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Old 04-03-2015, 08:28 AM
Location: East of Seattle since 1992, originally from SF Bay Area
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As with most questions, it depends on where you are. Here for example, no one should consider renting in retirement. There is no rent control of any kind, and landlords are raising rent as much as 60% due to the low supply and demand from people moving here. With a mortgage, you have only to worry about small increases in the property tax. Very few people have lived in the same home long enough to have paid it off, but in many cases (hopefully like us in a few years) there is enough equity from 15-20 years to relocate upon retirement and buy in a lower cost area with a very small mortgage or even pay cash. For the OP, buying a small condo or townhome could be the most cost-effective way to go, but beware of the HOA fees, which can be as much or more than the mortgage payment.
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Old 04-03-2015, 08:48 AM
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The buy-vs.-rent dilemma is intractable, and any bit of entirely sensible advice can easily be contradicted, with no less sense and logic. The best that we could do is gather data.

A single-person, without children or other relatives, without a broad and boisterous circle of friends to be entertained, and limited to modest hobbies such as reading, drawing, sewing and the like, requires very little space. Most houses are too large, and the perverse upshot is that the cheaper and smaller ones also tend to require the most remediation and maintenance.

Speaking personally, I pay as much in property-tax and maintenance for my rural house, as I'd have been paying for an apartment in town. Yes, I have more square-footage and the grandiloquent pride of calling myself a landowner. But at what price?

The dilemma is even more complicated if one relocates upon retiring, to some new and unfamiliar locale. How are the taxes? What is the ratio of property value to annual rent? This is akin to price-earnings ratio for stocks. At sufficiently high P/E, stocks become too expensive and too risky. At low P/E, they're a screaming buy, unless some devastating information is unrevealed, or market fancy pivots. So even with good research we can't be sure.

Gather data. That's about the only comprehensive advice that comes to mind.
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Old 04-03-2015, 09:13 AM
Location: Backwoods of Maine
7,114 posts, read 8,152,702 times
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Originally Posted by Hemlock140 View Post
As with most questions, it depends on where you are.
It sure does!

If you need to live in a moderate-size city, it will cost you for the "conveniences" - taxes if you own, higher rates if you rent. For anyone on a limited income (only you know what 'limited' is), it makes sense to go a bit farther into the country. I honestly don't know how folks who don't own a paid-off home will be able to get by if they insist on living the way they did before retiring. For a year or two, you feel "rich", then all of a sudden, you feel very poor, and trapped in a situation that you can't afford to get out of.

My only advice is, reduce your standard of living. That is not the same thing as your quality of life, which will improve if you manage to keep costs under control. Keeping costs under control, means (usually) downsizing to reduce heat/AC, electricity and other utilities, which I see as rising a lot in the future. Beware of places that have annual taxes of over $3,000 (this will go up, also) or HOA fees of any kind. Stay away from those.

A small apartment or very small "starter" home (900 to 1200 sf, max) might be a workable solution.
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Old 04-03-2015, 09:16 AM
Location: The Triad (NC)
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Originally Posted by Giesela View Post
Currently live in an apt, looking to retire on small pension at 60 in 2 years.
Single. Have no family to speak of.

Should I buy?
Re the money? That depends on the level of your TOTAL assets.

IF ( a BIG if) you can buy a nice enough place that isn't going to suck you dry
with repairs and do so with LESS THAN 25% of your total assets... then look to buy.
But if buying requires too much of your assets... don't.'

eta: At age 60+.... the term "buy" should not equal mortgage

Last edited by MrRational; 04-03-2015 at 09:51 AM..
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Old 04-03-2015, 09:41 AM
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Originally Posted by golfingduo View Post
Trouble is as a current renter will you have the cash for the down payment or better yet have enough to pay cash. There are a lot of great deals out there but there is one more aspect of owning that renters do not have to worry about. It is the elephant in the room too. It is called maintenance. Depending on the age, size, location and construction of the house that could turn up to be a large expensive option. Renters do not have that concern. Item number two on my point here is that since you are a renter and have not owned a home for a time if ever, what skills do you bring to the home to maintain it. If you have no plumbing, electrical, or even construction techniques any maintenance done will have to be done by contractors. If you do have those skills but haven't the tools (renters usually don't have many tools) you will need to get them. That can cost additional funds. So bottom line here is if you are a renter now a condo could be your best option so... but renting is still a viable option.

BTW I am a home owner

^^Excellent advice. Thank you!!!
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Old 04-03-2015, 09:43 AM
Location: State of Being
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I don't have enough info to help you with any advice!

Would you be paying cash for a home? Or a nice down payment?

Have you definitely decided where you will be relocating?

The area you are moving to . . . is it overall "high rent" - or equal to what a house payment would be?

Will you eventually be receiving social security in addition to your pension (which gives you more annual income).
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Old 04-03-2015, 11:25 AM
Location: Florida
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You need to give a lot more info. Probably be a good idea to hire by the hour a financial planner to help.

I favor as low as possible monthly payments so I would say no mortgage, buy if you have lots of cash. I would rent at the new location and then consider buying.
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Old 04-03-2015, 11:26 AM
Location: Midwest
1,469 posts, read 859,864 times
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In my answer I was assuming the OP would buy outright and NOT have a mortgage in retirement. Banks cannot discriminate even if you are 90 and take out a mortgage but I wouldn't feel "ready" for retirement if my home and cars weren't paid off.
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Old 04-03-2015, 11:34 AM
Location: Orlando
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This is a question I've been struggling with, and I've almost come to the conclusion that there is no good answer, because every advantage of one position or the other has an almost equal disadvantage. I'll use my own situation as an example.

I own (no mortgage) a 14-year-old home in a decent but far from posh neighborhood, worth about $200K. I pay $225 per quarter to the HOA, which does a pretty good job of maintaining the common elements.

Maintenance costs, insurance, and property taxes for my home total about $650 per month, and that does not include utilities. By maintenance I mean things like lawn care, security system, maintenance on the A/C system (I live in Florida), general repairs, etc. I have no homeowner skills, and I have no homeowner tools even if I had skills, apart from my "girl hammer," which is used only for hanging pictures. That's why my maintenance costs are so high -- I have to "pay a guy" to do everything.

So it costs me about $725 a month to live here, even without a mortgage.

BTW, the house is 1900 square feet, way too much for me as a single person. So I'm paying more utilities and property taxes than I should be paying, if I had a house that was a more reasonable size.

Since I have no mortgage, I have $200K tied up in this house. That's $200K that I can't invest and be living off the proceeds of.

If I had a mortgage on this house, I'd have the $200K (less a down payment) to invest, BUT then I'd be paying interest on the mortgage, which I'd never get back if this is my forever home that I would have no plans to sell.

If I sold the house, I'd have to pay a realtor a nice commission plus pay a mover a substantial amount to move my stuff to a smaller location, BUT a smaller house or condominium would save me some money on utilities and maybe on property taxes too. BUT if I bought a condo, I'd still have to pay a monthly maintenance fee of $300 or more.

If I were to move to a rental apartment, I wouldn't be paying the costs of home maintenance or the HOA dues, BUT rent would cost me at least $1K a month in a decent neighborhood. And, of course, by paying rent, I'd get no equity in my home.

Even though the dollar amounts I've cited are particular to me, I think everyone making the rent-or-buy decision has to struggle with the same general issues. I can't make a decision one way or the other, so I'm basically doing nothing, waiting for a burning bush or some other sign from God to tell me what direction to take.

Last edited by WellShoneMoon; 04-03-2015 at 11:54 AM..
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Old 04-03-2015, 11:43 AM
Location: The Triad (NC)
28,494 posts, read 62,152,821 times
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Originally Posted by WellShoneMoon View Post
Maintenance costs for my home come to about $650 per month, and that does not include utilities.
That sounds expensive.
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