Selling your home in retirement

It’s a question I answer more frequently, in fact it was the topic of conversation yesterday.  My answer, let’s frame it where you have choices.

I like to frame the decision both ways. Sell or not sell, or maybe delay the sell decision, spend time closer to or with your kids for a period of time, then make your decision.  For some it is an amazing opportunity to spend more time with the kids and maybe grandkids. Might even make you live longer. Or, consider the last time you spent more than 10 days with your kids and their family and schedule.  In your best interest I think you leave your courses of action open at least initially.

It is a big decision; it may be the best decision ever. Or not so much.  What if you get along with your children but don’t get along with the spouse or the new locale?  If you have already sold your home options may become more limited.  If you have rented the property, you can always at the end of the rental term return to your home.  It takes the pressure off making and all or none decision.

It may be that you enjoy being closer to your children but need your own residence, then consider selling your previous residence and buy or rent a residence nearby.

In the interim before you decide, you could rent your current home and create a cash flow stream.  You may find the decision to rent helps your cash flow and allows you to offset some of the expenses your kids are incurring.

This is how I think about the decision and some of what I mention to clients.

  1. Do your homework be informed and deliberate
  2. Get a notebook, keep notes and write down everything you can think of that helps you make a deliberate and informed decision
  3. What is the value of your home?
  4. Is it in a condition that you can rent it?
  5. If not, what do you need to do to get it in rentable condition?
  6. Ask a local rental company for their opinion on repairs needed
  7. Will you rent it furnished or not?
  8. If renting, make sure you talk with your insurance professional as well.
  9. What do you do with the sentimental items that won’t go with you to your new location?
  10. If you have items that you are unsure of taking with you or selling check with a local storage facility.  You can store them until you decide.
  11. Do you rent your home long term or through a vacation rental service such as VRBO or Airbnb?
  12. Will your HOA, if your property is governed by HOA, allow you to rent? Be sure.
  13. Understand the ins and outs of renting and or selling; Involve your tax professional.
  14. If you are going to rent perhaps a rental management company would be useful to hire.  If so, interview more than one company. Interview some of their clients if you can.
  15. Plan on holding back 10% of the rent for repairs, upkeep and unforeseen expenses. Water heater and air conditioner usually go out at inconvenient times.
  16. To assess the cash flow, divide 11 months of net rental income by the value of your home as a starting point. You can use 9 or 10 months if you want to be more conservative with your evaluation.
  17. I am sure there is more to consider so let this list be a starting point.

It may sound as though I am dubious about the idea of moving closer to or in with your kids. I like the idea of testing out the opportunity and leaving yourself an easy out.  Tell the kids up front that’s what you are doing.  I think framing the outcomes both ways will serve your interest first. The house will be there in a year or so, you can sell it then if you are convinced.

If it doesn’t work out, be grateful for the time with your kids and you can always say you are lonesome for your own home and return to it.

Want to talk through your options? Schedule a call.