Here are seven things to consider before buying your retirement home.
Posted November 30, 2012
Most of the seniors thinking about moving into an active retirement community have owned a home before. They've been through the process of evaluating both homes and neighborhoods, so they're not exactly beginners when it comes to picking a home. Still, there may some aspects of choosing a 55+ community that may be new to them...and so we offer here a checklist of 7 questions that need answers before making a final decision on buying a home for your retirement years.
1. Who will own the lot?
If the community is made up of site-built homes, you'll almost certainly be buying the land along with the house. But if it's a manufactured home community--and a large proportion of retirement communities are--there are several different possibilities.
The first is the simplest: you buy the land at the same time you buy the home. Another popular option is land lease: you buy the home (and so, can move it if you wish), but lease the land it sits on.
Each of these options has both advantages and disadvantages, especially as it relates to taxes. Check the situation in your state carefully before deciding which you'd feel more comfortable with.
2. Who will care for your property?
Many, if not most, active retirement communities offer extensive maintenance packages for residents, which could include anything from mowing the lawn to minor maintenance on the house itself (such as fixing air conditioning or plumbing problems). Think of it as a form of insurance: you might not need quite so much maintenance on your home...but then again, you won't have to worry about it, either. For many seniors, the peace of mind is worth the extra expense. That all depends, of course, on your level of both health and expertise—and on how much you can afford.
3. Who will you share the community with?
Neighbors are important: good neighbors can be a blessing, and bad neighbors worse than a curse. You can assume that your neighbors will be just like you in age, and in the fact that they chose to move into a 55+ environment...but other than that, you'll have to get to know them before finding out if you click or not. It's a good idea to visit your prospective communities and meet as many people as possible, in order to find out the tone and character of the community as a whole. But don't neglect to meet and get to know the people who will be your actual, physical neighbors.
4. Can you live within the rules?
Almost every 55-plus community will have a community association and an extensive list of rules that everyone is expected to follow. For instance: how long your grandchildren are allowed to visit. Whether or not you can bring your dog or cat. Even whether or not you're allowed to have a vegetable garden, or fly your American flag. A lot of the rules may seem to flout common sense, but they remain rules, and breaking them can bring a lot of trouble—even, in some cases, cause you to lose your property. Find out what the rules are before you buy.
Of course, as a member of the community association, you can always lobby to have certain rules changed...and that brings politics into play. Every community will have its own political identity. Some will be fair and cooperative; others can resemble petty dictatorships, run by a small clique for their own purposes. Sometimes associations are run by volunteers who mean well, but simply haven't the experience, or expertise, to do a good job. So when you assess a community, don't just look at what the rules are now: try to gauge the character of the political leaders of the community association, and whether or not you have confidence in the future of the association.
5. Is the community a going concern?
Face it: the future is uncertain. Residents of Brooklyn never thought they would be vulnerable to the same sort of hurricane damage that residents of New Orleans or Miami have experienced. Yet it happened. Natural disasters aren't the only kind that can seriously damage a community: financial disasters have probably caused greater harm than wind, flood, or fire. Does community management have a reserve fund, and is it sufficient to meet the needs of any likely emergency? Is the community free of lawsuits or other contingent liabilities? And what sort of liability will you face if the community suddenly faces a large bill, and decides to pay it off through a special assessment on its residents?
It's important to check out the community's finances before you commit to living there. Long-time financial stability, and regular, timely maintenance, are the hallmarks of a community that is well-run.
6. Can the community handle its own success?
You want the community you choose to be a wonderful place to live both now and in the future. For that reason, look into how the community plans to handle growth. Those wonderful quiet streets that you knew when you moved into Phase 1 may turn into gridlock by the time the projected Phase 5 is completed. All utilities—water, sewage, electricity, road repair—may become overburdened. The spacious clubhouse may become cramped. The character of the community, and of its association, may change drastically. So find out everything you can about planned future growth. And...
7. What about outside the community?
What will happen just outside the walls of your community? Will that open parkland one day become a golf course? A Wal-Mart? Low-income housing? Development isn't a bad thing, per se...you could be enriched by new amenities, or engulfed by traffic, noise, pollution, and even crime. Especially if you're moving away from an area that suffered the loss of its historic character, make sure you're not moving into the same situation all over again. Check with the local planning commission or zoning board to find out the long-term prospects for development.