Our Atlanta Independent
Senior Living Communities:
Atlanta Senior Living Resources
Which is Smarter: Renting or Buying?
1. Continuing Care Retirement Centers (CCRC’s) are facilities which are typically owned by a qualified not-for-profit (501(c)3) organization such as a church or senior housing authority. In a CCRC, the resident pays a one-time fee, oftentimes in excess of $200,000, which the ownership entity uses to either pay developmental costs or guarantee bond financing. The facility usually includes independent housing, assisted living, nursing, and dementia care.
In exchange for the initial contribution, the resident is assured that his or her monthly assessments will not change, regardless of the type of care that he or she may ultimately require. Upon the resident’s death, his or her estate will usually receive a predetermined, proportional return of the contribution. Depending upon the orientation of the 501(c)3, certain residents may be admitted with reduced contributions and/or reduced monthly service fees.
While living in the CCRC, the resident pays a monthly service charge, which represents his or her pro rata share of all costs required to operate the community. This fee, depending upon the resident’s actual living space, will generally amount to approximately 75% of the monthly rent that is paid by a resident in a Parc community.
The CCRC model is one which is well suited to many seniors, particularly those with early indications of either physical issues or dementia or those with limited resources. Since, by the very nature of the structure, the independent residents in a CCRC bear a disproportionate financial burden compared to those residents requiring either assistance or nursing care, the decision to enter this type of community must be carefully considered.
2. Retirement Condominiums are communities in which the resident owns fee simple title to both his or her living space and a pro rata share of the common areas. Although such communities do exist, particularly in Florida and Arizona, they are seldom found in areas that do not attract the traditional "Snowbird” type of retiree.
With a retirement condominium, the resident owners determine the level of services which they desire. Since the average owner of such a condominium is typically in his or her late 60’s to early 70’s, most do not wish to have on-site dining, program activities, 24-hour emergency response, and many of the overhead items that are included in a Parc community. In addition to debt service, if applicable, each owner must pay his or her share of taxes, insurance, maintenance, and staffing for the common areas. Typically, the cost for such common area maintenance will be at least 50% of the rental in a Parc community. If the typical retirement condominium were to have the inordinate allocation of common areas and personnel that are to be found in a Parc community, the monthly common area maintenance would be closer to 70% of the rental paid in a Parc community.
As with the CCRC, the retirement condominium is well suited to a broad spectrum of seniors, particularly those who are early into retirement and do not wish to pay for a complement of services which they do not need. In today’s economic environment, the cost to carry such a condominium is extremely attractive. The investment potential, transactional expenses, and the illiquidity of the investment must, however, be carefully evaluated before making such a purchase.