I am a year and a half away from my retirement. I own a home in Illinois and a modest vacation home in Wisconsin. I’d like to sell my base condo and save several hundred dollars a month. I’ll end up with $100,000 in cash from the sale.
I would like to rent a townhouse or apartment in the same area. My plan is to downsize and rent a two-bedroom home for $1,400. When I retire and possibly downsize and rent, my vacation home will be used as an Airbnb ABNB,
Is it a good idea?
“Big stepis a column on CNET that examines the ins and outs of real estate, from navigating the search for a new home to applying for a mortgage.
Do you have a question about buying or selling a house? Do you want to know where your next step should be? Email Aarthi Swaminathan at TheBigMove@CNET.com.
First of all, congratulations, you’re nearing the end of your retirement streak and with two more homes!
Downsizing is definitely something to consider. With the rental market so bad, it might be best to put it off.
Keep in mind the fact that rents are rising steadily across the country. In the first five months of this year alone, rents rose 3.9%, according to the apartment listing.
Check out this crazy graph, showing how rents have changed year after year, from Realtor.com:
“You will probably live another 20 years. Your rent will increase steadily during this time. B. Scott Sadler, founder and chairman of Atlanta-based Boardwalk Capital Management, told me that instead of growing your wealth from real estate, you would be more susceptible to inflation.” You reduce your expenses by only a few hundred dollars per month, excluding taxes. I will not sell or rent.
Either way, “real estate is a long-term source of wealth,” he added.
Even if we hit a recession, and even with higher mortgage rates, home prices won’t go down for long. Check out this chart from the Federal Reserve Bank of St. Louis, which shows you that in the long run, homes will appreciate more.
““Short-term trends should not guide your decisions in the long-term.”“
“Short-term trends shouldn’t guide your long-term decisions,” Sadler said. “I don’t think people should be in a rush to sell their homes…close rooms if they are too big. Convert the lawn to landscaped spaces if maintenance is very important. Rent a room for a nurse, teacher or student if you want to pay off part of the mortgage. real estate.
Renting a spare bedroom can allow you to recoup some of the savings you may realize by moving to a smaller rental unit.
But your idea of renting your vacation home on Airbnb is solid.
Airbnb owners have been on a killing spree in recent months as millions of Americans resume vacation plans after the worst of the COVID-19 pandemic.
AirDNA said in a recent blog that demand for short-term rentals has shown very few signs of weakening. New bookings topped 17.1 million nights in May, up 2.6% from a year ago. Year-on-year demand is up 17.9% and more than 26.1% compared to 2019 before the pandemic.
In other words, you will be withdrawing money from Airbnb. Stay where you are now and enjoy the security of ownership.
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