When Duke and I decided to retire and move out of the San Francisco Bay Area we made the decision to rent a house in Reno as a first step. While we were renting we could sell our house and then do some looking around to decide where we might like to settle. We ended renting a house in Del Webb's Sierra Canyon development in west Reno. Given where we are in our life renting makes a lot of sense both financially and for flexibility. It is interesting to look at the analysis that we have done of the pros and cons of renting versus owning. (All of these numbers are estimates.)
The Alpine model house next to us is for rent for $1449 per month.
The total cost of owning an Alpine model would be $1816 per month.
- Homeowners dues are $175 month
- Last time I looked the Alpine model was selling for $358,000. If you invested $358,000 at a 4% interest rate you can make $1,193 per month, so the cost of tying up your money is $1,193 per month.
- Taxes are about 1% which is $298 per month
- insurance at about $100 per month
- maintenance at $50 per month
- As renters we have no guarantee that the owner won't go into foreclosure or decide that he wants us to move out of his house.
- Renting means we can't do the things we would like to do to make the house more to our liking. That includes things like hardwood floors, different colored walls, and landscaping more to our liking.
- Renting means we don't bear the earthquake risk. If the house was destroyed in an earthquake we could just walk away.
- Renting allows us to try out living in this kind of a community without making a long term commitment.
- Renting means we will lose out on any future increase or decrease of the price of the houses in this area.
- If we decide to move on we don't need to go through the hassle of selling the house.