Retirees Look to Build Smaller, Custom Homes

Many people seek to downsize their home in retirement—but not their home buying wish list. Retirees reportedly are flocking to smaller newly built homes customized to their personal needs and tastes.

One advantage older home buyers find with these custom homes is that they can be built to accommodate medical conditions or physical restrictions, such as wider hallways to accommodate mobility devices. The home also can be outfitted with age-in-place features such as outdoor ramps and lower kitchen cabinets.

Retirees are looking to cut back on home maintenance and repairs, which is why their preferences are straying away from larger, older homes. However, building a custom home can be stressful because of the wide availability of options. Real estate experts recommend researching building plans and contractors carefully to make sure buyers get the type of craftsmanship they seek.

Source: “Retirees Turning to Custom Homes to Get the Right Space,” RISMedia (June 22, 2017)

Should Retirees Remodel or Relocate?

The decision on whether to renovate or relocate in retirement can be complex and emotional. A recent report revealed that as people edge towards retirement age, the more they value the emotional connection to their home rather than the financial value.

After meeting with remodeling experts, architects, real estate pros, and financial advisors, these remodeling guidelines should be considered:

  • Think about how long you plan to stay in the home and spend the money that’s comfortable to continue to enjoy living there.
  • Consider the potential consequences of the remodeling plan, so remodelers don’t have to go back and fix previous jobs.
  • Talk to a local real estate professional who knows the neighborhood and can advise on features that are currently in demand for potential buyers.
  • Focus on features that will improve the curb appeal and the overall value of the home.

Source: “Renovation vs. Relocation in Retirement,” The New York Times (April, 10, 2015) and “Most Americans Want to Move in Retirement,” REALTOR® Magazine Daily News (April 3, 2015)

 

A “New Breed of Investors” Steps Forward!

“Mom and pop investors” are trying to capitalize on a depressed real estate market in the hopes of one day being able to cash in. An article in USA Today highlights this new breed of small-scale investors who like to buy and hold properties, opposed to the high-dollar large investment firms that once dominated the real estate market who preferred to buy and flip their property investments. 

For “mom and pop investors,” the strategy is to buy homes at rock-bottom prices, rent the properties out to cover costs of home ownership for several years, and then one day sell the homes when prices recover. “An unprecedented number of investors are looking into this,” John Burns, CEO OF John Burns Real Estate Consulting, told USA Today. We find some buy for eventual relocation to another area for retirement.

For investors in the rental market, an 8 percent annual return is fairly normal, according to Burns. “That means that someone who buys a $100,000 property — and pays cash for it — makes $8,000 a year after expenses, including maintenance and taxes,” the USA Today article notes. 

The threats of tenant or maintenance issues may be the potential to derail that potential profit, so investors need to be careful. Many of the investors we work with are cautious and seek advice from their real estate agent, property managers or other experts. 

Source: “Mom and Pop Investors Propping Up Home-Buying Market,” USA Today (Feb. 14, 2012)