Downsizing to a smaller home comes with a host of benefits, which include cutting living costs to compensate for rising healthcare costs. However, what do you do with the home you’re leaving behind? Even if downsizing is a no-brainer, you are tasked with deciding whether to keep your current home in the family, rent it, or sell it. Here are some things you need to think about before making a firm decision that could cost you in the long run.
Is It In Good Condition?
No matter what you decide, you should have your property inspected and appraised. This way, there’ll be no surprises for you, future tenants, or your family. Besides, the condition of the home can guide you in the right direction to keep or sell it.
If your home is in need of repairs, not just cosmetic updates, you can still sell it, but don’t expect many high-dollar offers. The cost of repairs is usually factored into your listing price unless you’re selling as-is, so find out the average cost that homes are selling for in your area; for example, in Salem, the median sale price is around $418,000.
Getting your home prepped to sell or rent out can be costly, so decide if you’re ready to take on the stress and cost of getting a home ready for the market or a tenant. As you consider this, look at other costs and determine what you can truly afford to simplify your decision.
Can You Afford the Home(s)?
Once you’ve moved into your size-appropriate home, will you still be able to afford your new and old homes? Even if you decide to keep a home and rent it out, the rental income you receive might not be worth keeping up the property, especially if you move out of town.
The cost of owning a home and a rental can be surprisingly high once you look at the numbers. Property taxes, HOA fees (which can easily cost you $200 to $300 per month, depending on where you live), and upkeep add up quickly, especially if you own two homes. If you decide to rent, you’ll need to be available to tenants should a problem arise. If you make enough profit to cover all expenses, including property management, then keeping the home.
When you’re moving into a smaller space, some of your belongings have to go. If you don’t feel comfortable getting rid of them, then you’ll have to pay for storage until you find them a new home. So, visit storage facilities to determine the unit size you’ll need, and shop around to find the most affordable option. For instance, over the past 180 days, the average price of a self-storage unit in Salem was $102.97. If you’re getting quotes higher than this in your neck of the woods in Salem, go somewhere else. Or, consider asking your family to take some of your belongings; you may feel better knowing they’re with a loved one. While you’re at it, find out if your family members would be interested in your home as well.
Keep It in the Family
To avoid the hassle of selling and becoming a landlord, you can simply bequeath your home to family. It might be easy for you to decide that your family home stays in the family, but making that happen in a way that benefits you and your children can be dicey.
Before you decide anything, meet with an attorney or estate planner to come up with the best solution. Again, you’ll have to remember the cost of maintaining the home in the meantime, unless you transfer ownership of the home outright.
In the end, you need to do what’s best for your own well-being. Your family will appreciate the gift, but they’ll treasure your remaining years with them much more. Take a hard look at your savings, retirement, and expenses to determine what you can do for you.
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Written by Jim at Elder Action (elderaction.org)