A. Owning real estate is wired into the American psyche, but many people underestimate the cost of ownership. After a retiree downsizes, to buy or rent depending on analyzing many factors, include:
- Emotional factors: do you like to own a place and fix it up the way you want, or will it be a big relief after years of ownership not to worry about the lawn and a broken sump pump?
- Time factors: how many years you will stay at your new home? Many people might end up moving to a new place again after finding the dream retirement place is not what they have thought in the past.
- Financial factors: what are your cash flow needs? what is the cost of home price and the yearly rents for comparable properties in a community? What's your investment track record if you manage the cash yourself instead of putting it in a house?
The bottom line - you need to make a lot of assumptions and run several different scenarios to determine what's your best option, and make sure you compare the following 3 options -
- Buy a house in full cash;
- Buy a house with mortgage;
- Rent a house.