buying a retirement property to rent to retired people

molit

Currently coming up with a plan to make my fortune, as I'm sure most people on here are.

One question that has just sprung to mind is can I buy a retirement property to rent out - the ones which state over 55s only, but are not warden supported etc. I am not in that age range, and wont be for quite some time, but it strikes me there is a market for poeple who want to release equity, and not have the hassle of owning a house but who are still fairly fit an active

poppysarah

You mean something like this
http://www.rightmove.co.uk/property-for-sale/property-36005633.html

149k and The property is offered on a 70% equity basis and an annual service charge is applicable.

Can't imagine what rent an old person would want to pay for that.

molit

yep, something like that. an age restricted development - Where it says over 55's only.

There are some freehaold properties available, as well as leasehold....its more just a thought at the moment, but wondered whether anyone else had done this

googler

You need to have a chat with whoever runs the development to see if you can buy it outwith their designated age range, and whether or not you can then sublet it.

There's one local to me where I see that there's a number of flats up for sale; in order to buy one of these, you need between £60-70k for a 2-bed. Not so many years ago, they were changing hands at over £90k, so it's difficult to see their value going anywhere but down.

Monthly service charge £120 or so.
Resident's assoc collects £4 per month for gardeners.
Add council tax, utilities to these figures.

I'll leave you to calculate what your mortgage payments would be, if you could get one, but your baseline expenses would be £124 greater than your mortgage per month, and the rent in theory would have to cover both.

It strikes me that most old folks moving to one of these will be widowed or widowered, likely to be selling a much larger property, and can buy the retirement flat outright with the proceeds from the sale of their home and/or the life assurance from a recently-deceased partner. Why would they want to rent from you rather than do this?

molit

all, thanks for the figures. I think there is likely to be a market where people want to release equity and would rather rent - certtainly one of my current tenants is doing this - as he said, he was financially very well off, but he was struggling to go out and enjoy life, as all of the money was in property. As I said, only considering at the moment.

I also think that there would be much lower turnover of tenants as the poelpe would be wanting to stay for quite some time.

I think with all of these things it is all about the figures - if they stack up, they stack up, if not...walk away

carefullycautious

There is a sheltered housing private development by me that has a service charge of nearly 500 pound per month. Most of the old folk are deperatley trying to sell as they have no interest on their savings which paid for this

ALso if the old person has died the family are left struggling to pay the service charge and if they cant it will be passed to whoever buys. SO be careful and check into everything.

I doubt very much that you will be allowed to sublet like this. If it was that easy everyone would be doing it.

poppysarah

carefullycautious wrote: »

There is a sheltered housing private development by me that has a service charge of nearly 500 pound per month. Most of the old folk are deperatley trying to sell as they have no interest on their savings which paid for this

Got a link for that?

shamac

If this is the market you want to target, why not just buy a place and adapt it to be more suited to the elderly with things such as:

-no steps to the front door
-downstairs bedroom
-hand rails in bathroom
-accessible bathing facilities etc

Maybe buy in an area which has a higher proportion of older people?

GDB2222

shamac wrote: »

If this is the market you want to target, why not just buy a place and adapt it to be more suited to the elderly with things such as:

-no steps to the front door
-downstairs bedroom
-hand rails in bathroom
-accessible bathing facilities etc

Maybe buy in an area which has a higher proportion of older people?

Because these flats for the elderly were allowed to be built at higher density and hence are cheaper. That was the theory. In practice, though, they may be rather expensive.

molit

thanks for all of the replies, and some interesting views - one of the resons for considering this was the belief that the retirement proporties are cheaper, and they are slightly.... It all comes down to the estimated returns. I would think that you would expect to have longer occupancy etc, but i think as highlighted, a better option is likely to be making sure that the proprty is suitable for, rather than designed for, the older population. one of my current properties is a bungalow, and this is what i have done with this one, with the tenants viewing it as a home for the next few years.