As your sunset years draw near, downsizing is a wise move. Instead of buying a smaller house, though, strongly consider going back to renting.
It is not a popular opinion in Colorado, but renting a property is better than owning one. Any would-be retiree thinking of selling a home fast in Fort Collins or any other community in the Centennial State understands the logic and practicality of taking this route. Below are the best reasons to go in this direction.
Increasing Your Retirement Funds
Home equity is an excellent source of money to fund your retirement. The problem is it is illiquid. It only becomes cold cash you can spend if and when you sell your house. Otherwise, it is a rather useless asset that may render you cash-poor.
You can’t entirely rely on your retirement funds to support your needs when you decide to quit working. The government may provide you with a regular income, but it may not suffice to keep you from touching your savings now and then.
Forbes found that average retiring Americans have home equity that is about twice as big as their savings. Unlocking this untapped wealth frees up more capital to swell your coffers at a time when you will become more dependent more on cash.
To make the most out of your home equity, sell your house sooner than later. According to a Zillow survey, nearly half of real estate experts interviewed believe that a recession will occur in 2020, and some of them believe that it will last until 2021. Almost a quarter of respondents a recession will transpire before 2019 ends.
Your house may depreciate when a recession occurs, sweeping away your home equity. It makes financial sense to sell your property now when land values are still high.
Eliminating Almost All House-related Expenses
Cost is the number one burden of home ownership. Being the owner, you are solely responsible for its upkeep. If you are not finished paying your mortgage, your monthly loan payment can eat into your budget upon retirement.
With renting, the rent is the only thing you need to worry about. If you choose the right community, you can even find a rent lower than your current mortgage payment. Since you do not own the property, the landlord will be in charge of the repair. You still have to keep a rental property clean and habitable, of course, but your lease protects from unplanned and costly maintenance-related expenses.
Enjoying a Flexible Lifestyle
Mobility is one of the most attractive advantages of renting. The fact that you will not be tied to the house you are renting gives you the freedom to move when your lease is over. A landlord may intend not to renew the contract, but relocating is not that difficult with plenty of rental units available in many communities.
Giving up home ownership can be hard, especially if you value security. However, it is a small sacrifice to have a low-maintenance life when you retire.