Renting vs. Buying Retirement Housing

Are you thinking about moving to a more manageable home? Weighing whether you should rent or buy? Retirees have an assortment of points to consider when Rightsizing.  Health, expenses, accessibility, and location are only a few of the long list of points to consider when wanting to continue living independently.

So what are your options?

Regardless of the above points to consider, the basic answer is you can either buy another home or you can rent another home.  This home can be an apartment, a condo, or a smaller single family home.  If you want to be in a retirement home, with cooking, cleaning, and nursing care, then this is not the blog for you.

Lets compare the advantages and disadvantages of renting and buying:

Rental Disadvantages

  • High monthly rental fees ($2000/month rent = almost $250,000 in 10 years)
  • Losing your equity (paying your landlord approximately 5% annually and investing your equity for only 2% annually is a net loss of up to 3% each year)
  • Your landlord can sell the home and make you move with short notice

Purchase Advantages

  • Lower monthly costs
  • Control on when you move and what you re-sell it for
  • Continuing to increase your investment’s equity 

Now, lets breakdown renting a large 2-bedroom suite vs. buying that same suite:

Monthly Expense ScenarioRentingBuying
Rent$20000
Common Fees0$450
Property Taxes0$300
Individual Hydro$100$100
Water (incl. in rent/common fees)00
Individual Heating/Cooling$100$100
Content Insurance$50$50
Building Insurance (incl. in rent/common fees)00
Total Monthly Expenses $2250$1000

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

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

ScenarioAmountProjectedYearly % GainProjectedYearly $$$ GainProjected10 year $$$ Gain
Purchase Property $500,00010%$50,000$500,000
Rent Property$2000 x 12 months = $48,000-5%-$25,000-$250,000
Investing you money in stocks or RRSPs$500,0002%$10,000$100,000

If you rent and invest your money in low risk investments, you can average $100,000 over 10 years at 2%.  But at that same time, you will be paying your landlord $250,000 over 10 years at 5%.  That equates to a $150,000 net loss in your investment’s equity over 10 years.

If you purchase at a 55+ community, your equity will see an average increase of 10% each year, which will give you a $500,000 equity gain over 10 years.  

The initial purchase price was $500,000 and you just gained an extra $500,000 over 10 years.  That equals to $1,000,000 in equity that you can do whatever you want with it when you decide to sell.

Now, who would say no to a million dollars?

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.  All of our supportive communities help retirees live independently in their own home for as long as they wish.  

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

We want you to keep your independence and your equity!

Written by Katie Graham

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