Downsizing Upsizing Right Sizing? That is the question

Traveling without moving, a new approach to downsizing

Most realtors tell a person who is thinking of, say, downsizing, to list and sell their larger home and buy something smaller and presumably cheaper. This kind of talk is a bit self-serving because, if the client follows this piece of advice, the realtor gets another listing (presumably).

I’m not saying this is necessarily a poor suggestion. I mean after all, in Canada, if a client sells their principal residence for $600,000 and buys a condo for maybe $400,000, the client clears $200,000 in cash (minus closing costs), tax-free. The trouble with this is that most people I know who are sitting on cash tend to spend it, not save or invest it. So, when you check back in a few years, that $200k is often gone (replaced perhaps by a nice Tesla in the garage and (pre-Covid-19) a few cool trips.)

An alternative I’ve been touting for years is this: Keep the home as part of your (future) rental portfolio. Animate it (by, for example, adding a basement or sideyard apartment and/or a backyard coach house and workshop), then refinance it, pulling out tax-free cash and then buy another smaller place to live. Now you have two homes. From two places, you could end up with a portfolio that might look like this:

1. a former principal residence with basement or sideyard apartment, a backyard coach house (with upper as well as lower level apartments in it), a backyard workshop (for the gigpreneur in you or your tenants)

2. a new (smaller) principal residence with maybe a microsuite rental in it as well 😊

Now your portfolio has 6-doors (including a backyard workshop) from just two homes you own! How about them cranberries?

But today whilst I was having tea/coffee with my spouse, I realized there might be another option—downsize in place. Huh?

Maybe you add a basement or sideyard apartment to the big house and build a backyard coach house and workshop just like in the above model but, this time, you move into the backyard coach house. You move without having to move if you get my drift. You can stay in your existing community and boost your retirement income too.

Make any sense?

It sort of reminds me (I know this is a stretch) of an old (corny-as-heck) 1984 movie I like, Dune, where the pilots of interstellar spacecraft (who are humans who have “evolved” to look like humongous, fishy-type creatures with mythological, drug-fueled, spice-driven powers), fold space so folks can trip-the-life-fantastic from star to star in zero time; that is, travel about the universe without being bothered by a universal speed limit, c, the speed of light.

The speed of light is pretty darn fast—186,000 miles per second but this is puncy when compared to the distances involved in galactic travel. The Milky Way galaxy where we live is between 100,000 and 160,000 light-years across so to travel from one end to another, even if you had a rocket ship that could go c (which we don’t), it would take you more than 100,000 years to do it, and, frankly, even Warren Buffett isn’t going to live that long.

And forget about inter-galactic travel; the frigging observable universe defies comprehension–it’s about 14.26 gigaparsecs (46.5 billion light-years) in any direction.

Just thought you might want to know…

Anywho, you can watch a Dune excerpt on folding space here,

Be well,

Prof Bruce

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