Should You Sell Or Rent Your House To Pay For Assisted Living?
With the costs of assisted living always on the rise, you may wonder how you will be able to pay for it if you or a loved one should require it. However, with approximately 7 out of 10 people requiring assisted living care, it is worth thinking about. The average cost of assisted living is approximately $4,500 per month, and quickly adds up depending on how long you plan on residing there for.
If you own a home then you can use it to help you cover the costs. While there are plenty of ways to help you pay for senior care, selling or renting your home are the two most common options.
Renting Your Home to Pay for Assisted Living
Renting a home may seem like an easy way to get money fast, however there is a lot of work involved. You may need to put some time and money into your house to get it up to rental standards, and then you need to make sure it stays occupied with tenants. The key to renting out your home is to prepare as much as possible beforehand so that it’s not sitting vacant for a long period of time.
Speak With Your Insurance Agent
Before renting out your home, make sure to speak with your insurance agent first about increasing your liability coverage. More liability coverage equates to better protection should a tenant fall and hurt themselves on your property. Your insurance agent will be able to tell you the best options; whether it’s adding certain riders to your home insurance or giving advice on where you should expand your coverage.
Make Space and Fix Eyesores
You will need take a survey of your belongings and decide which items you are bringing with you to the assisted living facility. Then you will need to decide whether you are keeping, discarding, donating, or storing the remaining items to make room for new tenants. You will also want to fix up the house by making any needed repairs, minor improvements, paint touch-ups, etc.
Finding tenants is an integral step to renting out your house, especially finding great tenants. Marketing is an important process when you are renting your home, so advertise your listing all over social media and post to relevant websites.
While finding a tenant is a feat in itself, you want to make sure that you are finding a responsible tenant who will not break or steal any belongings. Consider running a background report, credit history, etc. to weed out those with a poor reputation.
Pros to Renting Your Home
- Brings in additional money when there are occupants.
- During a good market, you can increase the amount if necessary.
- Your house stays as an investment to pass on to others.
Cons to Renting Your Home
- You run the risk of getting bad tenants.
- The income you rake in depends on the market and prospective tenants.
- Being a landlord is a full-time job.
Selling Your Home to Pay for Assisted Living
Making the decision to move yourself or a relative into an assisted living facility is not always easy, especially when considering the cost of care. If the person requiring long-term care owns a home, then you can sell the property to help cover the expenses. While there are other ways to use your equity such as going through loans and reverse mortgages, selling a home is best for those who need the money upfront and/or lives alone.
Obtain Permission to Sell
You want to make sure that the home you are selling is legally yours. While this may seem like an obvious step, if you or a relative is dealing with Alzheimer’s, dementia, etc., it may not be so easy. If this is the case, hiring a real estate attorney can help protect you and your property.
Choose a Real Estate Agent with Experience
An experienced real estate agent can help you understand the current real estate market, provide tips on how to stage your home, and can advise on ways to sell your house faster. To find a reliable agent, ask your friends and family for recommendations and read reviews online if they are available.
Reduce Your Belongings
Limiting the amount of items you own can help make your move seamless. Go through your belongings and decide which objects you can give away, discard, or donate. The less items you have, the less clutter you will accumulate, making it easier to show and sell your property.
Pros to Selling Your Home
- Can be easier to stage and show
- Provides you with a lump sum to help pay for senior care
- Frees you from the burden of taking care of a house and paying the mortgage
Cons to Selling Your Home
- You still need to maintain and pay for your home until you sell it
- Can be emotionally draining to relinquish your home
- Your money may run out by the time you’re out of assisted living
Are There Any Other Options Besides Renting or Selling?
Renting or selling a home is a convenient way to obtain a lump sum of cash, but it’s not the only way to pay for assisted living. Other ways to help pay for assisted living include long-term care insurance, Medicaid, and taking out a reverse mortgage.
Long-term Care Insurance
Long-term care insurance generally covers services such as: in-home care, assisted living, nursing homes, and more. Ask your insurance agent about the costs for long-term insurance since it varies depending on health, age, benefit amount, and other factors.
Most state Medicaid programs provide some level of financial assistance, so check with your state to see which options are available. Certain requirements apply, such as a specific income amount and a limit to how many assets you can have. Before you can be eligible to receive Medicaid, you will need to get confirmation from a doctor that it is medically necessary for you to be receiving assisted living care.
Medicaid does not cover the price of room and board, so keep this in mind when planning your budget.
A reverse mortgage is a popular option that lets you borrow against the equity in your home. A beneficial advantage to this is that you do not have to pay until you move or sell your home. Reverse mortgages also mean debt and liens against the home, so speak to your financial advisor before making this decision.
Renting or selling your home is a great way to help pay for assisted living. Whether you should rent or sell your house depends on your personal situation, however remember to sell strategically since your home is usually your biggest financial asset. If selling or renting a home is too emotionally upsetting for you, explore other options to help you pay off the costs for senior care.