Downsizing is one of those decisions that nature can take out of your hands. As you enter your more senior years, the ability, energy and enthusiasm to maintain a family home are no longer within you: and it doesn’t matter what the real estate market is doing.
Your approach to the challenge of downsizing can be critical to how you enjoy your life in retirement.
Always consult your financial adviser or accountant to ensure you will achieve your financial goals by downsizing. Don’t just assume you’ll have a bag of cash once you’ve sold your existing home and bought into a complex or purchased a small apartment.
There are costs associated with buying and selling a home, and you may not finish with the cash flow you need to enjoy the retirement you’ve planned. Professional, unbiased financial advice is critical to avoid such an outcome.
One downsizing choice is a duplex: a building on one title that offers two separate accommodation spaces. You could live in one half and rent out the other to generate cash flow.
Many downsizers embrace the duplex idea. It’s not for everyone, but it’s worth considering, so here are my top tips:
The Pros
Rental income is a significant plus if you can buy a duplex outright with the proceeds of a family home.
Don’t assume you have to rent to strangers. Maybe a family member would like to join you.
You don’t have to fix maintenance problems that occasionally arise. You can put the other half of the duplex in the hands of a property management company. For a percentage of the rent, they’ll take that stress away.
If you need a loan, a duplex won’t hold you back. Lenders are happy to make cash available so long as you’re living in one half of the property and intending to rent the other.
The Cons
Don’t be reliant on the rental income. There will be times when tenants leave and the property will be empty for a few weeks.
Finding a reliable tenant can be confronting. However, you can use a property management company that specializes in setting up rental properties. They’ll select prospective tenants and set a commercially realistic rent. You can have the final say on who you want as a neighbor.
Give yourself time to find the ideal duplex. Their availability can be limited.
NOTE: The information in this article is general in nature and provided as a general overview only. Always consult your financial advisor or accountant for advice specific to your personal circumstances.