Dallas Real Estate And Retirement Planning

5 Common Mistakes Retirees Make With Real Estate

Have you recently retired or are you planning to retire soon? Everyone wants to live a comfortable lifestyle after they quit working, but all too often people make a few simple mistakes that can create huge headaches and financial struggles for their retirement years. If you can avoid these real estate mistakes, you’ll have a much better chance of enjoying the kind of retirement you’ve always dreamed of.

Neglecting to Downsize

When your kids were young and lived with you, you needed a lot more space. Now they’ve all grown up and moved out, and you’re still living in that large house with all of those extra bedrooms. That house may have room for everyone to stay with you for the holidays, but it also comes with big utility bills and maintenance costs, too. Downsizing to a smaller home can greatly reduce your cost of living, which can make your retirement funds go a lot farther.

Keeping Two Homes

Worse yet, a lot of retirees maintain summer and winter homes, sometimes in different states. Keeping two properties means paying two mortgages, paying at least double the property taxes, and paying to maintain both houses and properties. That’s a huge drain on your finances, and it can lead to a lot of problems for you financially.

If you really want to live part-time in one area and part-time in another, make sure that both properties are small and have low maintenance costs. You may even want to invest in a timeshare so that someone else pays for the property you’re not living in when you’re not there. In most cases, it makes more sense to save money by selling one of your properties or at using it as a rental investment property instead of keeping up two homes.

Failing to Invest Profits From Downsizing

When you sell a bigger home and buy a smaller one, you’re more than likely going to have some profits. That’s great, but you shouldn’t spend them on vacations or sundry items. Instead, invest them in real estate and/or other investments that will give you a positive return to continue funding your retirement.

Failing to Research Before You Relocate

If you’re like a lot of retirees, you probably dream of relocating to a beautiful, sunny area where you can enjoy all of your favorite leisure activities whenever you please. You may have been dreaming of living in California or southern Florida for years, but what do you really know about living in these places? Will you have access to doctors and caregivers in your insurance provider’s network? What about the cost of living in your chosen area? You should thoroughly research any new location before you commit to buying a house there and moving.

Continuing to Pay a Mortgage in Retirement

Finally, we’re not saying that you should just stop paying your mortgage. However, if you sell your larger home and buy a smaller one, you will likely be able to pay in cash. Even if you can’t, with the returns from your investments, you should be able to pay down your mortgage fairly quickly so that you can be free of it and enjoy your retirement income without worrying about how you’ll pay your bills.

These real estate mistakes can make life really hard on retirees, and they can result in major financial problems. If you want to enjoy your retirement instead of pinching pennies and worrying if you’ll make it until your next Social Security check comes, avoid these mistakes and diversify your investment portfolio with income properties that will continue to supplement your wealth throughout your retirement.