I used to think that a senior should enjoy their big family home and then sell it and move into a strata condo unit and pocket the cash from the sale of the home. I never considered that this might not make sense and therefore started this plan with my own parents. One day, a friend of mine questioned me on the financial intelligence of this move. From that point on I started totally rethinking the topic and have come to the conclusion that there is more than one path a senior could take when dealing with their home. The three major choices are to stay where you are and retrofit your current home, sell your home and rent a home, or downsize/right-size your home. Let’s take a look at each option.
Staying and Retrofitting
I am not a contractor, nor yet a specialist (although I have plans to be) in the arena of home technology available to improve life at home for seniors, but rest assured that everything you could imagine probably already exists. How much would it cost to totally renovate your current home to make it ‘golden oldie friendly’? Once you have that number, you can then compare to the costs of selling your current home and buying another home. Agents like me are pricey and we don’t give senior’s discounts like your transit company or local family restaurant! Once you’ve worked out all those costs you may be surprised to see that you haven’t gained a lot by moving. Don’t forget that if you are, say, 75 years old now or older, the maximum time you will be able to stay in your next place without some help nearby is about 10 years. The average life expectancy in Canada is, after all, 81. Does it make sense to blow your money on a real estate agent and property transfer tax twice in 10 years? If you don’t know the answer, perhaps ask your financial adviser… There are many in-home nursing companies that offer part or full time help as the needs require and who charge much less than what it would cost to move into a full time senior’s home. You could retrofit your house and put a good amount into care and continue to enjoy your nostalgic pad where your offspring once frolicked.
Sell and Rent
Although you will have the disruption of moving and adjusting, selling and renting could make a lot of sense for you. You get to take that big wad of cash from the over-valued 70’s home you live in and drop it into a conservative investment and live quite well off of it. Maybe you want to start splurging on your grand kids? This could be your way. Maybe you want to start travelling the world before your doctor bans you? Selling your home might be your ticket out. Renting also gives you the ability to keep a home much like the one you just sold. Always take some time to crunch these numbers because they are always revealing and somewhat surprising.
Maybe home ownership to you is a badge you like to wear. I get it. I’m a home owner, too, and it feels kind of neat to know that your landlord can’t force you to move. There is certainly one level more security by owning than by renting. However, it’s crucial again that you crunch the numbers. You will pay real estate and closing fees and the dreaded property transfer tax for the honour of paying even more per square foot for your new shoebox. Plus, it will probably be quite hard for the kids and their families to drop by for the weekend and sleep over – but maybe that’s part of your strategy. You may lose your garden and workshop. How important are those to you? There are now public shared workshops that are starting to pop up around town that you could track down and join, though, if you crave it. On the plus side, if you downsize to a condo, they take care of your garden for you. Maybe you are done with that weed-ridden menace and it’s time to watch Murder She Wrote uninterrupted for once. Also, thinking about your roof, snow removal, and the like are no longer all your burden but that of the property management company and council.
I hope that this has been a thought provoking post and that you will take some serious time to think about what’s best for you – not what your kids or your real estate agent says is best for you. If you do decide to sell, however, it’s always a bonus if you can sell on the top of a housing bubble like the one we are in now in Vancouver.