Heading into your retirement and thinking about cashing in some equity on your house? Maybe you are simply tired of the yardwork and want to simplify your day to day. Downsizing can be a great way to lean up your lifestyle and free up capital for other plans. So what should you think about when down-sizing your home? Check out these considerations.
Space is money
Downsizing to a condo will come with the tradeoff of less (or no) space to store items, host guests, etc., but realistically speaking, how often do you use the extra space within your house? If you are in or near retirement and $250K worth of equity is tied up in space to store things or host family once every 2 months you may be better served by renting a storage locker and putting family up in a hotel. As well, the price of townhouses in Vancouver are creeping up on stand-alone houses, many of our clients have found a happy middle ground with this type of property as a downsize that still allows for reasonable in-home storage.
Freeing up capital
The fact is that the majority of Canadian house-owners are relying on their home to fund part of their retirement. If you sold your million-dollar house and moved to a $500K condo, what opportunities and doors would that open for you? Travel? An earlier retirement? For many home-owners the surplus cold hard cash is worth making the move. Ask yourself what kind of life you want to live in your later years.
Coming to terms with condo life
For those who have owned a house, it will be a tough pill to swallow paying strata fees in a condo. But when you add up regular maintenance items like cleaning windows and maintaining the garden, to big capital spent fixing a leaking roof or finicky furnace, costs can add up fast and make the stability of a condo fee look enticing. When it comes to maintenance, condo strata allows for a more hands-off type lifestyle.
One of the most exciting (and scary) parts about downsizing is getting the opportunity to live in a new neighbourhood. If you’re currently in the suburbs, then maybe downsizing to a more urban area may be appealing? Imagine being able to walk to cafes, theatres, and parks? You also need to consider the practical logistics of your new home. If you’re downsizing for the long-term, avoid townhouses with lots of stairs. Condos with spacious and fast elevator systems are a much better tradeoff for the slightly longer entry/exit process.
Decluttering and minimizing
One of the easiest ways to be comfortable in your smaller space is by getting rid of all of that stuff you’ve been living with and not using: old magazines, paperwork from 20 years ago, old laptops, broken furniture, books you never look at anymore, etc. If you aren’t using something, the chances are that someone else will both appreciate and use it. Consider donating kitchen appliances and gadgets, clothes you’ll never fit back into, sports equipment from before you had problems with your knees, etc. While it’s nice to have family heirlooms and keep items that are personally significant to you, you probably don’t need every greeting card or concert ticket stub. Make a point of moving just the important stuff with you (they’ll be more important to you that way too).
A well-organized storage locker can be a godsend when downsizing – but don’t spend hundreds of dollars a month to store things you’ll never need again. If you do rent storage, make sure it’s climate-controlled, water-proofed and that your belongings are safe. You may need to access up to 7 years of tax history, so make sure important legal and tax documents can be easily retrieved. That doesn’t need to mean they take up prized space in your new home though – that’s what storage lockers and digital clouds are for.