Hey everyone ive been finding a lot of ritirement home units lately all showing a positive cashflow but im not too familiar with retirement villages. Is there anything i need to be wary of in these kinds of purchases is there a liklihood of a high vacancy rate? Do the banks look at retirement villages less favourably as far as lending is concerned? Should i be cautious of the fact that there are at least 8 other deals of similar nature within 30 kms?
Be very grateful for any replies to this matter
ThanksHave fun keep smiling and the world will shine on you
Cheers Julius
I have a mate who owns a couple of retirement units, he is pretty happy with them as an investment.
His units are in a rental pool, meaning that the rents from all the properites in the complex are divided equally to the land lords, so even if his unit is vacant as long as the complex as a whole has a low vacancy rate it will still provide a good cashflow.
I don't think there is much room for capitol growth though because the price of these type of properties is normally linked to the rental yeild that it is getting, and since most of the rents are linked to a certain percentage of the tenants pension the rent is only likly to grow in line with inflation, which is not to bad I guess as the rent and the value of the property will be growing with inflation your repayment to the bank each year will be shrinking with inflation.
I think you would have to look at each development on it merits, but having one or two of this style of property would be good in a balanced portfolio, all depends on your goals and stratergy.
Hi Julius
As tyson said they are a reasonable earner, but banks dont like to finance them because they are usually less than the magical 50m2 area.Rudolph
They're generally not very popular because of limited capital growth potential. However, like Tyson said, they can be very good earners and will provide a good income base for you to expand your portfolio. Its a similar case with service apartments and the like.
Hey guys
Thanks heaps for the feedback, its been very helpful. Especially as my goal at the moment is to have a few investments that are completley paying for themselves.
cheers allHave fun keep smiling and the world will shine on you
Julius
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