Pros and Cons of Buying a Rental Home in a Retirement Community
Pros of Investing in a Retirement Home Rental
People retire every day, and they’re looking for the ideal place to spend their leisure years. There are several positives to buying a retirement home as an investment property.
Desirable Area and Amenities
The first perk of investing in an over 55 community is that the property is usually in a nice area—near the beach, in a warm climate, or somewhere else that is usually desirable. Great location and weather are selling points in and of themselves. In addition to being located in good areas, retirement communities usually have many activities nearby, as well as amenities in the community, like a pool or gym. There are numerous amenities available in retirement communities. From exercise classes, educational courses, and recreational activities, there is always something to do in the community.
Maintenance Often Included
When buying or renting in a retirement community, monthly fees often cover homeowner maintenance. Every community will differ, but these fees can cover everything from housekeeping to exterior yard-work. Having outdoor space, but not having to maintain it, is attractive to this aging population.
Specific Target Market
When you invest in a retirement home, you have a very specific target market. Since most retirement communities require residents to be 55 or older when looking for buyers or renters for your property, you know who you are targeting and you can develop a marketing plan which will appeal to this demographic.
Quiet Community
Many retirement communities are gated and are not accessible to street traffic. In addition, the average home size is smaller so there may only be one or two people living in each house, so the noise in the community is likely lower.
Cons of Investing in a Retirement Home Rental
There are also negatives to consider when purchasing a retirement home as a property investment. You are limiting yourself to the 55+ age group of the population, which takes away anyone under that age as a potential renter or buyer.
Monthly Fees
While there are some communities that don’t require it, in most retirement communities, you will have to pay a monthly fee for the retirement home. What the fee covers will vary by community, but it can include utilities, yard maintenance, and housekeeping, for example. As an owner, you will have to pay this fee regardless of whether you are able to find a renter for your property.
Niche Market
Buying investment property in a retirement community limits your potential buyer or rental pool. You usually have to be at least 55 years of age to reside in the home, so this type of investment immediately cuts out a large portion of the population.
Limited Investment Properties
Retirement communities are not found in every neighborhood. As spoken about above, there are specific areas where these homes are commonly located. In addition, inside the actual community, there are only certain types of investment properties available. These are usually single-family homes or condominiums.
