Sell, Rent, or Borrow? Best Ways to Use Home Equity in Retirement
04/02/24 • 24 min
2 Listeners
Listener Ray is wondering what to do with his home as he embarks on a nomadic, van-life journey in retirement. Should he sell it to finance his travels or retain it for potential appreciation and cash flow?
James explores the nuances of home ownership as an asset versus an investment. He considers cash flow and leverage as he looks at Ray’s three options – sell, rent, or borrow – while emphasizing aligning financial decisions with personal goals and aspirations.
Questions Answered:
Why shouldn’t I consider my home an investment?
What are the key financial considerations for retirees when deciding whether to sell, rent them out, or explore other options?
Timestamps:
0:00 - Ray’s question
1:56 - Why a home isn’t an investment
4:38 - Do you want to be a landlord?
8:22 - The financials
10:14 - Asset appreciation
11:30 - Cashflow
15:04 - Leverage
19:02 - What should Ray do?
20:33 - Reverse mortgage
Create Your Custom Strategy ⬇️
Listener Ray is wondering what to do with his home as he embarks on a nomadic, van-life journey in retirement. Should he sell it to finance his travels or retain it for potential appreciation and cash flow?
James explores the nuances of home ownership as an asset versus an investment. He considers cash flow and leverage as he looks at Ray’s three options – sell, rent, or borrow – while emphasizing aligning financial decisions with personal goals and aspirations.
Questions Answered:
Why shouldn’t I consider my home an investment?
What are the key financial considerations for retirees when deciding whether to sell, rent them out, or explore other options?
Timestamps:
0:00 - Ray’s question
1:56 - Why a home isn’t an investment
4:38 - Do you want to be a landlord?
8:22 - The financials
10:14 - Asset appreciation
11:30 - Cashflow
15:04 - Leverage
19:02 - What should Ray do?
20:33 - Reverse mortgage
Create Your Custom Strategy ⬇️
Previous Episode
Pay ZERO Capital Gains Tax vs Roth Conversions in Retirement: How to Determine Which is Best
Listener Drew asks about a tax strategy for juggling capital gains and Roth conversions. While it can be a complicated question – especially when large accounts are involved – James provides some general guidelines that can be helpful for anyone with similar gnarly tax strategy challenges in retirement.
In this episode, we’ll cover the extent to which required distributions will be an issue, what you need to alleviate that issue, and the timeframe within which you have to do that.
James explains how to work backward to project your various tax brackets and determine how to prioritize tax gain harvesting, Roth conversions, and other tax strategies.
Questions Answered:
What is tax gain harvesting?
What is the tax planning window and how do I use it to my advantage?
Timestamps:
0:00 - Drew’s question
2:50 - Determine use for each asset
5:59 - Tax gain harvesting
11:10 - Back to Drew
15:30 - James’ priorities for Drew
18:41 - Usually not either/or
20:07 - Working backwards
24:50 - General principles
29:50 - Tax planning window
32:16 - Summary
Create Your Custom Strategy ⬇️
Next Episode
At What Age Should I Work with a Financial Advisor?
Deciding to work with a financial advisor is about more than how much you've stashed away. It's also about determining whether an advisor's benefits outweigh the costs.
In your higher earning years, finances become more complex. More money means more decisions and more chances to make mistakes or miss out on opportunities. That's where a quality advisor can come in handy. They help you steer clear of bad investments, seize the right opportunities, and keep financial stress at bay.
Having more than one perspective to draw from is the key to well-informed financial decisions. Teaming up and talking it out, whether with your partner or a financial advisor, is always beneficial.
Questions answered:
How can I determine whether working with a financial advisor is worth it for me?
What factors should I consider when deciding if I need a financial advisor beyond just my age or income level?
Timestamps:
0:00 - Not an age-related decision
2:43 - Value and pricing structure
4:12 - Natural conflicts
7:24 - When benefit exceeds cost
10:02 - Cost of mistakes
12:18 - Cost of missed opportunities
14:16 - Cost of anxiety
16:02 - Thought partnership
21:36 - Summary
Create Your Custom Strategy ⬇️
Ready For Retirement - Sell, Rent, or Borrow? Best Ways to Use Home Equity in Retirement
Transcript
On today's episode we're going to be responding to Ray , who wants to know what he should do with his home as he prepares to retire and travel the country . Should he sell it and use the proceeds to live on to fund some of those travels , or should he keep it , taking advantage of the appreciation over time and potentially accessing the equity in another way ? All that and more
If you like this episode you’ll love
Episode Comments
Generate a badge
Get a badge for your website that links back to this episode
<a href="https://goodpods.com/podcasts/ready-for-retirement-218367/sell-rent-or-borrow-best-ways-to-use-home-equity-in-retirement-48005501"> <img src="https://storage.googleapis.com/goodpods-images-bucket/badges/generic-badge-1.svg" alt="listen to sell, rent, or borrow? best ways to use home equity in retirement on goodpods" style="width: 225px" /> </a>
Copy