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Downsizing Your Home: Is It For You?

If you've been pondering on the idea of downsizing, you're not alone.

Why Downsize?

As record number of baby boomers reach retirement age, many are asking the question "do I need this much house?" Reasons for downsizing vary widely depending on individual needs and motivations. Some retirees find that stairs have become more difficult to navigate with age while others feel that once the kids have moved out, maintaining a big house no longer makes sense.

One Woman's Reasons

Six years ago, Minh Doran sold her house and bought a two bedroom and two bath condo in Waikiki. When asked what compelled her to make the move to downsize, she responded "the kids were scattered across the country, my husband passed away, maintaining a four bedroom and two bath house on a half acre felt like walking into the wind with a parachute strapped on my back." After buying her condo, Doran had extra cash from the sale of her house which she used to buy an investment condo that now provides her with a positive monthly cash flow.

What About All My Stuff?

There's no doubt that many people feel intimidated by the amount of work it'll take to downsize. After all, they've accumulated a lot of stuff and lived with it for many years. Expunging that stuff can be a daunting and emotional task.

downsizing your home is it for you

Decluttering

Heather Levin, who owns a professional organizing business that helps home owners get a handle on their clutter writes, "What many people don’t realize is that downsizing and decluttering can really save you a lot of money. In addition, downsizing and decluttering can make your life considerably more stress-free." Levin suggests an eye opening exercise that helps you to put a dollar value on the space of your clutter.

Paraphrasing her exercise:

  1. Write down the current market value for your house then break it down further by calculating the dollar per square foot.
  2. Write down the estimated square footage of storage space for stuff you haven't used in years.
  3. Multiply that square footage by the dollar per square foot value of your house and you will get the value of the space that you use for clutter.


decluttering your home saves you moneyFor instance, if your house is worth $380/square foot, and you use approximately 200 square feet as storage for clutter (about half the size of a typical two car garage)  $380 x 200 = $76,000. That clutter is costing you a lot of money to hang on to, and in reality, most people use much more than 200 square feet in their house to store their stuff.

Do Your Homework!

But before you start to pack up and make your big move, be sure to do your homework and see if it makes sense for you to downsize.

  1. Consult with a CPA to understand your tax consequences.
  2. Consult with a REALTOR and get an estimate on the market value of your house to see how much money is available from the sale of your current house to buy the downsized property.
  3. Get a handle on fees, put them on a spreadsheet and figure out your costs and proceeds.


Please contact me today if you would like more information on downsizing your home, or if you have any real estate questions at all. I'm here to help!

 

Toan Doran (R) Partner

Toan Doran REALTOR is a licensed real estate broker and Partner at Prudential Locations LLC in Honolulu.

Website:    http://toanhawaiihomes.com/ 
Email:        toan.doran@pruhawaii.com
Twitter:      @WaikikiRealEst
Linkedin:   http://www.linkedin.com/pub/toan-doran/4/740/307 
Facebook: http://www.facebook.com/toan.doran   
Phone:    ( 808) 721-6975

 
  • Toan Doran (R) Partner
Oct 01 2013 3:02:00 PM by Toan Doran

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