Downsizing your property is often regarded as a logical and practical lifestyle change but it can also be an emotional experience.
It signals a new phase in your life but can also represent the end of what used to be. Turning your back on a family home of decades can be upsetting.
Motivations to downsize commonly include the fact that children have moved out of home, a desire to embrace life somewhere new or because you feel your home has become too large, tiring and expensive to maintain.
However, downsizing is a major financial decision and requires planning to ensure it is successful. Don’t downsize without seeking expert financial advice.
Study the property market and seek help from your agent to understand the true value of your home and the expense of a smaller property. I’d be more than happy to help!
You may be able to sell and have enough to buy two properties – one for yourself and another to supplement your income. That’s a great way to retire early – but only if you do the math correctly.
Ultimately, downsizing should simplify your life and provide you with the opportunity to fulfil many of your ambitions.
Here are 14 tips to ensure downsizing is a success:
- Prioritize your desired lifestyle over property or location. Downsizing is less about real estate and more about how you want to live your life.
- Avoid delaying a decision. If you know it’s time to go, then it will only get harder to downsize as the weeks or months go by.
- Don’t downsize too late in life. You want to be fit and healthy enough to take part in your new community.
- Don’t make the decision after a life-changing event. Consistency is a more loyal friend than change at times of emotional upheaval.
- Don’t ignore your children’s feelings. They also have strong emotional ties to the family home and may become upset with your decision, or need convincing.
- Moving to a new area and then deciding you don’t like it is a frequent error. If you have a dream of living in a new town, try renting for a year to see how it goes and check you really do enjoy the lifestyle. Rent-testing can help you avoid a financially painful error.
- Do not assume that you’ll save buckets of money. Work with your accountant or financial adviser to assess the true financial benefits and whether you can afford it.
- Ask yourself if you really have to buy a smaller place. Maybe you can rent. Some see that as dead money but perhaps the interest on the cash from the sale of your house can help meet the rent. Don’t close off your options. At least with a rental, you won’t pay maintenance bills.
- Do your homework on the market. Don’t take generalized media reports as sufficient evidence. Ask your agent who knows the area to appraise your property, and estimate the cost of moving elsewhere. Realtors are your best friend when preparing to downsize.
- Budget for all the costs of moving. These will eat into your savings if you don’t keep them in check.
- If you’re going to a condo, don’t forget to include the strata fees in your budget.
- Don’t buy where any views might be built out. It’s annoying to the point of wanting to leave, and you’ll lose a percentage of the value of your investment.
- Don’t keep all your furniture. You need to let go and furnish your smaller home appropriately. Large furniture can make a smaller house or condo feel pokey. When that happens, disenchantment sets in.
- Avoid storage. It’s a waste of money and eats into your savings and lifestyle. If you’re going to downsize, then get real. Your stuff has to go!