Boomers make money rocking on the porch
July 17, 2004
Aging baby boomers -- and what a drag it is getting old -- can take solace in the fact that the B.C. housing market could hardly be kinder to them.
Those who own a home have seen historical appreciation and now they can not only choose from a bewildering array of retirement housing (no one calls them old folks homes anymore except the old folks) and can even make money in real estate while they rock on the porch.
In Greater Vancouver there are now 4,827 units of "congregate" housing that provide housekeeping, laundry and meals, up 34 per cent from just a year ago.
One-quarter are located in Vancouver; the rest mostly in Burnaby, White Rock, Langley and the Tri-Cities area.
Seniors housing is now the fastest-growing niche in the housing market and with the number of seniors over age 75 expected to increase significantly over the next 15 years, it will remain there.
Some of the higher-end projects (rents from $4,000 and up per month) have spas, fitness centres and theatre-style media rooms, beauty salons and libraries.
So how can an investor benefit from the trend?
The demand for retirement housing in B.C. is so pronounced that you can make money in the sector while waiting to retire. Investment options range from buying into a fee-simple retirement community, buying a suite in a retirement rental pool or buying shares in real estate investment trusts that specialize in the seniors market.
"If there was ever a growth market this is it," said Gerald Parfeniuk, president of Cares Real Estate Marketing Corp. (www.caresmarketing.com/) of Coquitlam who has worked with a number of developers of strata retirement communities.
An example is the St. Andrew Lane golf-course-linked community at Parksville on Vancouver Island. At St. Andrews, homes start at around $275,000. A typical buyer selling a $600,000+ house in Greater Vancouver, can buy a retirement home and invest the rest.
CPAC, a Langley-based company (www.cpac-care.com/), takes a different approach. Having finished its White Rock (Crescent Gardens) and Langley (Langley Gardens at Walnut Grove) they now offer a third phase for the 55-plus retiree.
Says Linda Prout (604-806-1093): "This development has the 'New York' lifestyle complete with concierge and an 'upscale' environment."
Two-bedroom units in the Langley complex will range from $180,000 to $280,000 for some 1,280 square feet. Prout: "Seniors are looking for lifestyle, security and will use the large size TV, card rooms and special exercise equipment." Having a very successful project, the company now is opening in Qualicum . . . The Gardens at Qualicum Beach with display suite open June 3.
Some of the retired owners invest in real estate investment trusts and publicly listed companies that focus on the retirement housing market.
The biggest in Canada is Toronto-based Retirement Residences REIT, which recently purchased Lifestyle Retirement Communities Ltd. for $140 million in a joint venture with the Canada Pension Plan Investment Board.
Investors can also buy full-service retirement suites directly which are then placed in an organized rental agreement.
Calgary-based Investicare Group Inc., which recently completed retirement lodges in Calgary and Red Deer, is an example.
Investicare does not build the retirement properties but arranges investment packages after buying the land and getting all permits in place. The retirement lodges are full service, meaning they offer the option of three meals a day, cleaning services and round-the-clock nursing care for those who need it. The average age of residents is 82 but investors can be of any age.
Investors own the suite outright. The suites can then be placed in a rental pool until the owners use it for their own retirement home. In Red Deer, for instance, the Investicare suites sell from $99,900 to $122,900 and typical rents are $1,395 to $1,995 per month. Investors have seen cash-on-cash returns of around nine per cent. When appreciation is factored in, long-term returns could be closer to 15 to 22 per cent.
Another Alberta developer is Leaside Developments. Reports Leaside's Michael Page: "We pick smaller communities that offer amenities suitable for retirement. They provide the users an incredible environment. For instance in Olds, Alta., our company offers in its Legacy Village (www.town.olds.ab.
ca/cib.html) full-size apartments designed with in-suite laundry and fully equipped kitchens -- independence, privacy but also companionship. Featured are heated parking, oak kitchens, nine-foot ceilings, two suite cleanings per month and yep -- you can have pets. Also offered are owner's lounge, private dining room, library and computer centres, exercise and games room, woodworking shop, hydro spa and guest suites. Having sold out Phase I, Phase II is now available from $116,900 to $206,900. Look it up at www.active-seniors-housing.com
Investing in the right retirement condo offers both stable rentals and potential appreciation. For instance, in the Legacy Village project you can invest, get a 10-per-cent return and rent the unit out for now and move in later. This type of investment will become an option-rich market -- benefits change from development to development.
As always, check out the owners and developers first . . . as in what did they build before and who can you call that bought one of their properties? Who does the management after all units are sold? Is there a rental pool and can you get out of you want to? Then shop for projects, realtors and developers just as you would for any other real estate.
© The Vancouver Sun 2004