Renting vs. Buying Retirement Housing

Are you thinking about moving to a more manageable home and want to continue to live independently?  Health, expenses, accessibility, and location are important aspects to consider.

What are are your options?

The basic answer is that you can either buy another home or you can rent one.  It can be an apartment, a condo, a life lease, or a smaller single family home.  

Lets compare the advantages and disadvantages of renting and buying:

Rental Disadvantages

• Higher monthly costs
• Losing equity
• Your landlord can sell the home and make you move with short notice
• Your landlord can raise the rent with little notice
• Lower quality of living space

Purchase Advantages

• Lower monthly costs
• Gaining equity
• Control on when you move and what you re-sell it for
• Higher quality living space that is designed for retirees

Renting VS. Buying

Now, lets breakdown monthly costs for renting vs. owning a new or newly-built 2-bedroom townhouse:

Monthly Expense Scenario	Renting	Owning
Rent	$3500	0
Common Fees	0	$600
Property Taxes	0	$400
Individual Hydro	0	$100
Water	0	$50
Individual Heating/Cooling	0	$100
Content Insurance	$50	$50
Building Insurance (incl. in rent/common fees)	0	0
Total Monthly Expenses	$4000	$1300

We can see, in the chart above, that renting is the most expensive avenue to go down.  You are more than doubling your monthly expenses when renting and in the end, you get nothing when you move out.

Equity Loss and Equity Gain

Now, lets compare the equity loss and gain with renting vs. owning that same 2-bedroom suite:

Scenario	Investment Amount	Projected Annual % Gain/Loss	Projected Annual $ Gain/Loss	Projected 10 year $ Gain/Loss
Purchase Property	$600,000	8% gain	$48,000 annual gain on equity in your home	$400,000 gain on equity in your home
Rent Property ($3,500/month)	$0	7% loss	$42,000 spent on rent per year	$420,000 spent on rent over 10 years
Investing you money in low-risk investments (ie, RRSPs, GICs, TFSAs etc)	$600,000	4% gain	$24,000 annual gain on investment	$240,000 gain on equity in your investment

Low-risk investments can average a $240,000 gain over 10 years but if you are renting, you are also paying your landlord $420,000 over that same time period.  That amounts to a $180,000 net loss in your investment’s equity over 10 years($420,000 – $240,000 = $180,000).

By purchasing in a Freedom 65 Sound Lifestyles community, your equity will see an average increase of 8% each year, which will give you $400,000 in equity gain over 10 years.  

The initial purchase price was $600,000 and you just gained an extra $400,000 over 10 years.  That equals $1,000,000 in equity that you can do whatever you want with when you decide to sell.

Now, who would say no to $1,000,000?

If you have the capital to buy now then you should buy so you can gain and save just in case you need to move to a retirement home later on.

Did you know that the average rent in a retirement home is approximately $5,000 to $7,000 per month? That’s approximately $72,000 each year.

Now is the time to make sure you are getting the most out of your investments and the best investment anyone can make is in real estate.

At Sound Lifestyles, we understand that home ownership can be stressful.  This is why we design, build, and maintain fully accessible housing exclusively for retirees.  Our supportive Freedom 65 communities help retirees live independently longer than in a typical single family home or rental scenario. Our property manager is available to call if a resident needs help in their suite.

Contact us to learn more about our supportive living environments and how you can gain on your investments by purchasing in a Freedom 65 Sound Lifestyles community.

We want YOU to keep your independence and your equity!

Still wanting a rental? Sound Lifestyles does have a few rentals. Contact us HERE.