The Real Cost of Village Living

The Real Cost of Retirement Village Living

A recent report into Retirement Village living drew the following conclusion:-

Conclusion
"Seniors make the choice to live in retirement villages based on a range of personal and financial factors.
The amenity and social aspects of retirement village living provide much of the benefit of this choice.
Commensurate medium density apartment buildings provide accommodation but they do not provide the
benefits found in retirement villages."

http://www.retirementliving.org.au/wp-content/uploads/2013/12/COMBINED-REPORT-6-Oct-2017.pdf

The following table examines what is a measured cost of this part of the statement -

"The amenity and social aspects of retirement village living provide much of the benefit of this choice."

The table examines a retirement village where the in-going cost is $850,000.00, a Deferred Management Fee of 35% of this amount, 0% of any Capital Gain going to the resident, maintenance fees, a refurbishment cost, loss of earnings on the refundable amount of $552,500.00 ($850,000.00 minus $850,000.00 x 35%). The refundable amount is held by the operator until the resident leaves the village.

The tangible value of the residential accommodation was calculated at a return of 4% to a landlord. (see included table on rental returns)

A tangible rental value of $653.80 per week.

The cost of the intangible value  "The amenity and social aspects of retirement village living" a whopping $1014.40 per week.

A total capital value cost to a resident of $1668.20 per week over 7 years.

Retirees could simply rent a commensurate property within the general community for $653.80 per week and retain their capital amount of $850,000.00.

The Real Cost of Retirement Village Living.