Is It a Good Idea to Invest in a Retirement Village?
Increasingly, retirement villages in Australia have become popular with investors, too. Many see an opportunity to benefit from property appreciation over time, most are in it for the rental income opportunity. Usually, retirement communities need residents to be 55 or older, but this doesn’t always apply to owners. Because of this, many “underage” buyers acquire houses and condos without the intent to move in as soon as possible.
In some communities, the demand for retirement homes is becoming to outpace the supply that would-be buyers are needing to be on the lookout for investment homes and hope for the best. Regardless, this doesn’t mean that senior villages or retirement villages are fail-proof investments, you need to do your utmost research before you commit.
Choice vs. Necessity
Living in a retirement community, as opposed to a skilled nursing facility or an assisted living is a choice rather than a necessity. This means that if the tumultuous economy hits a rough patch, demand has the potential to tumble.
Factors to consider before buying
Not all retirement communities are cut out the same way. Therefore, to determine whether the community you’re considering is the right investment, you must look at each village on its own merits.
Check out the determining factors below:
Assess the place and find out if it’s to your liking
Check out the available amenities in the community and how it compares to others in the area.
- Is it close to city attractions or the local facilities?
- Does it offer transportation to people who don’t drive?
- What about visits from doctors and classes?
Your potential tenants will likely look at these same things when deciding where to move.
Ensure that you can rent it out
Want to invest in a retirement village – be sure to check the fine print on this one. Some communities allow owners to rent out their property, but others don’t. If your primary purchase goal is to generate an income stream from tenants, then you know what community to invest in.
Evaluate its real value
To get a better idea of a particular property’s worth, start by doing some local research. You may be able to find assessment data through the homeowners’ association, for instance. It’s filled with data you can use. If you see the foreclosure information for the village and found a significant number, it’s possible to depress home values.
Check its condition
It’s important to evaluate the building and its systems whenever you’re looking to buy a home, such as heating or central air. This also goes for the entire community. Are the roads and landscaping in good shape? What about the roof of a condo building? Normally, the best way to repair those things is with a hefty assessment.
Ready to invest?
It’s little wonder that so many older Australians are starting to prefer spending their later years in a retirement village. These communities, including the prominent Lendlease retirement villages across VIC, gives seniors the opportunity to:
- engage in a host of recreational activities,
- regularly socialize with peers, and, in most cases,
- take advantage of on-site medical care.
It’s a win-win situation even for older investors.
Australian demographic trends see the outlook for retirement communities is bright. However, this doesn’t mean that an economic downturn couldn’t change your fortunes. Make sure to do ample research before you commit, doing so will let you sidestep the risks and maximize returns. Best of luck!
What do you think? Are you ready to invest in a retirement village?
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.