Tag Archives: downsizing

Moving Vs. Remodeling

Posted on July 26, 2016 | Leave a comment

Family situations are dynamic. Additions to the family, or a new hobby, may mean that you need to upgrade your home. This prompts the question – should you move or renovate?

Both options bring hassles. As a person who has both moved and renovated, let me assure you that both create major disruptions in your lifestyle. However, my suggestion is to renovate if possible. Selling one home and buying another could cost you nearly 10 per cent of the price of the new home. If you sell a home for $600,000 (this is in aussie dollars not USA) and buy another for $900,000, you would be looking at close to $90,000 in expenses such as agent’s commission, legal fees and stamp duty, loan fees and removalist fees. That is a huge loss of capital.

Will remodeling add value to your home? Contact the appraisers at www.scappraisals.com for your home valuation questions>

If you renovate, the main danger is overcapitalising – this means you spend so much on your home that it becomes far more expensive than the rest of the houses in the street. You can avoid this by asking an agent to give you an appraisal of your home’s value to see how it compares with those around you. If its price today, plus the renovations, does not exceed the average price in the street, overcapitalising should not be a problem. Let’s assume your house is worth $600,000, and the average price in the street is $800,000: you could safely spend $200,000 in renovations. That’s just over double the non-productive costs of moving house.

You already know how to buy a house, so let’s focus on the steps to successful renovating. Once your budget is clear, get a building inspection on your property to ensure it is structurally sound and capable of being renovated, and a survey to ensure the boundary pegs are in the right position. All too often, we hear of renovations that have encroached on a neighbour’s property.

Thinking of Downsizing? How Much Will Large Home Cost in Retirement?

Posted on November 23, 2014 | Leave a comment

Once you’ve paid for your house, how much will it cost you?

This is a crucial issue for anyone looking ahead to retirement. The more expensive your home, the more of a drain it’ll likely be in terms of property taxes, maintenance, homeowners insurance and more.

Suppose you own a home that, in addition to any mortgage payment, costs $1,000 a month. You then get a fat pay raise, prompting you to trade up to a larger house, which has double the monthly expenses.

Result: If you stay in the larger home during retirement, you’ll need to come up with $2,000 a month, equal to $24,000 a year. Based on a 4% annual portfolio withdrawal rate, that would mean $600,000 in retirement savings just to pay your housing costs, versus $300,000 for the smaller home.

“I’ve always been an advocate of modest homes,” says Charles Farrell, chief executive of Denver’s Northstar Investment Advisors and author of “Your Money Ratios.” A large house “means higher costs in retirement and it makes it more difficult to save while you’re working.”

Hitting home

Whatever price you pay for a house, it’ll often end up costing you at least 2½ times as much over the long term, Farrell reckons. Say you buy a $500,000 home, put down $100,000 and borrow the other $400,000.

You’ll pay back the $400,000 with that portion of every mortgage payment that goes toward principal. In addition, you might cough up another $250,000 or so in interest, even after figuring in the tax deduction. This assumes a 4.5% 30-year fixed-rate mortgage and a 25% federal income-tax bracket. Add that to the purchase price and you’re up to $750,000.

On top of that, Farrell figures the house might cost $20,000 to $25,000 a year, between property taxes, insurance, maintenance and occasional improvements. To generate that income in retirement, you might need $500,000 in savings, and probably more once you figure in the taxes on any investment gains. That brings the total tab to $1.25 million, or 2½ times the purchase price.

Farrell’s estimate for housing costs might strike some readers as high. It’s easy enough to get a handle on property taxes and insurance. Annual property taxes typically run 1% to 2% of a home’s value, while insurance might equal 0.5%.

Disclaimer: for information and entertainment purposes only

Simplyifying a Big Move

Posted on October 20, 2013 | Leave a comment

Packing tips

Good packing is crucial for a stress-free move. It’s always better to use small moving boxes for heavier household items.and large moving boxes for lightweight items like linen and pillows.

Pack similar items together so that a delicate crystal vase is not in the same box with a toaster, for example.

Label a box “blue bedroom,” not “Max’s bedroom,” so the movers know where it goes. Use small boxes to be kind to your back. Buy stretch wrap to contain unwieldy furnishings like sofa beds and use unprinted packing paper. Make sure cartons are firmly packed, and provide plenty of cushioning such as bubble wrap to absorb shock.

Keep sentimental items and valuables with you during the move. That includes jewelry, medications, home videos, photo albums, laptop computers and new-home documents.

Prohibited items on professional movers’ lists include hazardous materials like aerosol cans, pesticides, paints, pool chemicals, fire extinguishers, firearms and propane tanks, and perishables such as frozen foods, plants and produce. If you want to move a piano, call a piano mover.

Some busy professionals hire designers like Donna Hall of Savvy Interior Design Inc. in Hinsdale to inventory their belongings, suggest what to toss or donate, direct the movers and arrange furnishings in the new home. The result is a thought-out design instead of a pile of boxes awaiting direction.

Read entire article: http://www.chicagotribune.com/classified/realestate/apartments/ct-mre-1013-moving-tips-20131011,0,3194965.story