Author Topic: Father looking to downsize.  (Read 3042 times)

moosejaw

  • 5 O'Clock Shadow
  • *
  • Posts: 43
Father looking to downsize.
« on: June 30, 2017, 05:05:03 PM »
My father and his wife are looking to downsize.  I am unsure of all of their assets but I assume he has 1,000,000+ in investments, and their paid off home is likely worth 2.25 mill.  They love the house they are in but getting a bit older and a tad rickety they want to move to a home without stairs.

Due to the area they live in, housing prices are on fire so it's not seemingly as simple as downsizing into a $500k home as they don't really exist in the area they currently live.  A downsized home in a good area is about 1,000,000 in the city limits of Seattle.

Do any of you have suggestions on what you would do in an attempt to downsize?  How you would invest the funds, and if you would purchase another home, rent, invest a certain amount of the proceeds?

Please be as specific as you can.

deborah

  • Walrus Stache
  • *******
  • Posts: 8781
  • Location: Australia or another awesome area
Re: Father looking to downsize.
« Reply #1 on: June 30, 2017, 09:38:35 PM »
You haven't said how old they are, but a tad rickety is a clue. My parents house was too much for them, so they downsized. looking back, I am sure that they should have gone into a retirement village at that point. Instead they bought another house (even one with stairs, although they were a tad rickety). They have recently moved again. To another house. They had been in it for less than 6 months, and it looked like dad needed much more care. And it is too much for mum. So they are looking at what they should do. An aunt and uncle moved into a retirement village at about the time my parents moved the first time, and they are settled into the community, and have people around them who are friends. Even though one of them is starting to develop dementia, they are fine because they were there long before it started (it's very difficult for people with dementia not to go downhill rapidly when they are placed in a new environment).

As I'm in a different country to you, we have different services available. Here, you can get aged care assistance in the home of various sorts, and this enables people to stay in their own home for much longer. This has only recently become available. Before your people move, you/they should investigate the options available to see what is the best fit for them, and what will be the best fit in a few years time. My parents never even thought of moving to a retirement village the first time, but given that dad is getting forgetful, it would have been wise for him to have a solid memory for where he lives at this stage in his life.

chrisgermany

  • Stubble
  • **
  • Posts: 158
Re: Father looking to downsize.
« Reply #2 on: June 30, 2017, 10:59:59 PM »
Give them a test week in assisted living or a retirement village.
A test week 'just so that you know how it could be' did the miracle for my mom.
« Last Edit: July 01, 2017, 03:03:09 AM by chrisgermany »

MayDay

  • Magnum Stache
  • ******
  • Posts: 4015
Re: Father looking to downsize.
« Reply #3 on: July 01, 2017, 03:27:40 AM »
My grandfather has a one level condo in a 55+ condo development. Brilliant. He does zero house maintenance type stuff.

But I agree with others that a retirement community with levels of service would be ideal. First you move into a condo or apartment, and they can add care all the way up to full nursing.

Llamo just helped her mom move into one in the Seattle area. You might consider consider PM'ing her.

I don't know why the Oldz are so resistant to these places. They look amazing to me. I am definitely moving in to one!

Cranky

  • Handlebar Stache
  • *****
  • Posts: 1753
Re: Father looking to downsize.
« Reply #4 on: July 01, 2017, 05:38:52 AM »
How rickety is "a tad"? And how old are they? There's a big unspecified range there.

If I were looking for less house but not assisted living, I'd go for a condo of some sort.

nouveauRiche

  • Bristles
  • ***
  • Posts: 376
  • Location: HCOL - USA
Re: Father looking to downsize.
« Reply #5 on: July 01, 2017, 12:52:55 PM »
Are they still working?  What ties them to Seattle?  I don't know the area - could they get more for their money moving out of town?

I would also recommend getting a house that has at least one walk-in shower in case mobility becomes an issue in the future.

lhamo

  • Walrus Stache
  • *******
  • Posts: 9812
  • Location: Seattle
Re: Father looking to downsize.
« Reply #6 on: July 01, 2017, 07:20:56 PM »
It is absolutely not true that you have to spend 1mill to get a suitable small home in Seattle -- certain neighborhoods, maybe (Laurelhurst, etc), but not throughout the city.  And if they DID want to spend that much, they certainly could -- there would be plenty to live off of with their investments and the proceeds from the large house.

The challenge right now is that the market is so tight unless you can make a cash offer you may not even be able to get your foot in the door.

I would suggest they sell the big house and move into a nice condo in a walkable neighborhood to see how they like that lifestyle.   If they don't like it, they can then purchase a smaller house, for cash, in whatever neighborhood they like.  If they like it, they can purchase a condo if that makes more sense long-term.

moosejaw

  • 5 O'Clock Shadow
  • *
  • Posts: 43
Re: Father looking to downsize.
« Reply #7 on: July 03, 2017, 11:20:01 AM »
Hi All,

Thank you for the kind replies.  I am glad I waited to respond as I originally felt that my term "rickety" was a bit harsh.  However, his wife will be going for her second hip replacement, and he is 6'4 and needs a knee replacement very soon.  They are only 64 and 66 respectively.  So not very old, but the need for a one level home is important.

The mention of a million dollar home is due to where they currently live and would like to stay in a nice area, and have a comparable but smaller house/condo.  While I don't disagree that a home can be found for 500k somewhere in King County, that certainly is no longer the case on Queen Anne, Magnolia, unless there is something severely wrong with it.  The starting prices for homes on QA is in the 750k range, but those are usually tear downs at this point.

My fathers idea was to invest a 3rd of the home proceeds in an annuity that would return 5%, and supposedly pay for renting a condo.  However the condo/apt they just looked at start at $4200 which leaves the interest return about $1400.00 short from an annuity.  The rental market downtown is just outrageous.  This would be for a 2 bedroom apartment.  They want to stay in the area because of grandkids and they still want to remain in the area they know.

After seeing the cost of rent in the upper tier apartment buildings I thought of a scenario like this:

Buy a $750-900k home or condo, put $300k down, and let the annuity pay the mortgage in perpetuity.  The original concept of not having a payment by putting 100% down doesn't seem to make a ton of sense, but if the mortgage would be a lot less than the rent they would be paying, I have a tendency to want to lean to that direction.

Any thoughts now that I have clarified a few things?

deborah

  • Walrus Stache
  • *******
  • Posts: 8781
  • Location: Australia or another awesome area
Re: Father looking to downsize.
« Reply #8 on: July 03, 2017, 11:34:40 AM »
If they've had hip replacements, a senior living or 55+ community or similar is an even more reasonable option.

moosejaw

  • 5 O'Clock Shadow
  • *
  • Posts: 43
Re: Father looking to downsize.
« Reply #9 on: July 03, 2017, 11:37:58 AM »
If they've had hip replacements, a senior living or 55+ community or similar is an even more reasonable option.

Hi Deborah, the most suitable 55+ community is a bit of a distance from Seattle in Redmond, WA.  There are a couple options condo and townhome wise but 2 are extremely cost prohibitive and another is a little too old folks home for where they are at.

I had actually thought the same thing so I became familiar with the options.

lhamo

  • Walrus Stache
  • *******
  • Posts: 9812
  • Location: Seattle
Re: Father looking to downsize.
« Reply #10 on: July 03, 2017, 11:44:22 AM »
I know someone who just bought a very nice 2br, 1ba condo on Queen Anne for 545k. Rentals in the building are going for around 2500/month.  They need to look at more places and not assume that one or two luxury buildings are representative of the entire market.

Not sure I agree with the annuity idea -- they would probably be better off buying shares in something like Vanguard Wellington/Wellesley and getting better returns with slightly more risk.   Annuities are very expensive in the current low interest market.

deborah

  • Walrus Stache
  • *******
  • Posts: 8781
  • Location: Australia or another awesome area
Re: Father looking to downsize.
« Reply #11 on: July 03, 2017, 11:49:49 AM »
Annuities also tend to give better returns if you start older. They were going to give my elderly parents a reasonable amount, but 65 year olds just don't make the cut.

moosejaw

  • 5 O'Clock Shadow
  • *
  • Posts: 43
Re: Father looking to downsize.
« Reply #12 on: July 03, 2017, 11:52:58 AM »
I know someone who just bought a very nice 2br, 1ba condo on Queen Anne for 545k. Rentals in the building are going for around 2500/month.  They need to look at more places and not assume that one or two luxury buildings are representative of the entire market.

Not sure I agree with the annuity idea -- they would probably be better off buying shares in something like Vanguard Wellington/Wellesley and getting better returns with slightly more risk.   Annuities are very expensive in the current low interest market.

I was feeling the same way in regards to the annuities and will pass on the Vanguard recommendation.

The condo price varies a great deal based on his wants.  Condo wise he would insist on being in a concrete and steel building which ups the value.  They want one level, and likely 1200-1600 sq/ft which puts them at the higher end of things.

Cranky

  • Handlebar Stache
  • *****
  • Posts: 1753
Re: Father looking to downsize.
« Reply #13 on: July 04, 2017, 07:30:56 AM »
If they can get $2 million for their current home, why not downsize to something they like for $1 million? I'm not really seeing the issue. They should buy what works for them. It's a nice problem to have.

moosejaw

  • 5 O'Clock Shadow
  • *
  • Posts: 43
Re: Father looking to downsize.
« Reply #14 on: July 04, 2017, 12:43:31 PM »
If they can get $2 million for their current home, why not downsize to something they like for $1 million? I'm not really seeing the issue. They should buy what works for them. It's a nice problem to have.

I think my question at this point is two fold:

What is the best scenario for the money, e.g. buy a home outright, or have a down payment and invest the remaining amount to generate interest that will afford payment plus give a write off etc.

Next question is the best logical investment options.

Cranky

  • Handlebar Stache
  • *****
  • Posts: 1753
Re: Father looking to downsize.
« Reply #15 on: July 04, 2017, 12:55:37 PM »
I am not an investment expert, but I am pretty old. ;-)

I'd say that by your late 60's, it's pretty good to spread your investments around, and a paid for house is a pretty good investment, especially if you've got another million or two stashed away.