Downsizing To A Smaller House

I wrote this page as an extension of a discussion. I left a comment on a page describing a Luxury Retirement Communities saying I wouldn't much like living with a bunch of oldies (full disclosure I am very nearly 50 and my partner is very nearly 60). In response "pcunix" wrote his story about why he moved to an over 55 retirement community. 

(Note: I live in New Zealand - your dollar and housing market may vary). I'll try and keep this short - we bought our first house as a couple in 1998 - it was big 200m2 - but neither of us were young and we'd never lived together with a significant other before. It seemed like a good idea - it was: his cat and my dog fought like hell! Also I was quite keen to try some renovation ideas, and he didn't say no (well not loudly enough).

We renovated it extensively - and in the end it did brush up quite nicely. Here's the video I made when we sold it: (Note we still had quite a large storage unit at this stage - if you are selling decluttering first is my number one tip.)

Things moved on - we had a standard midlife crises: packed up our belongs put them in storage, rented out the house and moved to Australia. We bought an 1986 Landcruiser, a tent, and drove 35,000kms in 6 months. After 6 months is a 4m2 square tent the 60m2 2-bedroom apartment we rented in Perth appeared palatial!

Eventually we returned to New Zealand, and even before we moved back into our house we had decided to move back in we'd decided to sell it. It was simply too big. We'd lived for 2 years with what fitted in the back of a truck (the apartment was semi-furnished) - we returned home with a couple of extra bags air freighted plus 20kg luggage each.

We realized that although the house was beautiful it had some disadvantages:

• we had a lot of capital tied up in an asset whose main purpose was to house a lot of stuff that we hadn't needed or missed in the previous three years; 
• it took 2 of us about 2 hours to clean it a week;
• the gardens had always been a bit on the big side and we were paying a lot for lawns and tree chopping;
• it was built in 1947, and even after the renovation it needed continual maintenance, and tradesmen weren't getting any cheaper;
• we would be up for another $10k to get it painted inside the next 10 years;
• the power/gas bill was around $400/month in winter.

We looked around and realised that we could downsize, release about $100,000 of capital. More importantly we realised that we would greatly reduce our house related outgoings if we bought a newer property.

Although we'd successfully rented out this house when we went to Australia - it was too big and expensive to make a perfect rental property. As we are still considering moving overseas we wanted something that was both easy to lock up and leave, and that could be rented easily if required. 

So having decided we wanted to downsize the question was to what?

Over 55 Community
By coincidence we'd rented a flat next door to this local over 55 community. Its a very central location (used to be sports grounds) and is known to be one of the better ones. It combines individually owned villas, with various levels of aged care. Although we actually know people who have moved in there - I'd feel like I was nearly dead if we moved into somewhere like that. Most residents appeared to be well over 70, and probably going to be needed nursing or other care soon.

We now live near another one - and its an energetic 20 minute walk to the nearest shops - or a on a bus route that runs only peak hour. I feel sorry for the residents who must be isolated if they don't drive.

The other issue with many of these communities are that they have excessive fees. In this specific case you are paying for having a nurse on call - I don't need a nurse on call (neither does anyone really given that NZ has a free ambulance service), and I'm certainly not paying for it!

Apartment or Flat (Condominiums as the Americans Call Them)

Wellington is a vibrant city, compact and easy and safe to walk around. There is a lot of inner city apartments which range from shoe boxes for the rental student market to large and luxurious. The large and luxurious apartments tend to have views to die for. But in our price range it was more likely a view over an inner city, or the next door building.

Many of the better apartments are in retrofitted buildings that were once commercial. As a geologist, I was very aware that some of these buildings were not up to earthquake standard, and this was before the devastating Christchurch earthquake. Although we could have got parking, its a nuisance for friends to have to pay to park to visit too.

I also don't like the resale value of some of the less than stellar locations, the fact that you are buying little if any land, means that this a fast depreciating asset.

Townhouse Complex
I've lived in a townhouse complex before, and would do so again The issue is that levy that you pay for upkeep of common areas and building insurance and maintenance. This can be really quite high, and moving into retirement its a potential issue. Also you the body corporate can have restrictive rules about pets and whether or not you can rent your house.