord has the right to raise the rent after your lease expires within the LTB (Landlord and Tenant Board) guidelines.
- For retirees and seniors, one of the worst disadvantages of renting is that you can be asked to move if the landlord or a family member wants your unit or if they decide to sell. At this point in your life, you may crave a level of security you do not have with most rentals.
However, none of these challenges mean you shouldn’t rent, but rather that you should weigh your options carefully and know your rights. For example, it helps to be aware that a landlord cannot evict you arbitrarily. Even if they sell the property mid-lease, the new owner must still honour the remainder of your term before asking you to move. In addition, corporate rentals can be a safe alternative for seniors or anyone looking for greater security as a tenant. Since there is little chance the building will be sold, you can stay and rent as long as you wish.
If you decide to buy instead of renting, the following resources can help you enjoy a seamless transition:
- Can You Still Buy A House In Etobicoke For Under $1 Million?
- How to Make Your Home Purchase More Affordable
- What Compromises to Make When Buying A Home
Your Real Estate Agent Helps With More Than Your Sale
If you decide to sell, a real estate agent will help you prepare and price your home effectively to help you earn the highest amount possible. However, there’s more to a full-service team than a successful transaction.
We will see your journey through from start to finish and even help with decluttering and packing, thereby removing the most stressful and arduous tasks from the process!
However, it may also surprise you that many real estate agents can help you find the perfect spot to rent once your transaction closes. Since we work with many landlords and real estate investors, we often have premium access to some of the best leasing opportunities in Etobicoke.
Are you ready to explore your options for renting or buying in Etobicoke? We are standing by to help and answer any of your questions. Reach out today at contact@thompsonsells.com or call 416-450-5900 for more information or to get started.
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