There was a time when the family was growing, and space in the home was never enough. You may have even sold and bought a bigger home in order to increase that space. If that space is no longer needed and retirement is approaching, downsizing can be done successfully with a little preparation, a plan and realistic expectation.
Some are downsizing by choice while others are forced to downsize their home. Divorce, death, and illness might be the driving force behind the decision to downsize. Retirement, preference, and an empty nest might be the thing that gets you into a smaller home.
If you are considering downsizing, it’s important to first evaluate the reasons why. Knowing why you feel drawn to downsize will go a long way in helping you decide what it is you’re looking for in your next home.
Many make the move to downsize in hopes of freeing up some equity for retirement. If you plan to use the sale of your home to finance your retirement plans, know the numbers before you take the plunge. Any real estate you own can be considered part of your overall portfolio but in the end, downsizing doesn’t always bring in the cash flow that is hoped for. Learning the difference between cash flow vs net income, can help improve your cash flow. Real estate fees, moving costs, land transfer taxes and legal fees will all cut into any profit downsizing might bring. If you plan to rent, this can put more money back in your pocket.
Less space, less work
If the thrill of that huge garden has lost its shine, it might be time to downsize. Having empty rooms in your house is also a good indicator that a smaller home is in order. If you are no longer interested or able to care for your larger property, downsizing might be in your future. Many of those coming close to retirement are opting out of the single detached home and are buying into the condo market. A garbage shoot and no shoveling in the winter might be just what the doctor ordered. Moving into a condo can free up not just money but time. Many retirees plan to travel, and a condo is conducive to an absentee owner. Others are choosing to downsize into a condo because they plan on a secondary residence in Florida or another sunny destination.
Remember, smaller isn’t always cheaper. You may find yourself downsizing because you are relocating. Moving from a more affordable market to one that is more expensive isn’t common but in some cases, when retirement is calling, these end up being the circumstances. Buying on the west coast, for instance, will not net you nearly as much home as the one bought in Burlington. For some, finding just the right home in just the right location is worth the sacrifice this kind of downsizing can bring.
Downsizing, no matter what the reason, can be both scary and exciting. Do your research, consult a real estate agent for a property evaluation and be honest with yourself about the expenses involved in downsizing. Knowing the facts will take some of the guesswork out of your move and make your downsizing experience a pleasant one.