Hello
Colleague and I are just beginning and have been reviewing retirement homes [given global implications of aging society].
While research/investigations are still preliminary – a real-estate friend has voiced concerns regarding re-sale.
Would be grateful for any experience/knowledge in this area.
Many thanks
Cheers
Karenne
[saywhat]I think Margaret Lomas’s positive property database used to have quite a few of those retirement propetys going for sale.
They usually tak most of their pension, in exchange for accomodation and meals.
The database is at:
http://www.posproperty.com.au i think
Thank you very much Infinity
Will definitely check out the web site
cheers
KarenneHi Karenne,
I have personal concerns along the lines of your real estate agents friend’s namely their resale value.
Additionally there are potential problems with finance as some banks get a little nervous lending to niche markets and will not go to a normal 80% lend. Then there are potential difficulties further down the track when banks may not recognise said property as being suitable security for further leveraging. Obviously individual lender’s policies may vary but worth having a good talk to a mortgage broker about this side of the deal too.
On the rental side of things retirement villages can only be let to tenants who meet the age qualification. In one move you have removed a large part of the would be tenants population out of the equation – ie anyone less than ~55.
Ongoing costs and management fees are generally on the highish side so when you are doing your figures make sure you take these into consideration too. Sure the rent is tied to pension increases and is generally 85% of the total pension but for me the risks are too great.
One plus side of the deal is that some settlements will only occur when a tenant is found which initially could take some time.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Karene,
I was also looking into this as my first investment. The figures that were given to me seemed very reasonable. I think they were returning 9% net ie after costs. They were advertised as 2 units for $190 000. but the banks saw it as a commercial loan and would only lend 70% which left me way short to be able to anything about it.
About a week ago i got sent some info as they are going to float the company, need some funds I guess. Not sure what I think about that, but I did request some more info, cant hurt to look.
Would be interested to see what other opinions are on this.
Jo
I guess that’s always an option – if people want to invest in retirement villages or similar, you can always buy shares in those listed on the stock exchange.
Of course due dilligence, research etc needs to be done as for any investment.
There’s a couple of biggies who’s shares have made large gains in the last year or 2 – seems quite a few people are thinking along the same lines a-la aging population.‘The main thing is to keep the Main Thing, the main thing’
I too made enquiries regarding finance for this type of purchase and was sent the following reply from posproperty.com
“you may experience funding difficulties with purchasing this property. As this property is classified as “niche market” in other words outside the square of standard residential property, not all lenders look favourably on assisting with providing purchase funding.This is generally as a result of historical evidence available to them and may be associated with the physical size of a unit, the management structure, the re-sale market, or where they have previously been unsuccessful in recouping funds.
We suggest that parties interested in the purchase of any niche market property make their own enquiries with their own associated lender and ascertain their lenders criteria in relation to both purchase funding and acceptable security for niche market property.Prospective purchasers with established loans should also seek their lenders acceptable security policy in relation to acceptable security”
Another company I made enquiries with said they would refer prospective buyers to two banks that would understand this type of investment.
On a sour note I read in our local paper this week an article about Pensioners within these complexes struggling to live on $20 per week after 85% of pension and 100% of rent assistance is paid to complex management.
Is this really a socially responsible investment as advertised?
Kiara
On making enquiries from management of one of these retirement villages, I was virtually told that a tenant needs to have enough money to be able to support themselves before they consider going in as they are left with little of their pension. So personal funds would be needed for outings, clothes, holidays, etc.
Anna
Originally posted by Kiara:I too made enquiries regarding finance for this type of purchase and was sent the following reply from posproperty.com
“you may experience funding difficulties with purchasing this property. As this property is classified as “niche market” in other words outside the square of standard residential property, not all lenders look favourably on assisting with providing purchase funding.This is generally as a result of historical evidence available to them and may be associated with the physical size of a unit, the management structure, the re-sale market, or where they have previously been unsuccessful in recouping funds.
We suggest that parties interested in the purchase of any niche market property make their own enquiries with their own associated lender and ascertain their lenders criteria in relation to both purchase funding and acceptable security for niche market property.Prospective purchasers with established loans should also seek their lenders acceptable security policy in relation to acceptable security”
Another company I made enquiries with said they would refer prospective buyers to two banks that would understand this type of investment.
On a sour note I read in our local paper this week an article about Pensioners within these complexes struggling to live on $20 per week after 85% of pension and 100% of rent assistance is paid to complex management.
Is this really a socially responsible investment as advertised?
Kiara
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