A few months ago, we posted about the possibility of renting a property before deciding on buying in the post “Renting Before Buying – Testing the Waters.”
Renting before buying can be incredibly helpful in extreme situations: relocating to a new state, buying a much bigger home, or a much smaller one. This scenario, while not feasible for everyone, can help to save you a lot of money and headaches in the long run.
Obviously the difficult part of this is finding a place to rent that will allow you to get a feel for what you are looking to do. Finding a house that is the right size, for the right rent, with the right lease options can be very difficult. But if you are able to do so, consider this option before finding a home to blindly buy in the new situation.
This follow up post is once again inspired by Get Rich Slowly’s Holly Johnson’s own follow up post “The small house experiment, Part 2.” In Part 1, Johnson discussed renting a home for her family more than 1,000 square feet smaller than their previous home. They believed that a smaller home was the right solution for their family, but being unsure whether the logistics would work, decided to rent before buying.
In Part 2, Johnson discusses the outcome of their test. While the house works for the family, it’s not quite comfortable. But their experiment went beyond just judging the size of the house, it has helped them decide what the really necessity to them: “Storage space is something that I took for granted in our old house, and it’s apparently not something that I’m willing to give up. […] And, even though I thought I could live without an office, I’m finding it rather uncomfortable working in the corner of my tiny bedroom.”
So, now that Johnson and her family know what works and doesn’t work, they can continue to rent while they search for the right size home with the features they now know they can’t live without.
Now imagine how much different Johnson’s situation would be if they had jumped into downsizing by buying a much smaller house. They would have been stuck in a long term commitment in the form of a mortgage, which is much more difficult, time consuming, and expensive to get out from under than moving out of a rental.
We use Johnson’s situation as a real life example of renting before buying really helping a family make the right decision before settling on buying a house.
- Disclaimer: The information on this blog is not meant for specific financial advice. The ideas/opinions stated are not suited for everyone, and readers should use their own judgment in applying them in their financial lives.