by​ Patricia Estero

Are you thinking about selling your home and renting a smaller place in order to downsize for retirement? Here are six things you really should consider before moving into the rental market.

Many of us who are approaching retirement are poised to start selling off larger-scale homes in an effort to seriously downsize. We begin looking to shrink our space and cash in on home equity to better afford the next phase of life without a paycheck. We might start returning to the rental market, too. As we begin combing through downsizing ideas, renting a home or an apartment is a possible option.

And renting definitely has its perks. Depending on your rental agreement, renting usually includes a negotiated lease term, a reason to declutter, and generally minor repair costs. If you’ve found yourself in favor of renting a while over buying something else, here are a few tips to think about before downsizing to the rental market for retirement:

1. Decide what you want out of a rental.

Depending on where you live, the rental market may have a lot to choose from or not much.

Decide what type of housing you want first. Maybe you’d like to try living in a condo? Or maybe you want a small house? Or maybe an apartment or duplex is what you’d like to try?

And then decide what extra features you need. Do you need a place that allows pets? Would you prefer something on the ground floor or something that is one story? Maybe you’d like to live closer to family or closer to town? Make a list of the desired qualities you’d like in your new living space, and you should start thinking about which features are really important.

Don’t forget to consult your budget to determine what monthly rent you can comfortably afford.

2. Think about your lease term and monthly payment.

Usually, lease terms are for a set period of time. Ask yourself, “Can I live here for the required amount of time?” If it’s a year, consider whether you could stay a year. Is it too far from family? Will there be more upkeep or higher bills than you’re used to? Is there significant distance from any regular activities like church, your gym, or regular meetings? Also, think about that monthly payment and ensure you aren’t locking yourself into a lease term that you can’t afford for an extended time.

3. Remember the deposit (and first month’s and last month’s rent).

Initially, renting a place can sometimes get pretty expensive. Generally, landlords ask for a deposit with the first month’s rent, last month’s rent, and (if you have furry family members) a pet deposit. Plus, depending on where you are, landlords sometimes do credit screenings to see your credit rating.

Make sure you’re financially prepared to pay the deposits and a few rent payments up front, and if you’re considering renting, keep an eye on your credit score, too.

4. Ask questions.

You may have questions as you look at the property. Maybe you’re thinking about your budget and wondering what utility bills run. What are the long-term plans for the property? Who does the yard maintenance and pays for pest control? If you’re wondering, don’t hesitate to ask. Chances are that you’ll be glad you brought it up.

5. Check out your landlord.

If you find a place you really like, consider checking the public records (mostly available online) to see if the landlord has a history of problems with previous tenants or repair people. Also, check for any liens against the property that you’ll be renting. And look for foreclosure notices on the property. You might even do a general internet search on the landlord to see if anything else comes up.

6. Consider renter’s insurance.

A typical homeowner’s policy covers the rental dwelling in case of disaster but not your personal stuff. If you’re worried about replacing your everyday living items in the event of a fire or other disaster at your rental house, consider getting a renter’s insurance policy. There are often different options available with renter’s insurance, from personal belongings coverage to possible liability provisions and alternative living arrangements, too.

Renting a place can be an excellent alternative to buying a property when downsizing. Hopefully, these tips can help smooth your transition to your newly rented, smaller space.

Related Articles

• Is Downsizing In Retirement Right for You?
• Should We Rent or Buy in Retirement?
• Why Empty Nesters Should Declutter Their Homes
• Tax Consequences of Selling Your Home In Your 50s or 60s
• Do You Rent? Know Your Rights As a Tenant

Reviewed October 2023