200k rent or buy????

Herzlos

jimbog said:

Regardless of whatever new legislation is put in place you don’t want to be hunting for a new rental in your twilight years

Fair point. Moving house sucked when I was 20 and 40, but I can't imaging doing it when I'm 80. 

Devongardener

If you don’t buy you will be paying rent in your retirement. Surely you want the security of owning a property outright brings, it’s yours, you are not at the mercy of landlords wanting their property back, and limited rental availability.
We had been renting for years and 4 times our landlords or their descendants sold the properties, we eventually managed to buy ages 46 and 50 and worked really hard to pay off the mortgage in 15 years, now retired and the feeling of being secure in our home is huge.

mlz1413

My mum did just this, sold a flat and pocketed the money when she was 70, so she could rent.  This meant as her mobility lessened she could move into different properties to make life easier. 

The reality was that after moving she didn't want to move again.  She put up with building work (because she had just bought sofas she wanted).
She put up with noisy neighbours, as some flats were Airbnb so had parties in them.
Various other issues were outer security doors propped open,  rubbish strewn near the bin but not in it. Smoking 24/7. The lift constantly in use due to different shift patterns. 

10 years on, mum has bought a small bungalow to get away from the noise.  Moving at 80yo was stressful.  
She has also spent a lot of her nest egg on new furniture as had to leave what she bought as she chose to replace what was there.

The idea had started with a simple, I can rent for the interest on my investment' 

saajan_12

Tubearhole said:

Why buy a house that I am responsible for to maintain when I can rent a modern home and pay for the rent with the interest from the bank and top up with mine and my wife's pt income.

If I buy a house I will never see that 200k. I understand that my kids will when they are possible in their 60's and I am gone but why not have the money in the bank and give the money to my kids when they really need it for things early in life like a car a deposit for a home a holiday or whatever. 

Am I crazy in my reasoning or just trying an alternative to 'the norm'
 

If you're relying on the interest to pay the rent then you'd have to keep the £200k in tact for your lifetime, and also never see it. If you give chunks away then the next months interest is lower, so you have to dip into the capital further to afford rent.. which means it goes down faster and so on. 

At 45, you could have *another* 45 years, so even with interest, 200k may not last that timeframe if you dip into it. Usually only really makes sense to release equity whether by renting and spending the cash or via an equity release mortgage if you'll have excess cash which you can't use in your lifetime. 

Basically not saying one is better than the other, but the benefit you're aiming for isn't possible with either.