The Toronto condo market is nothing short of thriving. While many young professionals seek the urban lifestyle, it seems many baby-boomers and empty-nesters are making the transition from suburban to urban lifestyle as well.
Those looking to downsize are typically at a stage in their life where they’re no longer looking to build wealth for themselves. If you bought a home in and around Toronto 25+ years ago, you’re likely sitting on some incredible equity. Needless to say, that one investment you made when you were starting a family or putting down your roots has left you looking at a very comfortable retirement. So with your financial future no longer a concern, you find yourself living in an oversized house, your kids are gone to university or otherwise and you’d much rather be spending your time enjoying life and your new found freedom. But the fact remains: you’re a homeowner in a space you’ve outgrown and with that comes a lot of time consuming obligations.
Which leads us to another reason why people choose to downsize: to create a more hassle-free lifestyle. Let’s face it, homes require a lot of maintenance. That beautiful lawn of yours needs mowing, one of your pipes sprang another leak and those decade-old appliances are starting to cause more trouble than their worth. If you’re tired of these types of repairs and everyday responsibilities, then the condo life might be just what you need.
Whether you’re downsizing to live hassle-free, looking to cash in for retirement, or both — it’s important to set yourself up for success.
GET IN THE RIGHT MINDSET
Transitioning from a 2,500 sqft+ house to a 800-900 sqft condo is a big adjustment. You need to accept the fact that you’re not going to have the same amount of space you once did. When you’ve got a lot of space you don’t have to be as selective about what you can have, what you keep and what you’ll hold on to… just in case. Sure, there are condos out there that are comparable in size to some houses, but they come at a cost. Stay focused and remember why it is your downsizing to begin with.
IS IT A NEED OR A WANT?
Be clear with your realtor on the type of lifestyle you want. It’s important to create a list of must-haves that you won’t negotiate on. Try to stick to the important stuff and avoid getting caught up on things that aren’t essential to your lifestyle. Maybe you need outdoor space. What kind of space suits your needs: a balcony or terrace? Maybe you want more green space and need a place with a courtyard or proximity to a park. What kind of square footage do you need? Do you need extra bedrooms for your extended family when they visit? Or maybe you need a place to escape for a little me-time. If you’re thinking long-term and picture yourself growing old in this property you should definitely consider purchasing a unit without stairs. Remember that downsizing means less space and therefore fewer rooms to retreat to, but if you utilize the space and storage properly, you won’t even notice.
BUY FIRST, THEN SELL
Plan to give yourself enough time to find your perfect downsized property. It’s likely that you have equity in your home so you’ve got time to shop carefully. What you want may not be available right away so don’t jump the gun on selling your home until you’ve found your perfect space.
GO EASY ON YOURSELF
Moving out of a home you’ve lived in for years can be an emotional transition. One of the biggest challenges in downsizing is deciding which things make the cut and which things stay behind. With a significant reduction in space, you’ll need to be selective but don’t be too harsh. It’s better to hold on to some things and edit them later than to find yourself adjusting to your new space and realizing nothing you’ve brought with you feels like home. Don’t be too hasty. You’ll thank yourself later.
Just because you’ve downsized, doesn’t mean you can’t continue to build your wealth. Reinvesting some of the profits from the sale of your house is a great way to keep your money working for you. Why not invest in a pre-construction property for your kids while they’re at university? This way, you can put a small amount down over the 3 to 4 year build time. By the time your kids are out of school, the property will be ready for occupancy and it will also have increased in value, typically at a rate of 5% per year (though Toronto’s condo market has been outpacing that for the last several years). I’m a firm believer in not putting 100% down on a property because you can redistribute your money into several properties this way, better leveraging your funds. For a comprehensive understanding on investing in real estate, read our Pre-Construction Investment Guide.
COZY UP TO YOUR NEW LIFESTYLE
You’ve finally settled in to your new digs, and can’t believe how much free time you have now that you’re living the maintenance-free lifestyle. Living in the city is growing on you fast. With so many new experiences at your disposal for you to explore, participate and volunteer in the community. You’ve probably noticed a huge reduction on the amount of money you spend on gas because you can opt to walk instead of drive. Similarly, you’re saving big time on your overall utilities because guess what? Your smaller space doesn’t require the same amount of electricity and heating. Time and money, you’ve got it all.