Whereby you lease before buying.
Buying and selling is a stressful and expensive process. There is no doubt. There is the stamp duty, legal fees and selling costs, amongst many other costs, that all eat into your equity.
In most cases, one makes a move to improve their personal circumstance. But what if it does not? What if the move is a mistake? The transaction costs are non-refundable. Furthermore, you could be faced with the unfortunate situation whereby you either transact again (burning more equity) or stay in a property that you are unhappy in.
As many baby boomers make the decision in the next decade to downgrade from the family home, many will face the challenge of making the right move.
Changing from the large family home to an apartment and/or a new location entirely can be an exciting frontier. Or it can be a regrettable mistake.
There is a wise proverb that states “never test the depth of the river with both feet”. But when you sell the family home to buy in an unknown situation, that’s exactly what you are doing – diving in and hoping it all works out.
Whether it be baby boomers downgrading to an apartment or a young family starting afresh in a new suburb, there is one solution to ensuring the right move that is often overlooked – The trial move.
The trial move is whereby you lease before you buy. You trial your new conditions prior to being locked into a purchase and/or sale. Whilst you are leasing a property similar to one that you have considered buying, you lease your existing property out. If the move to the new location or apartment living is a success, then you can consider actually locking your position in by buying and selling. You can now happily sell your home knowing that you are going to a better future.
Most importantly though you have a contingency plan should the new property not meet your expectations. There are countless stories of those that could not wait to escape the city in retirement and head for the hills or the beach – to only find the solitude from family and friends depressing. Or those that find moving from a house to an apartment to claustrophobic. Alternatively, others have fully embraced such lifestyle changes.
If you are unsure how you will handle major lifestyle changes, maybe a trial move is something to consider.
If you decide on the trial move as opposed to the “sell/buy and hope for the best” method, there are still challenges. A trial move means that you are likely to move house at least twice, maybe three times before you eventually get settled. But at least you won’t have burnt 8 to 10% in transaction costs. And you won’t feel locked in to an unsatisfactory circumstance.