By: Liz Shemaria
At the beginning of a new year, many people think about how they can make improvements to their homes and lifestyles. As news headlines are filled with rising inflation and a potential global recession, downsizing a home may be part of that desire to change by saving money. If you are thinking of selling your home amidst rising inflation, you may be wondering where to begin with moving into a smaller space. Downsizing might mean moving into a smaller home, but it could also mean clearing out a room or backyard cottage to rent it out. With many options to downsize, there are a few factors to consider.
Declutter to clear your space
While it might seem unrelated, the first step to any home improvement project, or major home change, is to declutter. Getting rid of items that you don’t need can make way for you to think more clearly about what you want your ideal home to look like. Decluttering can help you see how much space you really need in a home, and also the amenities that you need in it. By decluttering, you may find that you can get by with less closet space, or two bedrooms instead of three. Working through every closest, drawer, and cabinet can create a clean slate to better understand what downsizing might look like.
Know why you want to downsize
The desire to downsize may be based on many factors, such as wanting to reduce expenses, live a more minimalist lifestyle, or save money on housing to put towards travel or other life goals. Deciding why you want to downsize can help you understand what your new home environment will look like, and the features you need in your next home.
Weigh moving to a smaller house vs. renting it out
If saving on expenses is one of your reasons for downsizing, setting a target budget will be part of your downsizing plan. Selling your house and moving to a smaller house is one option, and studying the housing market can help you determine if that type of move will help you reach your goal. Another consideration is to free up an extra room or backyard cottage space to renters, to bring in an extra monthly income. Consider your home size and lifestyle preferences when deciding to stay in your current home, or move.
Get a clear picture of your budget and dream home
Downsizing with a specific money-saving goal can help you pinpoint your budget for buying a home. Saving for a set future event, such as retirement, can direct you towards homes that could be within your budget and an ideal location.
Work with a real estate professional
With a budget in mind, you’ll be ready to find that next home, or get your home ready to rent. You can start researching homes on your own, to get a sense of the market, and the same goes for rentals to see how much you could charge for a rental property. Either way, working with a real estate agent can help you make a smart real estate move with your downsizing goals in mind.
Housing is likely your largest monthly expense and reducing this expense can free up resources to pursue other financial goals. The best way to downsize is to have a clear plan before you get started.