I’ve been rolling around ideas for what my retirement will look like for some time now, and I like to look at what other people further along than I am have chosen to do. For some reason there is an overwhelming tendency to buy a second property instead of renting.
I’m most interested in the strategies of those who split their time between Canada during the nice months and somewhere warm in winter. The ones who avoid winter for only a month or less usually rent, but the ones who avoid the whole winter tend to buy.
When I run the numbers, renting makes a lot of sense. Buying requires a large initial cash outlay followed by ongoing property taxes, condo fees, and maintenance costs. Monthly rental costs may seem high, but I would only pay them for a few months per year. The costs of owning are year-round.
It’s possible that many retirees get the cost comparison wrong, but I suspect there are reasons other than costs that dominate. Renting has the advantage of flexibility. Owning gives greater stability. No doubt some retirees are willing to pay for this stability and do so with their eyes open. In other cases, I’m not so sure.
I’ve been told things like “there aren’t many good places available to rent where I want to stay.” My usual reaction to this is “how many places do you need?” However, most who say this just never considered renting. I guess they prefer to own for some reason.
I can certainly see the advantage of not having to arrange to rent a place each year. And I can see the advantage of having a subset of your stuff waiting for you at a place you own. The question is how much would I be willing to pay for these advantages in terms of money, lack of flexibility, maintenance effort, and time spent worrying about whichever of my properties I’m not currently occupying.
Another possibility is that I’m talking to a generation that looks down on renting. They think of renters as losers who live in crappy apartments. This isn’t true of all retirees, but it’s true of some.
In the end I don’t think I’m any closer to a decision, and I’ve still got time to decide.