7 Tips When It Comes To Trading Down Once You Retire
7 Tips When It Comes To Trading Down Once You Retire
Must-Know Facts On Downsizing Your Home
Trading down is not a very popular option. It's rare for people to decide to sell their home because their house is too much instead of too little for them. But today, more and more homeowners are leaning towards this choice. Although trading down may not be as common, it can be the most prudent option to some; the first step is to establish a price range or perhaps consider renting out the property instead. Learn from these tips!
1Changes In Living Preference
Some may find it hard to believe, but there are actually other homeowners who arrive at the decision that their current house is too much, instead of too little for them or their family. In case you have a swimming pool that no one has used for years or if your kids are all grown up and have all moved away leaving you on your own, then perhaps you'll also find yourself in a similar situation. Let's say that you already retired, and you no longer have to live close to the city; you can consider relocating to a quieter area.
2The Pros Of Trading Down
There are two main advantages of trading down, especially to senior citizens - it helps lower expenses and reduces stress. In case you just retired a few months ago, then you'll likely find yourself living in a house that's bigger than what you really need, and you no longer have access to the extra cash that helps you to maintain the place properly as you don't work anymore. Although the thought about leaving can be worrisome and scary, consider this as something positive. The best and most obvious solution to the problem is to sell the property and move into a smaller and more affordable home, which will allow you to save more cash from the lower maintenance cost, and you'll get some money from the sale, too.
3Price Range And Related Factors
Several different factors can affect the price range when you do choose to trade down. The first factor is the amount of money that you've been able to save for your retirement. Selling your current house and buying a smaller one that's cheaper than the property you sold will free up some cash that you can add to your savings.
However, this introduces another vital factor to consider - the quality or state of the house that you are thinking about trading down into. In case you are thinking about moving to an expensive area, there's likely less money to be made if you do opt to trade down. Remember that when it comes to the cost of living, city life is generally more expensive than being in the suburbs.
4Choosing To Rent Instead Of Buying
A lot of retirees choose to sell their homes and move into a place for rent instead of selling and then buying a new house. This is actually a financially sound decision as you can save more money here since renting is generally less costly than purchasing; though, certain factors affect costs depending on where you live or where you plan to move. So if you do opt to rent, you can gain more money that you can, then put in your savings or use it for whatever you want.
5Potential Disadvantages Of Renting
There is no perfect choice in real life, so expect some problems in case you choose to rent. One potential problem is becoming a likely victim of rent inflation. When renting, you can expect monthly payments to increase every year because of inflation. This means that your current $1,000 rental fee could increase to $2,200 in twenty years if the inflation rate increase is 4% annually. If the inflation rate is 6%, your facing rental fees of about $3,000 a month - that's really going to take a huge chunk out of your savings.
6Research Your Prospect Home To Rent
When you owned your place, you had the freedom to do whatever you wanted as you were the master of your house. However, things are different when you're renting because the place where you live belongs to another person. This influences everything, from what sort of improvements or renovations you can do to the exterior or interior of your rented property, to whether or not you can have a pet, and other issues.
Therefore, before you finalize things, always thoroughly check out the place and be sure to do your research about the landlord or owner, too. If you are moving to a home development with several units or an apartment, you can talk to some of the residents so that you'll get an idea about how the people in charge treat their tenants. Don't forget that a landlord can choose to sell his property at any time, and if that happens, you'll have to move again and incur the costs that are related to that.
7Carefully Think Over Your Decisions
It's a fact that most people look forward to retirement; but when they actually get to that point, some find it hard to adjust since they're so used to working, and retirement is often associated with being old and dying. Well, retirement can be fun or not, depending on how you look at it; but always think things through carefully and don't rush when making decisions that may affect your remaining years. Although your finances may leave a lot to be desired, which may lead you to think that the best option is to trade down or sell your current home, don't base every decision on money alone and consider your emotions, too.