Maybe you're an empty nester looking to downsize. Or you'd like a less maintenance-heavy lifestyle. Or you're seeking flexibility as you start your life's next chapter. These are just some of the reasons homeowners are going mortgage-free and choosing the rental lifestyle over homeownership. In fact, in a 2016 Pew Research Center survey, 32% of respondents said they rent as a matter of choice.
Here are some things to keep in mind if you're thinking of transitioning from homeowner to renter.
Research, research, research: Before signing a lease, make sure you visit the property to get a feel for the place — not only the apartment you'll be renting but also the common areas and overall community as well as the neighborhood. And check out online reviews to get a sense of what other residents have experienced.
Evaluate the amenities: Even if you downsize your living space to move into rental housing, the community can provide amenities to upgrade your lifestyle that may have previously not been an option. Ask yourself: What amenities will tip the cost-benefit scale for me? Then, make sure the community you're exploring offers those services. An on-site gym or yoga room for working out, a pool for relaxing in the summer or a pet area to walk your dogs and socialize with other residents are all benefits to consider.
Prepare for tax changes: Keep in mind, the switch from owning to renting might affect your taxes. When owning a home, mortgage interest and property taxes are often tax deductible - a benefit you lose when signing a lease. Talk to your accountant or financial planner to avoid any surprises at tax time. And be sure to ask about all your options, such as the possibility of writing off part of your rent if you work from home.
Update your monthly budget: If you're a baby boomer looking to downsize, you may have had a consistent mortgage payment for the past 25 years. As you review your retirement savings and monthly spending, be sure to consider your new monthly rent payment (plus any additional expenses for utilities, parking, temporary storage, etc.) and plan for a gradual increase year to year.
Declutter your life: Some individuals can't wait to purge their basement storage pile, but for others, it can be difficult to part with some of those belongings. As you go through your home, consider each item — What do you use most often? What haven't you used in more than a year? What are you holding on to for sentimental value? You may not be able to keep everything, but you can keep the things that mean the most.
Get creative with customization: If you're worried about the limits or lack of control over decor in your rental, rest assured you do have opportunities to make a rental property your own. While you might not be able to paint the walls or install new flooring, with a little creativity, you can still customize your space. Removable wallpaper is a great choice for adding personality to a room. Other renter-friendly options include updating your window treatments (use tension rods to avoid drilling holes), using room dividers to change the flow and swapping out light fixtures (be sure to save the old ones to put back when you move out). Also if your old furniture doesn't fit and you don't know how long you will be at your new rental, you could try a company that rents furniture for all design tastes.
Establish rapport: Once you've signed the lease, it's helpful to build a strong relationship with your property manager or owner. You can help foster goodwill by paying your rent on time and being respectful neighbors.
Enjoy a low-maintenance lifestyle: One of the most compelling benefits of renting vs. owning is the maintenance-free lifestyle. As a renter, you won't have to worry about mowing the lawn, shoveling snow or cleaning out the gutters. And when the dishwasher leaks or the air conditioning is on the fritz, you don't have to worry about fixing it yourself. You just call your property manager to handle the repairs.
And without the need for maintenance, remember you can also free yourself from the stuff that goes along with it. That means you can sell or donate your tools and lawn care items instead of moving them to your new rental home. Donations can be tax deductible in certain circumstances.
Making the transition from owning a home to renting doesn't have to be daunting. With these tips, you'll be ready to enjoy the flexibility, freedom and financial savings renting a home can provide.
— Pinnegar is president and CEO of the National Apartment Association, based in Arlington, Virginia.