Should You Sell Your Home When You Downsize? 🏡 Here’s How to Find a Solution You Feel Good About!
If you’re a senior planning to downsize, you have plenty of options for where you go next. There are the traditional choices like buying a smaller home or condo, renting an apartment, or moving into a senior living community. Then there are newer, more innovative housing options for seniors, like over 55 Cooperative Housing Communities.
With all the time you put into researching where you’re going, the decision of what to do with the home you’re moving out of deserves just as much consideration. The most obvious answer is to sell it, but for some seniors, it may be a good idea to turn it into a rental property. Before you leap into anything, consider how different factors may impact your decision.
Your Home’s Value
If you aren’t sure how much you can get from selling your home, start by researching the average home value in your market. While national real estate trends can be somewhat helpful, home prices are highly variable depending on your location. You can also use a home sale proceeds calculator to get an estimate on how much your home could sell for.
Of course you want to get as much as you can out of selling your home, but even if your house is on the low end for where you live, don’t assume that’s a bad thing. According to USA Today, there is a lack of affordable homes for sale in many parts of the country, which could help you command a higher price and sell quickly.
While the local market is a major factor that affects your home’s value, you also have to consider whether your home needs repairs or updates before you can sell. In some markets, even an outdated home will sell, but most buyers are looking for a place that’s move-in ready. Sometimes updates are relatively simple and inexpensive, like new flooring and paint. If you haven’t made appropriate changes, ask yourself whether you want to make that investment now in order to sell, or whether you could make those improvements over a matter of years and renting it to generate income in the meantime.
Your Home’s Equity
When you’re trying to determine which option has the greatest financial potential, another thing to think about is how much equity you have in your home. Forbes explains that owning your home outright makes it a source of wealth that can be valuable as you age, especially if you end up needing to pay for long-term care at some point.
This can go both ways in terms of whether it’s best to sell now or wait. If you sell now and buy or rent something less expensive, you can invest the profit as a way to save for future costs. On the other hand, waiting to sell allows you to hold onto what’s likely one of your greatest assets until the time when you really need to access its value. Just keep in mind that the housing market fluctuates, and you don’t want to end up needing that money in a pinch during a downturn.
Your Income Potential
Before you decide whether to sell or rent, anticipating the price you can sell for is only part of the equation. The other number you want to estimate is how much you can make in rent. Just as the market for selling homes varies geographically, the same can be said for the rentals, so it pays to examine your local market.
However, there is a high demand nationwide for rentals, and especially for single family homes. This is a good thing for potential landlords because a high demand for rentals gives you a greater chance of being able to ask enough in rent to cover your costs. Plus, a high-demand rental market also means you’re more likely to keep the home rented consistently. If your home is in an area frequented by tourists, you can also rent it out as a vacation home. When choosing this option, your best bet is to hire a property management company that can book guests online, clean your home whenever new guests arrive, and take care of local support day and night.
Along with the income potential from each of these options, don’t forget to account for costs too. With all things considered, how do you know what’s right for you? There isn’t a magic eight ball that can give you an answer, but exploring your options and considering these main factors will help you make an informed decision.