Anyone know much about investing in retirement villages? I know that they are one of the worst investments there is purely from a dollar perspective, but need the certainty, stability, options etc for my parents. Its not purely about money for this. From my research, there are 3 main costs associated with these: The purchase price The service or maintenance fees/management fees The exit fee ie departure fee These fees will almost certainly deem it a poor investment and id really not want to get into it as a result, but at that age what they need is that peace of mind, stability, flexibility etc- all of which the retirement villages seek to provide in exchange for totally torpedoing returns. From what I know, the purchase price is ok, but the management fee will kill you. Maybe I can get one without 3 pools, bbq area, gym, community center, etc, etc which may reduce the management fee, but these are the minority and not the norm. Does anyone know what the management fee is as a proportion of the mortgage in a typical scenario...? Ive estimated that the management fee is about 50% of most mortgage payments... Im looking at Brisbane and surrounds- My parents have postcode bias so no logan, ipswitch, inala, Caboolture, Redcliffe, etc.. If I go down this track , I've already surrendered to the notion that I will likely not see a single dollar of returns.
Disregarding them as an IP option, I've known of people who have bought to live in them. 1 they couldn't get back more from the sale figure than they paid for it originally, the retirement home took the rest. Another, they can keep 75% of the selling price, the retirement home takes the rest. This was additional to the weekly costs. Strange setup, make sure to check all of the details.
You will struggle to get finance on these type of properties if you are looking to finance the purchase. Almost all lenders will not touch them
This is one area which specific advice helps. Your accountant will have contacts for a retirement living specialist who can advise on the ins and outs. A friend has recently bought near Noosa. Lend Lease own/manage the facility. The villa is totally refurbished by LL before she moves in. There are minimum requirements for the communal facilities in retirement villages and these include common lounge rooms etc. DADHC or other govt aging agencies can provide details of your options. You may wish to consider a facility which also offers higher levels of assistance ie self care thru to full nursing home wards. What health issues do your parents have eg dimentia, mobility, diabetes etc
Thanks, I'll investigate those more. At the moment, they have no health issues so all is fine, but you never know in the future...
Hi I am not an expert in this field, but I have often considered the possibility of buying 50 to 100 acres and one day setting up a retirement village. You need to speak to each retirement village operator directly to find out what they charge in regards to fees. The most important and obvious are the on-going fees per week, if your parents are on the pension they may have to pay for example 37% of their weekly pension to the retirement village operator and this might cover things like rates, garden maintenance and other fees which will be fully explained to you. The lower this percentage fee the more efficient the retirement village is run and is not designed to give a profit to the village. Their is also a thing called the "DMF", this is the Deferred Management Fee that the operator of the retirement village receives once the unit is no longer needed. This is sometimes a % of the capital gains and purchase price and is very large but is how the operator of the retirement village makes their profit...eventually. For a lifestyle decision it might be the absolute best thing for your parents, for an investment decision $$$ wise it is probably the worst decision so should only be done if really required. You should also personally hand pick some of the residents of your preferred village and ask how they like living in the complex, this is often the best way of determining if the place will be nice to live in. Don't forget that their is different level of care available and some villages have choices within the village itself on this level of care and type of living arrangements from basic style residential units to fully serviced apartments. You may want to find a village that offers several options should things change in the future for your parents and they don't need to actually leave the village once they require a higher level of care. Don't forget to check out the Retirement Villages Act. Best of luck. Regards, alicudi
