Are you downsizing to a smaller home for your
retirement years? Before you start settling into a new home, you need to figure
out a plan for the old one. You have a lot of options when it comes to handling
your current home and buying a second property, so it makes sense to take your
time making this decision and to ask yourself the right questions along the
way.
How
Much Will You Need for Your New Home?
The best way to figure out what to do with
your current home is to budget properly for the new one. After you use online
tools to determine your new home price range, you can better determine what
sort of profits, proceeds, or financial options you will need to help pay for
the new property. Be sure to factor in things like a down payment or accessibility upgrade costs into
your overall budget so that you will have a solid plan to guide the rest of
your home decisions. Once you have a budget, be sure to stick to it when
shopping for smaller homes for retirement.
When putting together a budget, there’s one
particular aspect that many people forget to include: the cost of professional
movers. If you intend to bring in the pros, you need to set aside some cash for
this service. The average cost a moving service tends to run between $25 and
$50 per hour, though this can easily jump to approximately $1,000 per room if you intend to
move out of state. Therefore, you need to take this expense into consideration
when you’re formulating your budget — you don’t want to come up short if you
need help moving!
Does
Selling Your Old Home Now Makes Sense?
When you are moving to a smaller home, the
first option you may consider when deciding how to handle your current home is
to sell it. This may seem like a straightforward process for many retirees, but
there are a few factors to consider before you
decide to sell your home right away. Are homes currently selling like hotcakes
in your local real estate market? If so, then listing your home now could be a
wise financial move. Are you still paying off a mortgage on your
current home? If you haven’t built up a lot of equity, you may want to hold off
on listing your home.
Could
Renting Your Home Help Your Retirement Savings?
If you need to build more equity in your
current property or if you want to add some additional income to your
retirement budget, owning rental property could be a
solid financial bet. There are some definite perks to owning investment
property in retirement, but there can also be some decided financial cons. So,
be sure to weigh your options and consult with a financial advisor, to see if
turning your current home into an investment property makes sense for your
retirement.
Could
Turning Your Home Into a Vacation Rental Be an Option?
Residential rentals can provide a steady
stream of income during retirement, but renting your home out long-term may not
make sense if you plan to split
your time between two places. So, if you are planning on
this sort of living arrangement for your retirement, it may make more financial
sense to rent to vacationers when you are not using your home. Short-term rentals can be easily
managed through sites like Airbnb or VRBO, and you may even be able to help pay
off both homes if you take the right steps to attract travelers to your homes
while they are vacant.
Does
Keeping Your Home Fit into Your Retirement Budget?
Buying a second home and keeping the first
one can be a big financial commitment, but it can also be the right choice for
many retirees who want to keep a home in their family. Downsizing seniors who
choose this option may need to get creative with financing since lenders tend
to be more restrictive when it comes to providing mortgages for second homes.
Plus, they need to factor in taxes, insurance, and other routine home expenses.
If your home will be vacant for most of the year, you should also consider
using property management services to
keep it maintained and secured, especially if your homes are far apart from one
another.
Downsizing can be freeing for seniors. You
have to create a plan for your old home before you can begin to enjoy all of
the perks of downsizing. Selling or renting can help your retirement savings,
but holding onto your old home may be the best choice for your situation. So,
weigh each choice and choose the one that will help you make the most of your
retirement!
Written by Jim Vogel
Photo Credit: Rawpixel
