This rental market is going bananas and it’s worth it to save money

I am a year and a half away from retiring. I have a home in Illinois and a modest vacation home in Wisconsin. I would like to sell my primary home and save several hundred dollars per month. I would end up with $100,000 cash from the sale.

I would like to rent a townhouse or condo in the same area. My plan is to downsize and rent a 2 bedroom house for $1,400. Congratulations - you are almost at the retirement finish line, and with two homes to boot!

It is worth it to consider downsizing. With this rental market going bananas, it may be a better idea to put it off.

Rents are going up steadily across the country. The rents for the first five months of the year have gone up by 3.9%, according to Apartment List.

The chart shows how rents have changed year-over-year, from Realtor.com:

You're likely to live another 20 years. Your rent will go up over the course of this time. B. Scott Sadler, founder and president of Boardwalk Capital Management, told me that instead of growing wealth from real estate, you'll be exposed to inflation. You are only reducing your expenses by a few hundred dollars per month, net of taxes. He added that real estate is a wealth-builder in the long term.

Even if we hit a recession and even with higher mortgage rates, home prices won't drop for a long period of time. The chart from the St. Louis Fed shows you that houses will appreciate more in the long run.

Sadler said that short-term trends shouldn't drive long-term decisions. I don't think people should be quick to sell their home Close off rooms if it is too big. If the maintenance is too much, turn grass into natural areas. If you want to defray some of the mortgage, rent a room for a nurse, teacher or college student. The savings you could make by moving to a smaller rental unit can be recoupped by renting a spare room out.

I think you have a good idea about renting your vacation home on Airbnb.

Millions of Americans resumed their vacation plans after the worst of the COVID -- 19 epidemic, and Airbnb owners have made a killing over the last few months.

AirDNA said in a recent blog post that short-term rental demand has shown very little signs of weakness. In May, new bookings increased by 2.6% as compared to last year, as compared to 17.1 million nights. Demand is up year over year by 17.9% and up over 26.1% from pre-pandemic 2019.

You're going to be minting money from that Airbnb. You can enjoy the security of being a homeowner and stay put for now.

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