‘How will buying in a senior citizens community affect the estate I am leaving?’

When it comes to cracking the numbers, say precisely that they vary from one to another. That’s why I find it easiest to divide the numbers into incoming, ongoing, and outgoing.

You can easily make your own version of this breakdown by just creating a couple of columns like I showed below. You can also find more exercises to help you compare downsizing accommodation options in the free Downsizing Essentials e-guide I created with Starts at 60 (you can download the e-guide here) and in my book with Noel Whittaker , Downsizing Made Simple, this is available at a discount for Starts at 60’s members.

This is how I would break down the cost of the senior village and the options for the land lease community.

Input costs

The purchase price for your right of residence in a senior village is often referred to as the entry fee. From the point of view of the retirement pension, this determines your home ownership status and your entitlement to rental allowance; If your contribution is less than $ 214,500, you are considered a non-homeowner and eligible for Rental Allowance.

In a land lease agreement, the inbound cost is the price you pay to buy your home and have a long lease on the land. This means that you will always be a retirement homeowner but will still be eligible for rental allowance due to the fact that you lease the land your home is on.

There may be other fees that you need to include in your incoming bucket, such as:

Running costs

In both a senior citizen village and a land tenant community, residents pay a weekly or monthly fee to cover the operation of the community and its facilities, as well as tariffs and insurance.

In a senior village, this is often referred to as a “general service charge” or a “recurring charge”. In a land lease community this is called “location fees”.

The ongoing fee, which is changed by a senior village, works a bit like a corporation in an apartment building or townhouse complex, as the costs of the village are shared among the houses.

But in a leasing community, the operator of the community can benefit from the ongoing fees, so that the property fees in a leasing community are not infrequently higher than the general flat rate for ancillary costs of a senior village.

Outgoing costs

Whether you are selling a home in a senior village or a tenant community, there will generally be fees such as brokerage fees and marketing costs, as well as the cost of repairs or improvements to your home.

However, you will likely find the biggest difference in the “exit fee” that is charged by most retirement villages and some land tenant communities.

Redemption fees are typically set between 25% and 35% of your original purchase price or the resale price and may also include the sharing of capital gains or losses with the operator.

Many people consider the exit fee a “rip off” but it is important to understand what it is so that you can figure out if it is worth it. As already mentioned, the Altersdörfer have to settle their current contributions so that they cover their costs – i.e. without profit – and they also usually want to keep the purchase price of their units affordable. To offset the fact that the pre-sale price is kept artificially low and no profits are made while the resident lives in their community, they charge an exit fee.

The bottom line is that there is huge variation in exit fees from village to village and even within a village itself, with many villages now offering different payment options.

Because of this, you need to know exactly what the various agreements mean for you, how much money you will have, what the running costs will be, how much pension and rent assistance you are entitled to, not just how much you will get back in the end, but also when. Because some contracts offer you a guaranteed repurchase of your apartment if it is not sold within 60 days, while others offer the legally required repurchase after 18 months on the market or no repurchase offer. have all.

Do the math and make sure that you look at your contract from three different angles: your rights, your obligations and your costs (an explanation can be found in the free e-guide Downsizing Essentials and in the reduced copies of Downsizing Made Simple ). And I cannot emphasize how valuable it can be to seek advice from a specialist in senior housing and care for the elderly.

IMPORTANT LEGAL NOTICE This article is general in nature and for information only as it does not take into account your financial or legal situation, goals or needs. That means it is not a financial product or legal advice and should not be relied on. Before making any financial or legal decision, find out if the information is appropriate for your situation and obtain independent, licensed financial services or legal advice.

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