Investors dream of building communities where all the units sell quickly. It’s like any other piece of real estate. Your level of success and how much money you make is very dependent on sales to the end users.
It’s surprisingly difficult to do.
Seniors with money tend not to want to spend time fixing up a place. Most of them want to start playing and having fun immediately.
We know a retirement community that is located high in the Appalachian Mountains. It’s in an exquisite location that is cool and shady in summer and cold and snowy in winter. It has amenities including 2 private clubs, a golf course, a ski resort, an activity center, pool, landing strip, hiking and whitewater rafting and lots of other wonderful activities.
But resale is VERY slow. Resale was pretty slow to start with and has only gotten worse.
What went wrong?
The developers made more than one mistake.
The clubs include only one mediocre restaurant.
The nearest shopping is nearly 15 miles away. A medical clinic in also that far. Good medical care is more like 40 miles away. Shopping that would excite a comfortably wealthy woman is also about 40 miles away, along with sophisticated restaurants and other entertainment. Only people who dislike shopping really can be happy in the development.
Choosing the Right Location for a Retirement Community
Many men love it but their wives won’t even visit. Adult and teen children who like sports like it pretty well, but many others won’t come here for even a short vacation.
Property owners may only come a week or 2 a year but they have to keep up the property and pay for it. A vacation would be cheaper even at an expensive mountain or beach location.
Houses linger on the market for years. People don’t feel confident enough in the value of their properties to make ANY improvements. The décor of the homes runs to log walls, cheap quilts and unattractive used furniture. Few of the homes have open floorplans, but even the ones that do don’t resale quickly.
The property owners are trying to make the development more attractive to buyers through stringent rules on remodeling and landscaping while at the same time the road crew makes everything as ugly as possible. Their efforts go toward making the mountain location look as much a possible like a Florida golf course community in a location that does not lend itself to that esthetic.
No one seems to know how to fix the problem, but they still try all the wrong things anyway.
Developing a great retirement community demands all of these amenities and the convenient city amenities, too. Medical care, shopping and restaurants need to be close enough to limit driving time to access these things. Driveways and homes need to be accessible, too.
Go ahead. Make the investment to create a great retirement community…but don’t do it like this one. Just have your finances in order. SBA loans are a great option although they can take months. If time is an issue for your seller, a commercial bridge loans are a good alternative even with the higher interest rate. Just try to make the bridge loan period as short as possible to minimize the interest costs.