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A reader is preparing to move out of state for their retirement years and wonders whether renting or immediately buying a home in their new state makes for a better transition.
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Our Realtors offer different perspectives on the issue, but all agree on one thing: The reader should be very familiar with their new area before buying a house.
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“Ask a Realtor” is a monthly column. To submit a question to our panel of Realtors, fill out this Google Form.
Dear Realtors,
In the next few years, we plan to transition into retirement and move into a single-family home in a different state. We have paid off the mortgage on our current house, so we plan to use the profit from selling it to pay for fees associated with selling and moving and to buy a new home without taking out a mortgage loan.
From what I understand, we seem to have two basic options for transitioning into the new home. First, we could move to the other state and find a short-term rental until we choose a place to purchase in our new location. Second, we could buy a house in the new market using a bridge loan or some other form of temporary financing until our current residence sells. Then, we’d use the funds from the sale to pay off the temporary loan for the new home.
Which of these two options — renting first or buying immediately with a short-term loan — provides the best path into retirement with the lowest transition costs?
Thank you,
Relocating Retirees
DuPage County, Illinois
Dear Relocating Retirees,
Congratulations on your upcoming retirement and big move! There are many more factors to consider when moving to another state than when moving across town, so the answer about whether to buy or rent isn’t always straightforward.
Our panel of Realtors has a variety of perspectives and opinions about your situation — and the best fit could depend on how familiar you already are with your new area.
Note: Some answers have been edited for length and clarity.
Kathleen Myers, Realtor with RE/MAX in Portland, Ore.
“Moving can be stressful, emotional, and full of unexpected challenges. Getting to your retirement destination is worth it in the end, but if you can avoid moving twice, I highly recommend it! Given your strong financial position, a bridge loan could be a great option to simplify the transition and make things easier for you.
“The effort you put into preparing for your move now will make the entire process much smoother later. If possible, visit the city you’re planning to move to with the specific goal of exploring it as a future resident. Even if you’ve been there before as a tourist or to see family, experiencing it through the lens of daily life can be eye-opening.
“Make the most of your visit by attending open houses, exploring different neighborhoods, and taking notes along the way. Discover places where you can enjoy your favorite activities and mark their locations. Take time to find essential spots like grocery stores, medical offices, and other everyday conveniences to help you feel at home faster. The more you familiarize yourself with the area now, the more confident you’ll feel when it’s time to make your move.”
Read more: How much does moving cost? What to know before relocating.
“First off, congratulations on paying off your mortgage! That’s a huge accomplishment, and it puts you in such a strong position … Listen, if you were my own parent or family member, I’d strongly suggest the rental route first. Here’s why:
“Market fluctuations: Real estate markets are like the weather — they can change quickly. A bridge loan, while tempting, adds a layer of stress and potential financial risk. What if your current home takes longer to sell than expected? Or what if the market in your new state shifts? Renting allows you to navigate these uncertainties with greater flexibility.
“Lower stress, higher happiness: Retirement should be about enjoying life, not worrying about finances. A bridge loan adds extra monthly payments and can be stressful. Renting is a much more relaxed approach. You can take your time, find the perfect home, and then make a confident, informed decision.
“Yes, renting involves some costs, but those costs are predictable and manageable. Think of it as an investment in your peace of mind, the new equity you’ll be building, and your future happiness. Let’s be honest, you’ve got to be careful with the out-of-state property tours — some are not really what they seem. I know you’re eager to settle into your new home, but trust me, taking your time will be worth it. This is your retirement, your well-deserved chapter.”
Dig deeper: Here’s what to look for when buying a house
“I would suggest renting first. Compared to buying immediately with a short-term loan, a buyer would definitely save on the interest rates and up-front investment costs. Renting will also allow you time to find your dream retirement home in your desired location without feeling the need to rush … Renting will also give the retirees a chance to learn more about the new state that they’ve retired in.
“Ultimately, the decision is up to the buyer(s), but professionally, I feel like renting is less of a risk, more cost-effective, and gives all the time needed to make a home-buying decision in a new location.”
Keep reading: 12 popular types of houses for buyers and renters
“You are already off to a great start by having this discussion a few years before you intend on selling and making the plunge out of state. (If it happens to be Orlando or Central Florida — let me know!)
“It is a big change, and I can respect wanting to go about it in the most financially responsible way possible while also making it smooth. In these situations, I always try to minimize the risk of perhaps ‘rushing and settling for a home’ that might not be ideal for the long-term.
“With that said, I would suggest selling your home, gathering the proceeds from the sale, and finding a short-term living situation in the community you are targeting. While it might not be as convenient to move twice, it can allow you to experience the area of interest and make sure that you are purchasing with confidence … Even though it might dip into your pool of proceeds from the sale of your current home, I do think it is a worthy expense if it means improving the probability of getting that perfect forever home where you want to be.”
Note: Kadesha Thomas, Realtor with Sotheby’s International Realty, could not contribute to this month’s column.
