As a senior real estate specialist (SRES), one of the most frequently asked questions I receive is, “Should I rent or buy at this point in my life?” My answer is always, “It depends”. There are several variables to consider.
In this blog, I will discuss the pros and cons of renting versus buying so you can make the best decision for your lifestyle.
Before we break down renting vs buying, let’s look at a few key factors for you to consider:
- Finances: Do you have enough savings or income to support home ownership? Or will renting a home free up money that you can use to fund other expenses?
- Lifestyle: Do you want control over your living space or prefer flexibility and fewer responsibilities?
- Health & Mobility: Do you want a home that requires minimal upkeep, or can you handle home maintenance?
Are you a senior interested in living in Scarborough? Here are a few more posts you might find helpful:
- Is Scarborough Good For Seniors?
- What are Scarborough’s Best Neighbourhoods for Seniors?
- How to Find a Real Estate Agent for Seniors in Scarborough?
The Case For Buying
Let’s look at the case for buying a home as a senior. Here are some pros of buying a home:
- Long-term stability: You can stay there as long as you like without fear of rent hikes or landlords and without risk of being evicted.
- Building equity: Your home can be an investment to grow equity over time. This could be beneficial as you age and might need to transition into retirement living, and the added equity would help fund it.
- Customization: If you choose to age in place, you might require modifications to your home. If you own your home, you can do the necessary work without the landlord’s permission. Even something simple like paint will require the landlord’s approval in writing.
- Tax Benefits: If you meet the eligibility requirements, you might qualify for the Ontario Senior Homeowners’ Property Tax Grant (OSHPTG). Or maybe you must modify the home and meet the eligibility requirements for the Home Accessibility Tax Credit (HATC).
- Wealth transfer: You can leave your home to your family and leave a legacy that makes you feel good.
What Are Some of the Drawbacks?
- Up-front costs: The cost of purchasing a home. You must evaluate the down payment necessary if you require a mortgage, closing costs such as land transfer tax (in Toronto, there is a municipal and provincial tax), legal fees, and movers.
- Maintenance Costs: Repairs, yard work, and general upkeep are your responsibility. As you age, you should expect more maintenance to be outsourced.
- Market conditions: a home’s value can fluctuate up and down. Depending on when you sell, your equity could go down. Sometimes, life happens, and you need to move unexpectedly.
- House poor: if your money is tied up in your house and you need it for other expenses, can you access it?
Buying is best for healthy seniors who want to stay in one place long-term. They also have financial capability that goes along with home ownership and prefer the control of living independently.
When Renting Might Be a Better Fit
Let’s look at the case for renting a home as a senior. Here are some pros to renting:
- Flexibility: if you want to travel or try a new city. Renting can be easier because you aren’t as tied down. Maybe you sold your home and have chosen to rent to free up money to fund your travel plans in retirement.
- Less maintenance: You don’t need the same emergency funds to replace a roof or a furnace. If these items require maintenance, you call the landlord, and they have to arrange for and pay for the repairs.
- Reduced upfront costs: There is no downpayment or closing costs like when buying a home. There is a security deposit, usually one month’s rent, in Ontario. Then, you pay your monthly rent.
- Financial liquidity: not having your money tied up in your home might offer you more financial freedom to fund your lifestyle.
The Cons of Renting
- Rent increases: you are at the mercy of the market and the landlord, especially if your rental isn’t protected by rent control. In Ontario, that’s any newly built unit after November 15, 2018.
- Lack of stability: If a landlord decides to sell the property, you could be vulnerable to getting evicted. This could have a significant impact on your finances in your next rental.
- Equity: no potential for equity growth. If your health changes and you require more care, do you have enough savings to fund it?
- Customization: If you want or need to modify your home, you must get written permission from the landlord. Some people want what they want, and this might be too limiting.
Renting a home is best for seniors who don’t want the responsibility of home maintenance. They also like the flexibility of not living in one place long-term and like to keep their assets liquid for travel, healthcare, or other investments that will fund their lifestyle.
Looking to downsize from your current home? Explore these related blogs for more advice.
- What Seniors Need to Know About Downsizing for Retirement
- Should I Buy a Home or Sell First as a Downsizer?
- 5 Signs It’s Finally Time To Downsize
Finding a Solution
I will share some real-life examples of people I have guided to purchasing and renting as older adults. You can use these examples to help you determine which lifestyle fits your needs:
Lifelong homeowner: A retired couple in their 70s decided to sell their family home of 40 years because it was too large for them to maintain. As much as they loved their community and neighbours, it was time for them to live in something smaller, easier to maintain, and all on one level.
They opted to buy a condo in a beautiful boutique building close to the house they had lived in. Everything is familiar by staying in their community, and they continue with their social life. When I visited them, they were so happy that they decided to buy the condo; they loved it. Owning their home is important to them. They plan on leaving it to their family when they pass.
Downsizing renter: I helped a widower in his 70s downsize to a retirement living apartment following the loss of his wife. Fortunately, he had a home to sell, where he raised a family and cherished it for 35 years, even though the decision was tough and emotional.
There were many benefits for him to move where he did. First, all his meals are provided for him, and he doesn’t cook. This allows him to eat nutritious meals, and he’s more energized. Secondly, where he lives provides a sense of community. He’s social, has made many friends, and is thriving. By selling his home, he could take the equity he gained to fund his lifestyle, which he loves.
Hybrid approach: I have a recently retired client who decided to sell her condo because she would travel all winter and then live at her cottage (3 seasons) in the summer. After a couple of years of this routine, she determined she still wanted to own a condo because she found that she would return to Ontario following the winter, and it was too cold to be at her cottage.
She started to rent places short term, “try before you buy.” This was a great strategy because she learned what areas she liked living in and, more importantly, the ones she didn’t. We eventually focused on a community that she loved because it offered her a great outdoor lifestyle and was close to transit, making getting to the airport fast and easy.
If you are unsure whether you want to rent or buy, let’s have a conversation to discuss what’s important to you for your next chapter.
Buying or selling as a senior? Give me a call at 647.283.2127 or email stuart@stuartnodell.com to get in touch.
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