Sell then rent

I'm 64 and my wife of 41 years is 61. We would not want to be at the whims of a landlord and would not rent unless it was temporary.

We're considering down-sizing from a 2 storey home to single level in a couple of years. A significant issue is that the costs of moving [stamp duty, agent's fees etc] makes this, if we want to stay in the same area, financially unattractive. So it really is a balancing act.

One thing I would not contemplate, unless desperate, is a reverse mortage which I view as a surrogate landlord situation.

For what it's worth.

R

If you sold your house worth say 600k and bought one worth 250-350k would you use the left over to buy some kind of rental property?

N.T

newbie trader said:

If you sold your house worth say 600k and bought one worth 250-350k would you use the left over to buy some kind of rental property?

N.T

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Defeats the purpose.
We are selling the house so we can travel in style.
Where does rental prop come into question?

As a renter that struggled for years to be able to buy 2 property's at great prices...only to lose them due to marrying then divorcing a total idiot with a killer body....i can say that renting after years of owning is a bad choice.

Renting is being a victim of the reality's of housing prices in this country...i hate being a victim, so try and steer the oldies into and manageable, happy down sizing....perhaps sea-change move.

So_Cynical said:

As a renter that struggled for years to be able to buy 2 property's at great prices...only to lose them due to marrying then divorcing a total idiot with a killer body....

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/salute. Non, je ne regrette rien.

So_Cynical said:

so try and steer the oldies into and manageable, happy down sizing....perhaps sea-change move.

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very insightful

newbie trader said:

Am I missing something? I know we got off topic but what does that have to do with anything! Please explain?

N.T

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Are you a blowhard?

Largesse said:

what if they find a cure for death before you die?
then what?

what will you do then?

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exactly what I was thinking, onceblue you dont count for the black swans in this world.. that will be your ultimate downfall. Cant you understand what Large is trying to get at? cant you see what is in his avatar? cant you understand that there are black swans out there that are trying to get you? trying to take your livelihood? trying to take everything you own? trying to take everything you have worked hard for? dont you see that? dont you understand?

Naked shorts said:

exactly what I was thinking, onceblue you dont count for the black swans in this world.. that will be your ultimate downfall. Cant you understand what Large is trying to get at? cant you see what is in his avatar? cant you understand that there are black swans out there that are trying to get you? trying to take your livelihood? trying to take everything you own? trying to take everything you have worked hard for? dont you see that? dont you understand?

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Black swans, lol... Taleb fan I gather.

I did enjoy his books, but got the impression he needed to have a baah waah after his hedge fund went bust.

And this sort of black swan won't be occurring for a long, long, long time (if at all). We're just too primitive at this stage.

Muschu said:

I'm 64 and my wife of 41 years is 61. We would not want to be at the whims of a landlord and would not rent unless it was temporary.

We're considering down-sizing from a 2 storey home to single level in a couple of years. A significant issue is that the costs of moving [stamp duty, agent's fees etc] makes this, if we want to stay in the same area, financially unattractive. So it really is a balancing act.

One thing I would not contemplate, unless desperate, is a reverse mortage which I view as a surrogate landlord situation.

For what it's worth.

R

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Well, obviously you wouldn't take out a reverse mortgage unless you had no other options, or really wanted to stay in a home you loved.

Why are you so against it , Rick?

Certainly there will be less to leave to your children, but I reckon most offspring should have made their own way in the world by the time you die anyway.

Imo it's a useful mechanism if you are asset rich with the property but want an increased cashflow.

Julia said:

Well, obviously you wouldn't take out a reverse mortgage unless you had no other options, or really wanted to stay in a home you loved.

Why are you so against it , Rick?

Certainly there will be less to leave to your children, but I reckon most offspring should have made their own way in the world by the time you die anyway.

Imo it's a useful mechanism if you are asset rich with the property but want an increased cashflow.

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Fair point Julia.

We are fortunate in that our kids are doing fine. More importantly they are content.

I figure I spent a career working my way out of a mortgage and would avoid entering one again at an "advanced" age. Financial institutions are not benefactors. I agree they can be useful.

But I'd prefer a future without ties to a lender. Been there, done that.

However -- this is just where we are and I accept that others may have "no other options". I'd only suggest thorough research of alternatives before committing to a reverse mortgage.

Muschu said:

Fair point Julia.

We are fortunate in that our kids are doing fine. More importantly they are content.

I figure I spent a career working my way out of a mortgage and would avoid entering one again at an "advanced" age. Financial institutions are not benefactors. I agree they can be useful.

But I'd prefer a future without ties to a lender. Been there, done that.

However -- this is just where we are and I accept that others may have "no other options". I'd only suggest thorough research of alternatives before committing to a reverse mortgage.

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It's interesting how we see the same thing quite differently.
Yes, it's a mortgage, but given it doesn't have to be paid back until you die, if your children don't need the amount borrowed as an inheritance, then if you were to run out of cash I'd just be looking at it as using up some of what I'd paid for while I'm still alive.

I have a friend who has recently taken out one of these. She has a low income, loves her house, and is now able to stay there as well as have enough to live on day to day.
Her alternative would have been to sell and rent which imo would have been quite silly when the reverse mortgage option exists.

Julia said:

It's interesting how we see the same thing quite differently.
Yes, it's a mortgage, but given it doesn't have to be paid back until you die,

...

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Well, not exactly unless I am totally wrong of course.

There is little clause, that you can be asked to leave once you are unable to maintain that property.
(I assume here that if family does not suggest financial help to get by now, their heart will not change to pay the maintenance bills once money run out).

I did not study it, so I don't know if person with reverse mortgage can be for example bed ridden and be able to occupy that house, or can be asked to leave.
As I said I do not know intricate details, but suspect that Bank would love to get rid of anubody if they could.

This is fairly new concept for Australia and will be glad to see several cases to make sure that there are not too many hidden pleasantries.

Julia said:

It's interesting how we see the same thing quite differently.
Yes, it's a mortgage, but given it doesn't have to be paid back until you die, if your children don't need the amount borrowed as an inheritance, then if you were to run out of cash I'd just be looking at it as using up some of what I'd paid for while I'm still alive.

I have a friend who has recently taken out one of these. She has a low income, loves her house, and is now able to stay there as well as have enough to live on day to day.
Her alternative would have been to sell and rent which imo would have been quite silly when the reverse mortgage option exists.

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Happy said:

Well, not exactly unless I am totally wrong of course.

There is little clause, that you can be asked to leave once you are unable to maintain that property.
(I assume here that if family does not suggest financial help to get by now, their heart will not change to pay the maintenance bills once money run out).

I did not study it, so I don't know if person with reverse mortgage can be for example bed ridden and be able to occupy that house, or can be asked to leave.
As I said I do not know intricate details, but suspect that Bank would love to get rid of anubody if they could.

This is fairly new concept for Australia and will be glad to see several cases to make sure that there are not too many hidden pleasantries.

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Leaving aside any emotional attachments or feelings of security that older folk often feel about their homes, another concern is that of declining health with advancing age - what happens if the owner wishes to sell the home to fund entrance to a "retirement home/nursing home" situation? I understand that gaining a place in a desirable aged care facility can be quite expensive, and I "assume" that the bank would require the reverse mortgage to be repaid if the property securing it was sold - leaving the ex-owner still alive, but not necessarily as well-placed to fund aged-care accommodation as they may have been (unless property prices have increased above the cost of the accrued interest since the reverse mortgage was taken out, of course.)

On the other hand, selling to free up capital, but then renting, makes no sense to me from a pension point of view (own home exempt from asset test, but money in the bank is not) and also leaves the retiree at the mercy of rental increases due to a possible property boom with no way to re-enter the market themselves. Caught between a rock and a hard place.

Having a relative in a similar situation I can see where the OP is coming from. My relative sold the "marital home" after the death of her husband and downsized to a duplex - freeing up some capital and making home maintenance much easier for her to manage on her own. Unfortunately, like many retirees the GFC and lower interest rates have combined to make existing on what pension she receives a balancing act that leaves very little room for spending on non-essentials. Reverse mortgage or financial assistance from family? - I think it will be a difficult issue for many families to come to grips with due to our aging population and increased lifespans.