One of our readers, Joy, commented on the decision to downsize from their large home to a small rental bungalow.  She states, “At this point we don’t expect to own a home again – we plan on being renters…the whole concept of being a renter is very freeing.”

Joy mentioned that their lawyer told them that they were being very unconventional.

Related: Why downsizing might not save your retirement

Indeed they are.  According to CMHC, Canadians aged 55 – 64 have the highest rate of home ownership among all age groups.  They are accustomed to owning a home and consider it an essential priority.  In fact, statistics show that it is not until after age 75 that more people rent, probably because they are moving into some sort of assisted living accommodation.

Cash asset

If you sell your home after living in it for 30 – 40 years, you can net a fairly considerable sum of money.  Many people have a goal of buying a smaller home and topping up their retirement nest egg with the remainder.

However, other costs such as realtor and legal fees, land transfer taxes, home inspection fees, etc, can take a large bite out of your net amount.

Related: Should you sell the family home?

Should you decide to rent instead you could put the entire amount into another investment (e.g. stock portfolio) that will grow over time and provide additional income.

Evaluate the costs

Home ownership is generally more expensive than renting.  Factor in the costs of property taxes, possibly condo fees, home insurance and ongoing maintenance costs.  Renters write one cheque to their landlord once a month.

Purchasing in a desirable neighbourhood, whether next to a golf course or close to downtown amenities, can be more expensive than in the suburbs or a small town.  Rent in a trendy area can be much less costly.

Many down-sizers have no desire to deal with home maintenance any longer.  If the furnace stops working, renters can just call the landlord.

Many retirees with pets like to own their own home.  It may be difficult to find a rental that allows pets, or it may cost you more.

Related: How I decluttered and simplified my life

What is your expected income from all your various sources?  You want to have enough cash flow every month to pay your bills and have room for discretionary and “fun” spending.  At this time you don’t want to incur credit card debt to maintain your lifestyle.

There are countless calculators online that will help you make the decision of whether renting or buying is right for you.

Final Thoughts

Each person must evaluate his or her own future plans and financial situation as well as current market conditions.

Instead of sticking with the status quo, home ownership is now more of a personal choice depending on your proposed lifestyle.  Instead, renting may be just the ticket.

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