Renting vs. Buying Retirement Housing

Are you thinking about retirement and moving to a more manageable home?  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 be an apartment, a condo, or a smaller single family home.  

If you desire to move to a retirement home to get help 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 

Renting VS. Buying

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 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. 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

Low-risk investments can average $100,000 over 10 years but if you are renting, you are also paying your landlord $250,000 over that same time period.  That equates to a $150,000 net loss in your investment’s equity over 10 years.

By purchasing 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.  Our supportive communities help retirees live independently longer than in a typical single family home.

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!