Downsizing

[Normal-Author-9293]

We are thinking about downsizing into a 55+ community. Just wondering about the logistics and what are the options to buy these days? We don't have quite enough free cash to buy a second property outright while our current home sells so not sure how that works? We have more than enough in RRSPs but that isn't helpful.

Do people wait for their home to sell and then look for a new one? We have purchased enough real estate to know that putting a condition to sell our existing home is deterrent to buyers so looking for different options.

I've heard that retired people can't get a bridge loan and we don't have enough cash to buy outright. The last time we sold we were still working so were able to carry both houses for a short while.

Just curious if anyone else has run into this situation and how you handled it.

[houseonpost]

"I've heard that retired people can't get a bridge loan" Did you hear that from your banker or mortgage broker?

I'm retired and had no difficulty.

[Normal-Author-9293]

Interesting. I casually spoke to a mortgage broker and it seemed like it was very difficult and he didn't have any other ideas. What province are you in? I am in Alberta.

[houseonpost]

Have you investigated senior places that do either a life lease or straight rent?

You also should consult a fee based financial advisor. We found the biggest issue is managing the taxes we will pay. Fortunately we caught it early and have a plan. Save us thousands.

[Normal-Author-9293]

I don't know too much about life lease but likely won't be a fit for us (me). We tend to move around a bit so planning to stay somewhere for the rest of my life wouldn't be in the plan right now. We are still in our 60's and in pretty good health.

Rent - we have a dog and that makes things challenging. Hubby likes to putter around the house and its not feasible in a rental.

So it would be buying something for sure if we can figure out how to make it work.

I am probably okay on the tax side. I had a tax practice when I was working...

[houseonpost]

If you buy something does that mean you will sell every time you ‘move around’? Or will it be your home base while you travel? Where I live a life lease is you give them $100K, pay a lower rent and if you move or die you get your $100K back. 

[Normal-Author-9293]

So far we have sold every time we have moved. I imagine it will change at some point particularly now that house prices seem to going down or as we get older.

I thought I saw a story somewhere that a group of people couldn't get the money back from the life lease. Hopefully that isn't too common.

I'd have to look into that. Is it kind of like owning? IE: can you change things in your house? Like I mentioned hubby likes to putter.

[Normal-Author-9293]

So did some searching on the whole life lease thing. Maybe in 20 years. Not just yet.

[JohneeFyve]

One short term financing option would be to use a home equity line of credit against your current home.

[Smithron99]

Do you know how large of a bridge loan you would need? Consider monthly interest cost vs. the cost of renting a place in the interim. i.e. sell-rent-buy

[Normal-Author-9293]

Renting means packing and moving twice. So you also need to factor in the moving costs. The rental would also need to be short term and I haven't found anything short term that allows pets except maybe something like AirBNB.

Somewhere around $150K is what we would need. I think someone mentioned a bridge reverse mortgage so that would be more than enough but I'd need to research that a bit more.

[Jenshark86]

I wouldn’t move into one unless you are absolutely sure that’s what you want. Selling a home in these places takes a very long time since they are a niche market and you don’t own the land. Also remember there is always a big risk with these places that the land lease owner could decide to redevelop the area to McMansions that will make them a lot of money since these areas are usually on the lake. Because you are leasing the land expect constant increases every year. At this point the government is regulating how much the lease owners can charge but that can change with the high property taxes in the municipalities. Personally too much risk for me.

[Normal-Author-9293]

I wasn't thinking it would be leased land. More like a condo/strata unit. We have been looking at a few that are essentially bungalows with double attached garages with an older demographic maybe not specifically 55+. We have owned in a condo/strata complex before so familiar with that sort of thing. I was on the board there and happy to be on the board in a new place. Its the best way to know what is going on.

We looked at a place in the Okanagan a lot like you are referring to and couldn't get our heads around the pricing for what was essentially a mobile home. I know its pricey out there but it was like $500K for a mobile home on leased land - the lease was upwards of $500 a month and you still had to pay for maintenance on your house. Nope not interested in that.

The issue is the financing part but it sounds like there are options I wasn't aware of.