Retiring Abroad: Is It Better to Buy or Rent a Winter Home?

Milestone Wealth Management Ltd. - Feb 06, 2024

In the winter, Canadians of all ages love to get away to a warmer climate. But in retirement, the question comes into play: own or rent?

Renting a place while snowbirding in retirement definitely comes with some positives. First off, renting offers flexibility in location; one year, a retiree could choose Palm Springs, the next year Phoenix, and then perhaps Mexico the following year. Secondly, renting offers flexibility in type of accommodation; take a long cruise one winter, rent a condominium for another winter, drive your RV across the U.S. for another winter. And finally, a big benefit of renting is the relatively lower financial commitment. It is true that rental rates can be expensive in retirement destinations in the popular months of January and February; however, owning a place involves a large up-front cost as well as ongoing maintenance costs, utilities, and taxes. In addition, there can be tax consequences of owing a property that don’t have to be considered when renting.

On the other hand, purchasing a place of your own could also be an attractive option. Firstly, the investment aspect of owning can’t be understated; owing real estate over the long term can often be a positive investment, due to increasing real estate values. Additionally, one can choose to rent out that property when it isn’t used, which can help cover the cost of ownership and may even generate a profit. Secondly, the stability and predictability of owing a retirement property may prove to be a good fit. Having the peace of mind of knowing that you always have a place to go to each year - and not having to search for and secure a new spot - is a big positive. And finally, owning a property gives you the freedom to make it your own "home away from home". You can choose the location you prefer, the type of property you like, and renovate and decorate it in your own style.

Retiring to somewhere warm in the winter is a dream many retirees share. Whether you are renting or owning, each option carries its own pros and cons. Ultimately both options can provide a great outcome, it is just a matter of deciding which is the best option for you.