Is it time to move to assisted living or into a more manageable space? If the answer is YES, you might be at a loss when trying to decide what to do with your current property. Many seniors have to make this decision every day, and for most people, there are three options. Some seniors choose to keep it to bequeath to their children or grandchildren, while others hold onto the property so they can rent it out. However, the vast majority choose to sell.
-Which Choice Is the Right Choice?-
Regardless of your decision, affordability will likely be at the top of your factors list. If you are going to sell your current home, you will probably have ample cash for a down payment and closing costs. However, if you choose to keep the deed in hand, it might be necessary to pay much closer attention to your finances.
Start first by writing down your income and non-negotiable expenses. Don’t forget to include any desirable non-necessities, such as entertainment, golf, or salon services. You’ll also need to collect information on the amount of cash available for a down payment and the cost of moving.
When you have this handy, use an online estimator to point you in the right direction so that you are not looking at houses that you cannot afford (homes in Naperville have been selling for $392,000 on average).
If you plan to rent your home, you can offset some of your monthly spending with the income you take in from the lease. For budgeting purposes, try to be as conservative as possible. Compare local rental costs and use the lowest number you come across on comparable properties. You will need to subtract the potential cost of home upkeep, property management fees, and other rental property expenses.
When you have adult children who are going to assume stewardship of the property, discuss with them who will pay for what. Some may assume that you will continue to pay for utilities and other recurrent fees if no one lives in the home.
-Weighing the Good and Bad-
Unfortunately, no one but you can decide what to do with your home. There are good and bad elements in each decision, and you will just have to weigh your options to decide what makes the most sense to your needs.
As mentioned, selling your home means that you have access to cash quickly. But more than that, it also means less home maintenance, which can add up to a hefty sum in your pocket each month and more time to spend enjoying your retirement. Financial planner Neil Frankle asserts "that retirement is not the time to build wealth but to focus on your income."
Renting your home likewise has its ups and downs. If you can rent for considerably more money than you would spend to rent your own new home, then there’s no reason you should not let your current property pay for your lifestyle. On the downside, you should treat owning a rental home as a business, and you have to pay taxes. Also, there are many strict housing rules and regulations that you must abide by.
If you plan to leave your home to be enjoyed by your family, you’ll want to make sure that there is enough money to pay for bills. After all, things like gas, water, and electric must be paid even if no one chooses to make the property of their primary residence. You might also wish to set up a living trust, which Darrow Wealth Management reports allows your heirs to avoid probate in case you die before making further decisions on the property.
Contact your Attorney for more info.
Moving out of your longtime home is an emotional experience, but it is also one that requires practical thinking and balancing your wants against your needs. Pay close attention to the numbers because what you do now may affect your income and assets in the future.
If you know how you would like to proceed - Renting out or Selling your home, I am here to help you with it.
I will complete this process smooth and easy, so you can focus on other important things.