To Rent or Own? How to Downsize and Keep a Positive Cash Flow

Written by Gordon's on . Posted in Blog

money_-_stock_image_-_banner.jpgWhen you are downsizing, a big question is should you rent or buy. Young or old, your choices have multiplied greatly.

Retirement Living

Once upon a time, the best options for seniors who were downsizing was to purchase smaller property. Now, the amount of choice available to either rent or own can be staggering. So, you should first decide what kind of property you want, and then decide whether you want to rent or own.

Cash Flow

Whether renting or buying, it is important to think about your finances. How much does it cost to rent versus the cost of maintaining a property you own, and how much money does that leave you per month? While you might think owning is better, when unexpected repairs need to be done it can become financially challenging. When you own a condominium there are monthly fees, but there are also levies to cover the cost of needed repairs. If most of your finances are invested in the condo, you may have to take out a loan!

If you have sold your primary residence, and decide to rent, you can invest the remaining money. Also, if you have enough capital, the interest may be able to cover your rent.  Before making any decisions, you need to be honest with yourself about what is practical and what is affordable.

Property as Investment

A reason to purchase rather than rent is in the hope that your investment will appreciate in value. However, the recent housing market crash has shown that real estate is not always the best investment. If you are downsizing into a condo, and you consider it an investment, you may want to rethink your decision. The population is aging, and as that population moves into retirement communities and eventually dies, availability of these condominiums will go up, and the prices will go down (along with other real estate).

Renting is not always the least cost-effective option—in fact it can sometimes be much better than buying. Owning your home has its own benefits as an investment, or for the security that comes from not having to renew a lease. No matter what kind of property you are considering, be sure to investigate your options, and how much it will really cost you.

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