When you’re ready to downsize, figuring out what to do with your existing home is often the most difficult decision. The good news is that there are more options than you may realize. Consider the pros and cons of each option before finalizing your decision.
While many people strictly recall their college days when thinking about roommates, seniors shouldn’t overlook this possibility. If you have a large family home that is now too big, getting a roommate or two may be the answer.
First of all, by charging roommates a fair amount for rent, you can effectively defray some of the costs of homeownership. Since you’ll still be living in the home, you’ll also be able to ensure the house is being taken care of adequately.
Second, companionship is very important as you age. Research at the University of Chicago found that seniors are 14 percent more likely to suffer a premature death if they have feelings of being extremely lonely. Another study found a link between loneliness in seniors and depression, and even elevated blood pressure.
However, before you bring in roommates, be sure there are clear understandings about money, personal space, and anything else that may cause conflict. It’d be best to get those understandings in writing to avoid potential problems. You should also do a thorough credit and background check. Your local Realtor should be able to point you in the right direction to get this done.
Sell the Home and Move on
If you’re looking to downsize, selling your current home has a lot of advantages. Not only do you get money in the bank from the sale of the house, you get to move into a home of your exact specifications.
To begin the process of selling your home, the initial step you should take is to look up how much comparable properties are selling for in your location. If you are satisfied by the number you discover, you can then hire a Realtor to get the ball rolling. That same Realtor will likely be able to find your new home. If you find the home you want to buy prior to selling your house, you can always include a contingency clause to ensure you aren’t on the hook for two mortgages at the same time.
Become a Landlord
If you can’t bring yourself to sell your family home, you can always opt to rent it out instead. While being a landlord isn’t for everyone, it is a way to make money off of your home while also keeping the property in the family.
Investigate what the going rate is for rentals in your local area. If that number provides positive cash flow, renting your family home could be worth pursuing. Keep in mind that rent needs to cover loan payments, property taxes, insurance AND maintenance.
If you don’t want to deal with the hassles involved with being a landlord, you could also opt to hire a property management company. Hiring a management company is especially useful if you’re setting up your home as a vacation rental because guests prefer professional housekeeping services and on-site support if any issues arise. Since the cost involved with property managers varies widely, be sure to research thoroughly before signing on the dotted line.
Allow Family to Move in
If you want to keep the property in the family and you don’t need an influx of cash, a relatively painless solution would be to simply allow a family member to move in.
Obviously, the downsides to an arrangement like this would be financial. If you let a relative move in and they don’t offer to contribute financially, you would still have to pay property taxes, insurance, and all the other costs that come with owning a home.
Being a homeowner gives you a ton of options. As you begin the process of downsizing, you can use your family home to help you reach your goals, whether that is to increase your retirement savings, create a monthly income stream, or leave something behind for future generations.