Ralph R. Roberts

Article / Updated 08-03-2023

To a great extent, successful downsizing relies on careful planning. Of course, even with the perfect plan, you’re likely to encounter unexpected challenges. We know a couple who planned impeccably and still had to downsize three times before they finally found the right fit. However, a well-laid plan can help you avoid many of the most serious and unpleasant surprises and recover more easily from those that are unavoidable. In this article, we give an overview of the basics of downsizing planning. Downsizing, like any project, begins with the process of setting a goal. In this case, the goal revolves around lifestyle and housing — where and how you’re going to live during the next stage of your life. In the following sections, we break down this goal into three factors: Lifestyle Location Housing Considering different lifestyle options Lifestyles are difficult to pin down because of the sheer number of options and the fact that different lifestyles often overlap and intersect, but here’s a short list to get you thinking about the lifestyle you envision: Active versus sedentary Activist (campaigning/working for political or social change) Agrarian (living off the land) Aquatic (swimming, fishing, water sports) Communal versus independent Conventional versus Bohemian (unconventional, artistic, adventurous) Entrepreneurial (innovative, business-oriented) Minimalist (living with very few possessions) Settled versus nomadic Traditional (living in small groups, hunting, gathering, herding, farming) Urban/suburban Imagine what you’ll be doing most days, where you’ll be doing it, and with whom. Your vision reflects your lifestyle. If you’re hanging out in coffee shops, visiting museums, and dining out with friends and family members, for example, you’re probably going to want to live in a more urban setting. If you’re tending a garden and feeding chickens, you’re leaning toward a more rural/agrarian lifestyle. If you’re crisscrossing the country in an RV, you’re more nomadic. Choosing a location If you’re planning a nomadic lifestyle or opting to downsize in place (without moving anywhere), choosing a downsizing destination is moot. Otherwise, location can be a huge factor in your downsizing decision. Start by choosing a general location, such as a country or a state, and then narrow your choices to more specific areas. Consider the following factors: Affordability Climate Surroundings Proximity to family and friends Cultural and social opportunities Convenience Safety (crime stats) Job/career opportunities Exploring your housing options Although you can downsize in place (without moving), downsizing often involves moving to a smaller place — usually one that’s more affordable and easier to care for. Housing options vary considerably, as reflected in the following list: Apartment Assisted living facility Condominium (condo for short) Existing home (usually a single-level ranch-style home for downsizers) Modular home (built off-site and placed on a lot) Multigenerational home (moving in with your adult children) New construction (single-family home or condo) Retirement community (typically for people over 55 or 60) RV Skilled nursing facility Tiny home Townhouse, duplex, or triplex (two or three homes that share a wall but have separate entrances) When your goal is affordable housing, consider not only the rent or mortgage payment but also any amenities a housing option offers, such as a pool, hot tub, walking trails, parks, fishing ponds, gym, social activities, and meal plans. These amenities can save you a considerable amount of money on travel, recreation, and entertainment. Establishing your timeline When you have a downsizing goal in mind, set a deadline — the date you’d like to be downsized. Are you looking to be downsized next week, two months from now, or more like three years from now? It’s never too early to start planning. After setting a deadline, break down your goal into realistic milestones, so you have a timeline for getting everything done. You may want to set milestones for the following activities: Meet with a financial advisor to evaluate my finances. Meet with an attorney to plan my estate. Find a new place to live. Sort my belongings. Organize my photos and documents. Sell stuff. Pack. Sell my home. Move into my new home. Your timeline and milestones are unique to you. For example, if you’re planning a more nomadic lifestyle, your timeline may include travel plans, such as getting a passport, arranging transportation, and reserving places to stay. If you’re downsizing in place, obviously, you don’t need to sell your home, find a new home, pack, or move. Creating to-do lists Create a to-do list for each milestone to break them down even further. For example, if you’re planning a garage or estate sale, you may have the following to-do list: Set dates and times. Get change. Get shopping bags and boxes. Advertise. Place street signs. Organize and arrange items for sale. Mark prices. If you’re preparing to meet with your financial advisor, your to-do list may be a list of information and documents your financial advisor needs, along with questions and concerns you want to discuss. Drafting a budget Regardless of where and how you choose to live, it needs to be affordable, so take the following steps to draft a budget: Total your monthly income from all sources, such as the following: Income from work or business Social security payments Pensions/annuities Investment income Reverse mortgage payments Total your anticipated monthly expenses, such as the following: Housing (rent or mortgage, insurance, property taxes) Utilities (gas, electricity, water, trash, phone, television, internet) Groceries/meals Recreation/entertainment (concert tickets, sporting events, vacations, hobbies) Transportation (vehicle payment, insurance, fuel, maintenance and repair; public transportation; or ride-sharing services such as Uber and Lyft) Medical (insurance premiums and out-of-pocket costs) Clothing and shoes Personal care and miscellaneous personal expenses (toiletries, cosmetics, gym memberships, dietary supplements, home décor and furnishings, gifts, and so on) Subtract your monthly expenses from your monthly income and hope the result is positive. If it’s negative, you need to trim your expenses and come up with other sources of income.

Article / Updated 04-25-2023

Selling a home can be very nerve-wracking, so you may be tempted to take the first offer that comes along. Be careful! Potential buyers can be problematic if you don't know what to look for. Not all offers are created equal, so if you jump at one too soon, you could end up breaking the law, tying up the sale of your home, or seeing your home sale fall through. Here are some signs of potential trouble when looking at offers on your home: The buyer requests a cash-back-at-closing deal. Here, the buyer offers you more than the home is worth if you agree to kick back the extra money at closing. This practice is fraudulent and can land you in jail. The buyer isn't pre-approved for a mortgage loan. This person can tie up your home, preventing you from considering better offers. The buyer offers no or very little earnest money deposit (EMD). The lower the EMD, the more likely the deal will fall through. The buyer makes the purchase agreement contingent on the sale of his home. For your home to sell, several other transactions must occur first. This is known as the domino effect, and you should avoid it, if possible. This type of contingency ties up the sale of your house with no guarantee that the interested parties will ever actually go through with the deal.

Article / Updated 12-06-2022

Unless you’re downsizing in place, the process involves moving out of one home into another or living as a nomad, traveling from one place to the next. Whatever you decide, you can be sure of one thing: You’re about to make some very big decisions. Addressing your changing priorities Over the years, your choice of home was probably driven, at least in part, by a growing family and accumulating wealth. You needed more space to house your family and possessions. When you’re downsizing, especially if you’re nearing a certain age or experiencing physical or cognitive challenges, your priorities change. Whether you’re buying an existing home or building a new home from scratch, you must consider features that may not have crossed your mind in the past, such as the following: Proximity to caregivers and to everything you need with convenient and affordable transportation (so you don’t have to drive anywhere) Single-level home (so you don’t have to climb stairs) Step-free entrance Wider doorways (to allow access for a walker or wheelchair) Patio versus a large yard (so you have less outdoor maintenance) More efficient use of vertical space (because you have less square footage) Lever handles (instead of knobs) on doors and cabinets Nonslip flooring Shower with no-step entry, grab bars, and adjustable showerhead Raised or adjustable-height toilet Automatic or rocker light switches Hands-free faucets or faucets with lever handles Lower cabinets or cabinets with pull-down shelves Multilevel or adjustable countertops Availability of assistance, such as meal preparation, housekeeping, and nursing Selling your home Regardless of whether you’re planning to buy a new home or move to a rental unit, or you have some other living arrangements in mind, if you own a home you’ll need to sell it. As you plan to sell, keep these key points in mind: List your home with a top-selling Realtor in your area. You’ll earn enough extra by listing with a top-selling Realtor to more than cover the commission. Realtors specialize as seller’s agents or buyer’s agents. Choose a seller’s agent — you want someone in your corner who can sell your home fast for top dollar. (Some real estate teams have both buyer’s and seller’s agents, enabling you to buy and sell through a single group.) Follow your Realtor’s recommendations to make repairs and updates to your home to bring it up to market value, but don’t over-improve the property. In other words, don’t invest more than you can ever hope to recoup from the sale. Buyers aren’t looking for million-dollar homes in neighborhoods where most of the properties are selling for $400,000 or less. If you’re expecting a profit of more than $250,000 (or more than $500,000 for a couple) from the sale, consult your accountant to discuss the tax implications. If your area is experiencing a housing market slump, consider postponing the sale until the market recovers. However, if you don’t expect the market to recover anytime soon, you may be wise to accelerate the sale. A good Realtor can help you make the best decision. In a sizzling housing market, consider buying a new home before selling, so you don’t end up selling with no place to move into. In a down market, you may be better off selling first, so you don’t get stuck with two mortgage payments. Buying a new home When you’re in the market for a smaller home, take your time to find exactly what you’re looking for. Imagine that your new home will be the last home you’ll ever own. Does it have the potential to serve your current and future needs? Work closely with a Realtor (a buyer’s agent) to explore your options. Develop a comprehensive list of everything you’re looking for, but be open to suggestions from your Realtor, who may bring up factors you haven’t considered. Provide as much information and insight as possible, including the following: Price range Size (square feet) Number of bedrooms and bathrooms Style Location Amenities (pool, clubhouse, gym, social activities, and so on) Whether you’ll need assistance (meals, housekeeping, nursing) Your current situation, including why you’re downsizing Whether you plan to pay cash or finance the purchase Exploring other living arrangements When you’re downsizing, owning a traditional home or condo isn’t the only option. You may want to consider other living arrangements, such as the following: Couch surfing — a series of brief stays with friends and family members Traveling and living in a van, bus, or RV Living on a boat/houseboat Living in an alternative structure, such as a tiny home, treehouse, shipping container, or yurt (portable round tent) — don’t knock it until you’ve explored these options Living in a commune — a property shared by people with similar interests and goals Sharing a home with friends or family members Worldwide Opportunities on Organic Farms (WWOOF) makes it possible to volunteer on organic farms around the world in exchange for shelter, food, and sometimes pay.

Article / Updated 12-06-2022

Downsizing can mean anything from scaling back on living space and possessions to choosing a completely different lifestyle. When you’re deciding whether to downsize, you need to do a gut check — honestly evaluate your situation and your mindset. Your situation may be that all your children have moved out and you have far more home than you need; or your expenses are rising and you’re afraid of running out of money before the grim reaper pays a visit; or you’re bored and you want to finally pursue your dream of joining Cirque du Soleil. You need to evaluate where you are and where you want to be when you’re deciding whether to downsize. Likewise, you need to look inside yourself to get a sense of what you really think and feel about downsizing. What’s your vision for the next 10 to 20 years of your life? What will you be giving up? What do you expect to get in return? Are you looking forward with confidence and excitement or fear and trepidation? If you don’t have a solid plan that you’re fairly certain will make you happier, you run the risk of being disappointed and getting discouraged, so take some time to analyze both your situation and your mindset. Examining your situation To discover your why (or why not) for downsizing, examine your current situation by answering the following questions: Is your situation such that you have no choice but to downsize? For some people, downsizing isn’t a choice. Financial strain, health conditions, or pressure from family members may compel you to downsize, regardless of whether you want to. Even if you’re being compelled to downsize by forces outside your control, taking the initiative and being proactive can give you more control over the outcome. Don’t just throw up your hands in despair; be an active participant as much as you’re able. Are you leading the life you want to live? If you feel as though you’re a victim of circumstance or you’re living passively and simply reacting to decisions that other people make, you may want to downsize to start living your life with intention — living your dream instead of enabling others to live theirs. Sometimes, having a big house and lots of possessions can be like wearing a ball and chain. Are you lonely? You may be able to improve your social life by downsizing and moving to a community where you’re more likely to meet compatible individuals — for example, an over-55 community with lots of social activities. (In Rochester Hills, we don’t call them senior centers; we call them OPCs — older people’s centers!) Is your home too much for you to clean and maintain? If your home is falling into disrepair, or your housekeeping is starting to slip and you can’t afford to hire out the work, it can be a sign that you’re ready to downsize. Are you burning through your savings? Ideally, you want to die without a penny in savings, meaning you enjoyed your money while you lived. But perhaps you want to leave some money behind for your survivors. Whatever the case, examine your finances carefully to make sure you’re not burning through your savings too quickly. If you are, downsizing may be the solution. Do you have more house than you need? If you have rooms that you never use, you may be a good candidate for downsizing. Or you can lease those rooms to generate additional income. Do you need to unlock the equity in your home to finance your dreams? If you have significant equity in your home (you can sell it for much more than you owe on it), you may want to sell your home to cash out your chips and use the proceeds to support the lifestyle you envision for yourself. Of course, other options are available for unlocking the equity in your home, such as refinancing or opening a home equity line of credit (HELOC). If you were to die today, would you leave a total mess for your loved ones to deal with? Do you care? Many people downsize to ease the burden on their loved ones, in which case moving to a more manageable home, shedding possessions, and organizing documents become top priorities. However, if you’ve already done a fantastic job of organizing everything and living simply, downsizing may be unnecessary. Do you need assistance with medical or personal care? If your health is declining or you simply need a little more help than in the past, downsizing can be an opportunity to move into housing where you can get the help you need. Are you and your partner on the same page? If you have a partner and one of you wants to downsize while the other doesn’t, that can be a deal breaker.

Article / Updated 03-30-2022

When renovating a property that you intend to flip, don't get carried away. Some home flippers hire top-of-the-scale contractors and insist on the highest-quality building materials from the nearest suppliers. To help you avoid that trap, here are 11 secrets that can slash your cash outlays and boost your bottom line. Get free advice and planning tools. You don't have to hire a professional interior designer to draw up plans for remodeling a kitchen or bathroom. Most home-improvement stores have their own designers on staff to assist you. If you purchase the materials from the store, the store frequently throws in the design consultation for free. And who can say no to free? You can often find additional planning tools and calculators online. Large home-improvement stores and manufacturers typically feature cost estimators, material lists, and installation instructions and tips on their websites. For some excellent online resources for planning your projects, check out Lowe's, Home Depot, and Bob Vila Design Tools. Hire moonlighters. Large construction companies often have large overhead costs, so they have to charge more for their work. A roofing company, for example, needs to purchase and maintain its trucks, pay rent on office space, and cover payroll expenses and insurance for its workers. To earn an extra buck on the side, the employees of many of these companies moonlight, which means they provide the same high-quality service on the side for a fraction of the cost. You can often locate prospective moonlighters by visiting worksites in your neighborhood. Ask to see the boss, and if he's not around, pitch your proposal to the workers. If the boss is around, you can ask him for an estimate without blowing your cover. Hiring moonlighters is a great idea, but make sure they have health insurance with accident coverage. If your workers don't have proper insurance and one of them gets hurt working on your house, your cost savings could quickly be sapped away by losses. If the moonlighters don't have insurance, buy an insurance policy that includes accident coverage for workers. Hire students over the summer. When school's out, college and high-school students flock to area businesses to secure summer employment, and they're often turned away because so many people are looking for jobs. That's where you come in. Post an ad in the local newspaper or contact high schools and colleges in your area to let them know you're looking for summer laborers. Students are eager and well-qualified to perform the following renovation chores: Mowing, weeding, trimming bushes and trees, and planting flowers Patching and sealing driveways and walks De-cluttering garages, basements, and attics Vacuuming, window washing, and other cleaning Demolishing old storage sheds Tearing out old carpeting Patching and painting inside and out Refinishing decks Buy overstocked or discontinued building materials. When you wander the aisles at your local hardware or building-supply store, find what you want and then ask about any overstocked or discontinued materials that are similar in appearance. Talk to the manager, who most likely wants to clear the old, overstocked items from inventory to make room for the new merchandise that's in greater demand. You can often purchase overstocked or discontinued merchandise for a fraction of the cost. Buy builder's-grade materials. When shopping for building materials, ask the salesperson to direct you to the builder's-grade materials — the more affordable options, such as prefab cabinets and low-grade carpeting. If installed and maintained properly, these materials are perfectly suitable for most markets. If you're flipping on the ritzy side of town, however, you may need to buy the good stuff. Gauge your selection of materials by the visibility and importance of the rooms. Consider using higher-quality materials for the kitchen, main bathroom, and master bedroom and a lesser quality for the other bedrooms and the second and third bathrooms. Use remnant material to trim your costs. Carpeting stores, countertop manufacturers, and other suppliers often have remnants in the back that may be sufficient for completing small jobs. Picky customers often return items that have tiny scratches or dents as well as materials that they cut a little too short. These gently used materials may be just what you need, and you can pick them up for pennies on the dollar. Buy time-saving power tools. When you hire a contractor, you indirectly pay for the tools that make the job much easier. When you rent a tool, you have to return it. When you buy your own tools, however, you have them for as long as they work, and you can spread the cost over several flips. If you're a do-it-yourselfer, buy the tools that make it easier for you to do a professional job. In addition to the standard hammers, pliers, wrenches, screwdrivers, tape measures, paint scrapers, and paintbrushes, almost every house flipper can simplify do-it-yourself jobs with the following power tools: Heat gun for stripping wallpaper and paint Power washer to clean everything from decks to siding Power roller for painting inside walls and ceilings Cordless drill with a well-stocked drill-bit case Screw gun with Phillips and flat-head screw bits Circular saw for decks and other woodworking projects Reciprocating saw for cutting anything you can't cut with a circular saw Nail gun for quick and easy single-handed nail driving Vibrating sander, or belt sander, for sanding out scratches and gouges in wood surfaces Charge purchases on a rewards-back credit card. Credit-card companies offer some pretty sweet deals to reward customers for using their cards, and as long as you pay the balance in full when you receive the bill, you're not socked with high interest charges. If your building supplier offers its own credit card, you may get a discount on all purchases. If not, shop around for other cards. Companies offer everything from cash-back deals to frequent-flyer miles, free merchandise, free groceries, 0 percent interest for a specific period of time, and other attractive benefits. Take full advantage of these perks. Schedule work off-season. During the off-season, larger companies have to keep their employees busy in order to pay them and finance their benefits. Use this as a bargaining chip when negotiating the cost of repairs and renovations. However, don't delay a project that needs to be done just to save a few bucks — holding costs (the cost of maintaining a flip) can outstrip any savings. You reap two additional benefits by scheduling work off-season. The contractor is more likely to complete the job on schedule and is generally more responsive when you need her services in season. Pool your projects. Most skilled laborers charge a minimum for just showing up. You pay for their time and travel expenses no matter how small the job. To save money, pool your projects. You can draw up a list of projects for the plumber, a list for the carpenter, and another list for the electrician. Have them complete all the projects in one trip. Better yet, if you have several houses going at one time, ask the contractor whether she'll consider giving you a discount if you guarantee that she can work on all your properties. Talk with your neighbors. If they're having the same work done on their homes, you may be able to negotiate a better price for multiple jobs. Rent a large Dumpster (a.k.a. skip) for all the tear-out and construction debris so all your contractors have one place to dump rubbish from your flip. By supplying the Dumpster, you can tell your contractors to remove the cost of waste removal from their estimates.

Cheat Sheet / Updated 03-30-2022

"Flipping houses" sounds as easy as 1-2-3: 1) Buy a house significantly below market value, 2) fix it up, and 3) sell it. However, when you actually try to flip a house, you soon realize that it's tougher than it sounds. The beginner faces several hurdles, not the least of which is tracking down properties with potential and buying them for cheap. This Cheat Sheet brings you up to speed in a hurry on house flipping basics and helps you clear the most common hurdles.

Cheat Sheet / Updated 03-01-2022

Foreclosure investing is complicated and risky. I’ve seen individual investors lose tens of thousands of dollars at a single auction simply because they had no idea what they were doing. You’re smart to study up on the process before putting any money on the line. This Cheat Sheet will get you up to speed in a hurry on foreclosure investing and help you steer clear of some of the major pitfalls. However, I strongly encourage you to study up on the foreclosure process in the location (state and county) where you choose to invest, and hire an attorney with foreclosure experience to cover your back, at least for your first few investment properties.

Article / Updated 03-08-2017

When you're just getting started, be sure to pick an easy property to flip — a great house that's merely cosmetically challenged. Then make the following improvements: Clean everything thoroughly. Repaint the interior walls, all white. Install new wall-to-wall carpeting where it makes sense to carpet. Replace all light-switch and outlet covers. Spruce up the landscaping. The idea is to freshen up the house on the cheap to give it a nice, clean, manicured appearance. If possible, time the sale for spring or fall, when demand is typically higher or be prepared for the house to linger on the market if you plant your For Sale sign in the winter.

Article / Updated 03-08-2017

Flipping houses is an expensive endeavor. You need money to purchase the property, renovate it, pay the bills for the duration of the project, and sell the property. Where will you find the money to finance your house flips? Here are a few sources to consider:: Your own savings Home equity loan or line of credit (on your current home) Bank loan (you'll need cash for a down payment) Personal loans (from friends or family members) Government loan (if you're buying from a government program) Hard money loans (from investors) After you purchase a property, you may be able to finance the repairs and renovations by refinancing to pull equity out of the property.

Article / Updated 03-08-2017

A key first step to profiting from a flip is not to pay too much for a house. When deciding how much to pay, estimate the amount you can reasonably sell the house for after fixing it up, and then subtract your expected costs, which include the following: Purchase price Cost of repairs and renovations Any back taxes due on the property Holding costs (property taxes, utilities, insurance, interest payments, homeowner association fees, and so on for the time you expect it will take to buy, fix, and sell the house) Any agent commissions and closing costs when selling the house Aim to earn at least a 20 percent profit after subtracting all costs.