Retiring & Downsizing Your Home In Kentucky
What should you do if you’re retiring, your kids moved out and you’re ready to downsize in Kentucky? You might think that the only option is to stay put and hold on to the home you have built up equity in for many years while you raised your family. Who has the money to buy an oversized house with multiple bedrooms anyways? How would you sell an oversized home in Kentucky? You may think this, but hold that thought!
We buy large houses in Kentucky and we’ve encountered many homeowners that bought a huge house in their early years when they were starting a family. Many times as the kids grow up and move out, the house becomes too large to manage and clean on their own. The bigger the house is, the more work there is to take care of it. The larger the house, the more nooks and crannies there are to clean.
On top of all the maintenance that comes with owning a monster sized home, once the kids are all grown up and move away, the house can become an anchor. You’re an empty-nester held down in one geographical area due to the large house and an even bigger monthly mortgage payment. Now that the kids have moved out, it becomes more important to have free funds to go see them and do what parents are meant to do – have fun in your golden years!
An oversized house in Kentucky can be tough to deal with. The shear size makes it exclusive as many buyers can’t afford to take down such a massive purchase. Even with bank funding, many do not have the capital to afford such a large house. As inflation runs rampant and property values appreciate overtime, it just makes it that much harder for a buyer to perform on this particular type of home purchase.
Before you get started thinking about ways to give it away and move on, consider a few of our practical solutions that will help you downsize your home in Kentucky – and retain your stored equity.
Rent Out Your Home & Downsize To A Smaller One
If you took out a debt to purchase the home you are still responsible for the mortgage. This is usually the largest issue in a homeowners mind as it is hard to find someone that is willing to shell out the same kind of money per month. A great way to outsource the monthly mortgage payment is to rent your home out. This is counter intuitive as many believe it’s their home so they need to make the payments. There are people in every market that are looking for houses to rent. Yours is may be a nice big house that stands out compared to the rest of the market – even better for you! (This is a selling feature)
Believe it or not, many people cannot get approved to rent an apartment or home due to poor credit or prior circumstances and they are happy to pay to rent a place. Some of these people are even cash heavy so they’ll enjoy living in your oversized home. They get to live in a nice home and sprawl out as opposed to a tiny apartment that their poor credit would allow them. Sure, they’ll pay a premium to live in your nice big house, but then again, many would prefer to pay more for a better experience than to shell up in a tiny apartment based on their financials or credit history.
On the other hand, we wouldn’t be providing the best advise if we only shared the pros to this approach. By renting out your oversized home and downsizing to a smaller one, it does mean that you’ll be a landlord. Renters know they are not storing equity in the home so they don’t always take the best care of things. Tenants tend to defer maintenance and they usually only call when there are problems. Often times they create these problems. Unfortunately, it’s still your responsibility to fix them as it’s ultimately your home and you are responsible for ensuring you are providing a safe living environment.
You could avoid dealing with these issues yourself by hiring a property management company, but then you have to manage the property management company. The quality of service that each property management company provides varies based on the vendor so conduct your own due diligence before you sign a contract or agree to a long-term agreement. Finally, the con with hiring a property management company is that they will take a portion of the rent money so you may still be left paying some bills depending on the agreement in place with your tenant.
Downsize & Lease Your Big KY House
If you have an oversized home in Kentucky and you can’t find a buyer, and you don’t want to rent it to tenants that will trash it, you can do a lease option. The agreement that you put in place can have specific line items that serve your needs and the buyers. Essentially, the tenants will pay rent and store credit to purchase the property over time.
This agreement is a particularly great strategy for a multitude of reasons. For one, since the renter is essentially the buyer, you are now acting at the bank. That’s right! You have been upgraded from a homeowner to the bank. You are now allowing the tenant the opportunity to make a purchase and you’re carrying the note for them. Many times these type of transactions will behoove someone with a poor credit score or prior financial infractions on their record. You’re not just getting your house taken care of. You’re actually helping someone make a transaction that institutional lenders wouldn’t approve. This type of transaction will actually help to improve the tenant’s credit for the future. It’s literally a win-win.
On top of the benefits you’re providing to the tenant, you can require a sizable down payment or deposit just like any other lease. A deposit is required for any lease and a home should be no different. Anywhere between $5,000-$10,000 (or more, but we never allow less) is reasonable. It may seem like a lot, but many people are happy to pay this kind of deposit as they could not get this deal through traditional lenders.
Another good thing about a lease to own option is that you can charge a slight premium per month as the tenant is a buyer rather than a renter. They know you are doing them a favor by holding the note on their behalf while they pay it off so many are fine to pay a slight premium per month. Finally, since the tenant is aiming to purchase the property, they usually don’t tear it up like a renter because it will ultimately be their home if they buy it. We recommend that you make the tenant responsible for maintenance and repairs in the lease agreement. This is fair as the home is essentially meant to be theirs once they make all payments per the lease agreement.
The downside to this route is that you have to find a tenant willing to do a lease option. This isn’t that hard and you can even outsource this job to a realtor that will usually charge a flat rate or the first month’s rent. Another con associated with this plan is that if the renter stops paying the monthly rent, they are leasing the property so they have what is called an “equitable interest” in the property. Therefore, in Kentucky, you cannot simply evict them. You have to go through the Kentucky foreclosure process with the tenant. In Kentucky, foreclosure is a judicial matter rather than a civil one, meaning that you’ll have to get lawyers involved and go through the courts to get anything done. This can drag on for months or potentially years depending on all of the circumstances. (We help people avoid foreclosure in Kentucky, but that’s more for the tenant).
You Own Your Big Fancy House Free And Clear
If the property does not have any debt associated with it, congratulations! You are one of the select few that had the foresight and self control to avoid refinancing or spending equity. This is rare, but the good news is that you have time at your disposal. You can address the property as you see fit because there isn’t a monthly payment obligation pushing you. On the contrary, it’s better to keep a property inhabited rather than leave it vacant. Oftentimes vacant properties can draw vandalism and uninvited guests like cockroaches, critters such as termites and worst of all – squatters!
Just because the house if free and clear does not mean that you should leave it unkempt. It’s best to address the property as soon as you downsize and move out.
Downsize & Sell Your Oversized House or Fix It Up?
If you’re contemplating fixing the place up or selling it you need to determine what the best route is for you and your family. It’s important to consider if you are able and capable to fix the place up. If you are up for the challenge, then great! If you’re worried about investing energy, time and money into the property just to break even, then you may want to consider selling it it as-is.
It’s tough putting effort and resources into a project only to break even. Sadly, that is often what happens when we take on projects that we shouldn’t. Nevertheless, you can and will learn a ton from the process.
Who Buys Oversized Houses In Kentucky
To many, an oversized home in Kentucky is an added burden that becomes their problem at the time the the purchase. Many bite off more than they should. It’s understandable though. When you get started with a family, you want room to grow and spread out. When considering selling, a large house is just a big investment for the average buyer. The up-and-coming generations prefer to rent rather than to own. It makes selling an oversized home hard to attract the right buyer. Whether you hire a realtor or list your oversized home in Kentucky on your own, it’s a big undertaking.
Believe it or not, there are actually individuals and companies that buy oversized houses in Kentucky. It may sound far fetched, but real estate investors and “cash for houses” companies purchases large houses all of the time. They specialize in sprucing up big properties and bringing them back to their former glory. These companies flip properties regularly and they are not afraid of buying large homes. If you’re not interested in doing all of the hard work, managing renovations and paying for the expensive repairs, then selling your big house in Kentucky to a cash buyer (like our company: We Buy Property In Kentucky) is a great way to get cash for your house and move on with ease.