Downsizing

Graduation season is here and parents of those graduates are starting to think about what happens next! It’s a crazy time of life because you are likely caring for almost adult children and aging parents at the same time. There is no time like the present to DOWNSIZE. It may be just the child’s bedroom or it may be your parents whole house, but the process can be difficult and stressful. The last thing you want is to have to do it in a hurry, making decisions you’ll regret later. I suggest starting way before you actually have to. Here are 5 tips that can help!

Clarify your Goals – What do you want to accomplish in the next 10 years? As the kids are off to live their life, it could be opening doors for your life that you hadn’t thought about. If you are retiring, there could be something that you always wanted to accomplish that you finally have time to work toward. Start with your WHY! Not sure what I mean by that or have never dug in to you Why? Read the book Start with Why by Simon Sinek! I went through the process about 7 years ago and realized that my Why is to HELP people. Every decision I make in my business is filtered through that why, so if there is a decision to be made I ask “will it help people?”. Maybe your Why is to see the world! That would require a lot of time and planning and probably a lot less stuff in your home!

Declutter – Go room by room and take inventory. Make a bin for Donate, Sell or Toss. Remember all the fuss years ago about the Marie Kondo method… “If it doesn’t bring you joy!” If you didn’t do that when it was trending, this is a great time to do it. And if you did, I bet you need to do it again! It is amazing the amount of stuff we accumulate in a year. Don’t be afraid to do it once or twice a year. This is the most time consuming part, so start early. You may need to hire a professional. I have a few companies that will come do this for you, determining if there are valuable things for an estate sale or what can just get trashed. My favorite right now is BlueStar Move Management. I have had tons of people ask me for a company like this and I finally found one!

Evaluate Financial Position – Finances will definitely change at this stage of life, so take some time to speak to your financial person or review your budget. Remember that equity in your home can be turned into cash if there are college bills to pay or properties to buy, especially now with all the changes to college loans. In past experiences I have used a couple of strategies that may work for you. If you are looking to move a parent and downsize their home, consider using the equity in their current home to purchase or put a downpayment on the new one. Once the original home sells everything will be paid off at closing. If you are looking for a space to move you college kid, considering using the equity in your own home to buy or put a down payment on that property. If you choose to purchase that property outright, it will be an investment property and require a 20% downpayment, but if you have leases signed or commitments from tenants to pay rent, it will likely not count on your own Debt To Income (DTI) ratio. There are also loan products available called bridge loans, where the lender will help if you have to buy then sell a property.

Evaluate Housing Options – If you have a kid on their way to college or the real world, you could potentially turn their need for housing into your first investment property! Don’t allow them to pay rent to someone else when they, and their friends, could pay rent to you. I even like the idea of letting that child “buy” the home from you once they have finished school and have a job. Whether they choose to live in it, sell it, or rent it out, they can start their adult life with the one thing that truly creates financial mobility, home ownership. There are many options as we retire for downsized housing that can easily fit into those goals you clarified earlier. We recently moved my mother into a condo at the lake. It is a big switch from her house of 50 years in the middle of Charlotte on almost an acre of land, but she has grown to really love it. It took us about 3 months to get her completely moved in and downsized. We purchased the condo first so she could take her time with a loan that I “co-signed” for. Once we sold her house in Charlotte we simply paid off the loan and the HELOC money we had borrowed to help make that transition.

Condominiums can be a great choice for Graduates or Retires because of the small space, smaller price point, and amenities the community offers. The can also turn into great rental properties for short-term or long-term rentals, but make sure to read the association documents carefully.

Execute – Make a schedule to achieve those goals. Find help and assistance where needed. You may need to hire movers, contractors, a real estate agent, or a home management company. There are lots of options! I talk to familys all the time that are trying to sell properties once the family member is deceased. They are left with an entire home full of belongings that they do not know what to do with. These Move Management companies can come in and sort through to see if an estate sale would be worth it, or what items should just get junked or donated. I recently spoke to a woman who was doing her best to go through and get rid of as many things as possible before that happened to her children. It may be as simple as a detailed outline in a will that gives every member of the family the responsibility of the items. Something that specific would need to be revised in a timely manner.

At the end of the day we can’t all be like my Aunt Peggy who sold all of her worldly possessions except for 1 chair, a plate, and a fork to travel the world in her RV, but I do think we could eliminate the clutter around us in order to eliminate some of the clutter in our lives. Starting with a blank slate in the big changes of our life can be scary so seek some help. Whether you are cleaning out a graduates bedroom to fill their dorm or making a spare bed room, or downsizing a whole home into a condo in retirement, it will take Goals, Help, and a Plan!