Another aspect of buying a retirement home prior to retiring is that it can not only diversify your investment portfolio, but you can add some income for a few years by renting it out. You might consider renting it on for several years on yearly leases, or if your new home is in a vacation area, it is many times possible to rent it seasonally.
If renting your home sounds difficult and intimidating, keep in mind that there are all kinds of services these days such as VRBO.com or Airbnb that will take care of everything for you and take the hassle out of renting the place out yourself.
You will of course have to pay a fee to use these services, but it can really be worth it to not have to manage the rental process yourself. Before you decide to rent out your retirement home, make sure that both your mortgage and your homeowner’s insurance will allow you to do so.
If you purchase a brand new home for your retirement you will not have to worry about any improvements or home repairs, but otherwise you will probably want to make some upgrades so that your new property suits you and your lifestyle.
Make sure that you have some cash set aside for these improvements, as the time to make them is while you still have an income, not after. Again, renting out your home can help you accumulate some money to make upgrades and repairs, but it can also result in more wear and tear on your home as well. If you end up renting your house out for a couple years or more before you retire, you may want to make allowances for things like new carpet once you move in yourself.
Another nice aspect of buying your retirement home early is that it will give you a great idea of the expenses you will have once you retire. You will know all your monthly expenses such as utilities, taxes, and insurance in advance and have an opportunity to plan accordingly. This should give you some peace of mind and lower your stress levels when you are thinking about your retirement years. By making your purchase while you are still part of the workforce, you will knock one more thing off your list for retirement and make the whole process much easier and worry free.
You may also have the opportunity to find that your new home is not as ideal as you thought it would be and by giving yourself a chance to find out more about it before you are actually committed to living in it, you give yourself some additional freedom to make choices.
If you pick out a home in a vacation area and spend several years visiting it only to decide you don’t like the area as much as you thought, you still have the opportunity to sell the home and find another one that suits you rather than having to commit to it 100% just because you are retired and don’t have other options. Flexibility is a great thing when it comes to your retirement and your peace of mind as well.
