By Jim Vogel
Whether your home raised multiple generations or just one, deciding what to do with it in the midst of a downsize is tough. Do you sell it off? Pad your retirement by renting it? Or pass it along to a family member? We sorted out the big details so you can find your direction and start moving forward.
Any time you’re making a real estate transaction, it makes sense to have all your financial ducks in a row. Whether you’re selling your house, renting it out, or planning to give it to a family member, you should start out with a solid understanding of how much it’s worth. Before you go too far, get an estimate of what your home might be worth on today’s market.
Also take a hard look at figures like your monthly income and how much you plan to spend on your next home. If you’re selling and can purchase a house outright, that’s wonderful, but if you need to budget for a mortgage, you’ll want to tally what you can afford to spend on the next property (homes in West Palm Beach averaged $253,000 in the last month).
Also consider the expenses associated with properties you’re considering. You can price insurance with Atlantis Insurance instantly, and you can easily get an idea of how much utilities will run with an online search. You don’t want to get in over your head, and just because a house is smaller, doesn’t necessarily mean it will be inexpensive.
To Market, to Market
Selling a house is a common choice for those in the midst of downsizing. If your home is paid for, it’s a chance to potentially purchase the next property with cash. It could impact your financial picture in other ways as well, like padding your nest egg or paying off debts. Or perhaps you always dreamt of purchasing a vacation home, and now’s your chance. Whatever your motivation, selling is a solid choice, but there are a few considerations.
There is a lot of work involved in getting a house ready for the real estate market, and sometimes there is a bit of expense if you need to make many renovations or hire a professional stager. In the end, if you’re careful with your numbers, you can turn a decent profit by your downsize.
Selling isn’t the only way to make money on your abode. Some seniors elect to rent out their property, either as a short-term or long-term rental. While it’s appealing to hang onto your asset and make money from it at the same time, be forewarned, a lot of work goes into either of these options.
GuestReady points out vacation rentals can be quite the responsibility, since you need to keep up with all the usual maintenance and financial obligations like taxes and utilities, and on top of that, you need to advertise, manage bookings, and clean up after guests.
Similarly, becoming a landlord can be pretty involved. You still have the same financial and maintenance concerns, and on top of that, you need to worry about things like advertising and bad tenants.
For many seniors considering this option, hiring a property manager can be a smart choice, although it’s one more expense to figure into your budget. If you go that route, find someone close by with a proven track record, and check references for best results.
Sometimes seniors like the idea of giving the home to family members. There is nothing wrong with this option; however, LawDepot notes there are a number of tax and legal considerations involved. If you would like to see your family homestead raising future generations, or if you simply have a loved one in need of a roof overhead, be sure to discuss particulars with an attorney.
Seniors have a lot to think about when they are downsizing, and one of their biggest decisions is often the old homestead’s fate. Sell, rent, or give it away, there is much to consider. Crunch some numbers and think about what will be best for you in the long run, and you’ll find your answer.