A lot of clients I meet want to explore renting as an option when they sell their home. That way they can use the equity in their home to travel, gift, invest or simply as funds to live on for their next chapter in life.
Most people in that position wonder if they should buy again or simply enjoy the freedom of renting - and their adult children often weigh in on the conversation, too.
Adult Children weigh in
Adult children often worry about stairs, property maintenance, or isolation.
Some families find that moving to a modern rental with elevators and on-site amenities actually gives parents more independence because they aren't reliant on you to shovel the snow or fix a leaky roof. This can shift the parent-child relationship back to quality time instead of property managment time. And relieve the parents of the feeling that they're burdensome.
If you sell now the heavy lifting is done
Decluttering and preparing your home for a move is the hard part. And it's easier to do when you're motivated (and admittedly younger). So exploring rental options becomes much easier when the hard part is over.
Try before you commit
For parents who are hesitant to give up homeownership and are curious about renting did you ever think:
What if....we just try it for a year? We could lease a beautiful condo in a walkable neighborhood like Guildwood or Pickering to see if you actually like the lifestyle before making any permanent decisions.
What if.... we book a couple of weeks in a respite suite at a local retirement residence & test drive a couple? That way we can see if it is really the right move for us now...and will help break a tie if there's a couple we're thinking of.
What if....we book an AirBNB stay in a condo for a week to see if it's right for us?
Indoor Pools are a fun feature for grandkids when they visit
Pros and Cons
If you're anything like me, a Pros and Cons list may help. Here's a start:
Pros to renting (a condo or an apartment, not in a retirement home)
- unlock your homes equity
- major maintenance burden carried by the landlord
- property taxes and condo fees are paid by the landlord
- most condos & newer build apartments have features you're used to in your home - dishwasher, washer/dryer in your suite & extra storage
- as a renter you have access to all the amenities and social activities the same way a suite owner is
- you can lock up and go if travel is your thing
- some of your utilities will be likely covered in your rent
Cons to renting
- If you're hoping to rent a house and you're the only occupant the lawn care and snow removal will be your responsibility
- many highly desireable condo buildings are mostly owner occupied and have very few rentals
- some purpose built apartments don't have all the features you're used to in your home, particularly en-suite laundry
- purpose built apartments that are occupied after November 2018 are not rent controlled
- you may have to jump through quite a few hoops to put in a rental application & be in competition
- if you're renting a private property you don't have security of tenancy - the the landlord wants to move back in or wants to sell you may need to move
Common Q&A's about renting after you sell:
Q1: "We’ve owned for 40 years. Isn't renting just 'throwing money away'?"
In the Toronto market, home ownership is baked into our culture. We’ve been conditioned to believe equity is king. Most people feel that way at first. But how would you feel if you stopped paying for property taxes, roof repairs, and insurance, and instead had that house money sitting in an account generating monthly income? Renting isn't "losing" money; it’s "buying" your time back.
Q2: "How do I know if I’ll have enough money to last if I rent long-term?"
This is where the analytical side comes in. You need to look at the "burn rate" vs. the "return rate" of your invested equity. Many of my clients sit down with their financial planner to see how the interest from their home sale can often cover a significant portion of their rent. They have projection charts that can map out your expenses over the next 5, 10 years. Just imagine living in a luxury condo where the building maintenance is someone else's problem, and your investment portfolio picks up the tab.
Q3: "For the kids: How can I bring up downsizing without making my parents feel like I'm pushing them out?"
Having this discussion is a sensitive and emotional one. The "heart and soul" approach works best here. Start by asking if they have a plan (they may surprise you) . Tell them your worries about you managing the house and those stairs. Even if it's not a 'now' decision, offer to accompany a tour some of the modern rentals & condos nearby just to see what’s out there. No pressure, just a 'fact-finding' mission.
Q4: "What happens if I rent and the landlord decides to sell the property?"
This is a valid fear in the GTA. Security of tenure is the biggest difference between a private condo rental and a dedicated apartment building. The You have two choices here. You can choose a private condo for the modern finishes, knowing there’s a slight risk of the owner selling, or you can look at premium apartment buildings where you have secure tenancy for as long as you choose to stay. Which of those sounds more comfortable to you?
Q5: "Can we really afford to gift money to our kids and still rent a nice place?"
In Toronto, often the gap between a home's sale price and the cost of a nice rental is substantial. If you are eager to leave a legacy, consider would you feel if you could give your kids their "inheritance" now, while you're here to see the impact it makes, rather than having it locked in a house you no longer want to clean? It’s about moving the money from the "bricks" to the "people."
Other helpful articles:
Essential guide to selling your parents home
