If you're approaching your retirement and looking to move to a different home than the one you've spent decades in, you have a lot of options available to you. Whether you're downsizing or just moving to a similarly sized home in a different part of the country, one of your main considerations will be how you'll pay for that new property.
For many long-time homeowners, the answer is simple: Sell your current home to pay for the new one. But others prefer to hold on to their old house and rent it out as a long-term source of income. With that in mind, you may be wondering which path forward is the best one for your unique situation.
The most important thing when trying to figure out if selling or renting your old home will be best, is knowing how much money you have on hand in the first place and what your future plans are. If you have enough money to buy a home without selling, you might be better off renting your old one because it will help ensure you have a solid source of income for years down the line.
But if you don't, it's probably not something you can realistically consider. That could be especially true if your current home's value isn't as strong as you'd like it to be. But if rents in your area are higher than they are where you're looking to move, you might even be able to rent out your old home while moving yourself into a rental property in that new neighborhood – and still come out ahead.
If you do choose to rent out your old home, rather than sell it, there are a few things to keep in mind. The most important one is that you will have a number of responsibilities to your tenants, and you either need to be around to deal with them yourself, or pay someone to do it for you. Making that decision is important, because you will need to factor the added cost of property management into your bigger calculations. Of course, if you've already paid off your home loan, you may not need to worry as much about that added expense.
Realistically, there's probably a lot you don't know about being a landlord. As such, you'll need to do plenty of research to determine whether that path is right for you in retirement. Looking at the big picture here is a must to ensure your long-term financial success.
Retirement planning can be a bit of a guessing game: You don't know how much longer you have to live or what your health will be like even five years down the road, but you should have a clear picture of the amount of money you have to live on, make a new home purchase and so on.
Selling instead of renting gives you a very defined amount of money and does not leave you exposed to the various ups and downs of the rental market in your area.
Making any decision around real estate takes a lot of consideration, and it helps to work with experienced professionals like the ones at Ray White Surfer's Paradise. If you're thinking about holding onto your current home in retirement as a source of rental income, we can walk you through all your options so you find something that works for your long-term financial future. Get in touch today!