Buying a home in a retirement community can be a great investment in the next chapter of your life. Retirement communities are a good option for people who want to live with other retirees in a neighborhood that is catered specifically to their needs, especially social needs.

But the nuances that come with buying a home in a retirement community can make the experience overwhelming. Here are some things to consider as you evaluate your needs for retirement and also for the future.

Community and Infrastructure

Think about how close you are to public transportation. People are often forced to stop driving as they get older. If that happens to you, you will want to be in a place with a solid public transportation system. Consider your distance from important places like grocery stores, emergency medical facilities, and pharmacies. And don’t forget to think about your distance from cultural attractions and other social opportunities. You’ll likely have a lot more downtime during retirement than you’ve ever had before. And don’t be too quick to dismiss living in a big city—you will be much more independent there than you would be in a rural community if you have to rely on public transportation.

Take time to get to know a potential neighborhood and your potential neighbors. You will likely care greatly about social opportunities in your new community. Your neighbors could be your best friends (or your worst enemies), so get a solid feel for what living there would be like.

Last, consider the restrictions in a retirement community. You might be expecting pet restrictions, but there are many others that may surprise you. Some places ban cigar smoke and grilling. Some won’t let you park a car in the driveway, and you might not be allowed to sit on your balcony and talk after dark. A community with a long list of rules may mean a lot of drama later, so think twice before buying in such a community.

Financial Considerations

There are many retirement communities with serious financial problems. Look at the financial reports for the ones you’re interested in. Carefully review the records of the homeowners’ association. Make sure that there aren’t a lot of members who are not paying their dues. Look at county clerk offices for liens and foreclosures in the community. Also look at community tax assessments through both the association and the local property tax appraiser.

Also consider the homeowners’ association fee and what it covers. Ask when the fee is expected to go up, and make sure that you will be able to cover these fees in the future. Also, ask if any unusual assessments will be coming up. Communities that haven’t planned well for the future will have to cover expensive repairs with large assessments on its members.

Think about local tax rates. Some states are friendlier to retirees than others. Property and income taxes are crucial considerations, as are estate taxes. Find the combination that’s right for you. For example, Florida is great for income-tax advantages, but it also has higher property taxes.

Amenities

Look at included amenities and ones that cost extra. Different types of communities include different amenities. Consider whether or not the community you’re interested in offers the activities you want to do. Does the community have a pool? Does it have golf, swimming, and tennis? Does it offer classes and crafts? If you’re not interested in these activities, don’t go to a community where you will have to pay for them.

Making the Decision

Once you’ve decided on the things that are important you (activities, type of community, climate, and cost of living), look online for communities that fit your criteria. Then get on the road and visit the ones you are most interested in. This will give you more questions to ask and will also expand your knowledge. And last, don’t forget to ask if you can have a long-term stay or even rent before you make a final decision about where to buy.

Nice newsletter. Good article. Good information. Thank you. Carol

For conventional financing, borrowers with scores at 740 or anywhere above generally receive the same loan pricing (rate and cost). That being said, the better your credit the higher your chances of receiving loan approval with high debt to income (up to 50%) or high loan to value (up to 95%) which can be a major benefit when applying for a new loan. For Jumbo financing, borrowers with credit scores above 800 are generally rewarded with both better pricing and easier guidelines. There are no situations where better credit is a negative when obtaining new financing so we should all continue to strive to reach and then stay in the 800’s.

What are the advantages of a score over 800

Thank you Mike for this information. As a residential realtor the information that you provide is crucial to a successful transaction for my clients. You are indeed a pleasure to recommend to all of my clients. You are so professional, thorough, conscientious and pleasant to work with. !!

Hi Dane! Wanted to make sure I'm clear on this. Am I right in saying that on whichever remodel is done you still take a loss rather than an increase in value - the ROI will never exceed 100% of cost?