age assisted accommodation

[grossreal]

hi all
here is a question and its here as it will form part of a deal
and you can give me your feedback as I have not fully put the deal together.
its aimed at the 75 to 85 year old market.
currently there is self care usually 60 to 75 year olds
and then there is aged care 75 to 0
now this is aged assisted care half way between
so not needing full care but not able to live entirely on there own.
similar to a aged hotel setup
so buss system and buzzer if need be and a nurse is about 1/2 hr away that thpe of thing.
now here is the deal and who would take it.
the unit will be a reverse mortgage on the person current property and the person doesn't buy the new unit they buy an option to live there.
so the unit stays in the companys name but it gives an option to the incomming tennant.
the option fee form a reverse mortgage against the incomming tennant old ppor.
or the incomming tennnat can sell the ppor to cover the cost of the option.
now there is no loans in place as there is not alot of chance of a 75 year old being able to get a loan in any form.
and the tennant gets security via the option.
we don't wish to pay rent as it then impacts on the incomming tennants other cash flows.
how has a few ideas of how to make this better.
and yes it is understood that noone wants to live in this form of accommodation so no I don't like them I would nevr live in one.
because reality is that alot of australians will live in this form of accommodation I am looking at a few ways to make it a bit different from funding point of view
and yes these are sites I am looking at doing if the number work out correct and
again yes this is caveat emptor so I can and will sell the options if some one here wants one.

 

[GoAnna!]

grossreal

Have you checked out the government regulations around the supply of this service? From conversations from a friend who owns a number of aged care facilities there is a lot of red tape and government hoops to jump through. Maybe you need to see what gets past the rules first?

With many of the facilities that currently operate you don't effectively buy the dwelling but instead a bond and rental system is in place based on government calculations.

So I guess my first question is - is it legal?

 

[grossreal]

hi GoAnna!
yes it is as there is two current groups and you are correct for aged care but this is not aged care and there is very little aged assist currently in the market.
for self care the rules are very similar as is the case with over 55 unit purchases but that not aged care were you have full care( thats very different)
this is not either.
this is not care accommodation this is age assist so similar to self care except with assistance at call so its alot different.
but I am not going to go into the difference
the question is how to structure to make it the best for the tennant.
and don't post give it to them free. cause thats not going to happen.
is it legal
well is it legal to sell a over 55 unit and what government reg is there to sell over 55 units.
its the same
the difference here is you can pay for what services you require in a buyer pays system.
you don't pay any form of bond and rental structure for self care the units yours and full strata this is the gap in the middle and a huge market.
and this is the evaluation position.
so in answer to your question
yes it is

 

[travelbug]

Most nursing homes have self assisted accommodation.
From the ones I'm familiar with, people move in to self care and can access care as they need it. ie nurse on call, etc.
Then if needed they can move into full care (as my MIL just did).

Why would someone choose your units over someone else's if they are sourcing and paying for the care themselves? Wouldn't this be expensive on a one by one basis?

When I first started reading your post I thought you meant you would have a person employed to assist the tenants. This would involve red tape but would be more attractive.
Another problem is the turnover of tenants. Many old people deteriorate quickly and quickly go from self care through to full care quickly. Again, my MIL went from self care to assisted care then full care in less than 6 months. She's 88. You would have a tenant in place, they have a fall then it ends abruptly as they can't look after themselves.
I don't mean to sound negative just thinking of all the possibilities.

 

[grossreal]

hi LynneeD
this is not one on one
this is in a large group similar to the aged care groups currently but is aimed at the age group from 75 to 88
the running will be done by one of the current operators I am looking at different ways of organising the funding in purchase and on going
so this is fishing to find different people ideas then is currently in the market.
as this market is about to go bolistic as the boomer become need these properties and currently the demand will well out strip supply.
so just looking at it at the moment

 

[aaarghhh]

Hi GR

So you would own the underlying land ... and the person taking the option, leases the unit via reverse mortgage funding?

Is this right?

Aaron

 

[grossreal]

hi aaarghhh
I own the land and the building at all times they buy an option to live there

 

[aaarghhh]

Does the owner have any security of tenure with an option?

 

[s_t]

Is it simple enough for them to understand and be comfortable with it? The elderly aren't exactly the first to take up the new/tricky/dangerous methods of doing things!

 

[grossreal]

hi aaarghhh
no they don't have security over the property but thy do have tenure and they have very strong tenure as the option must run its time frame
with an option as opposed to a lease or rent they have the ability to hold onto a protperty for a certain amount of time so its the same as a put option.
the asset is under your control but you don't own it.
now why is this so much better.
well the same as any option on a block of land or property it does not affect your serviceabilty or income stream.
you can reverse mortgage on the primary residence and then when the will is organised the estate pays out the option.
so its the same as a sale contract with an option just that the sale never goes thru as the sunset clause is longer then the life span of the option holder.
has this been done before you may ask.
not that I am aware
and its at planning at this stage so I am open to a few ideas

 

[grossreal]

hi s_t
well that one is simple usually they arenot the ones taht need to understand it there advicers are.
and these investments are not 250k 2br in penrith these are 600k investments and alot of these and I will call them clients.
have got alot of advicers from accountants to legals and usually family and alot of peoplr understand options most would have used them and if your account or solicitor does not understand an option then not sure which rock they have been living under.
this market is going to implode in about 10 years shorter I think.
and I don't wish to sound like a spruker but when 75 and 80 years old can't get a bed for love or money then the advicer will be pulling there hair out.
we only have so many beds and have a look the number of here and the number wanting them the numbers don't add up.
there is a very good saying hard but true most people don't ever wish to go into these establishments but at the end of the day they have to.
and most are run on the most part but dodgy back door guys that fine a cheap house or land
build a dodge home and fill it.
this is a bit diffferent this is 3 to 4 star and aimed at the people that are used to that market.
the large groups in this market already cater to this market but they will not be able to keep up.
so I am looking at the funding side of this venture
and where better to get feed back them here.
why because when 75 or 88 london to a brick you will be hanging up the welcome home plaque on the wall

 

[wylie]

well that one is simple usually they arenot the ones taht need to understand it there advicers are.

An ex-neighbour just went through this. Her advisers were her step-daughter (and me). No legal advisers involved, which would be normal, in my opinion.

and these investments are not 250k 2br in penrith these are 600k investments and alot of these and I will call them clients.
have got alot of advicers from accountants to legals and usually family and alot of peoplr understand options most would have used them and if your account or solicitor does not understand an option then not sure which rock they have been living under.

I have not been living under a rock, but I don't understand options. My 89 year old ex-neighbour ex-banker doesn't understand them, nor her step-daughter. I don't believe she would have been interested in a reverse mortgage in any circumstances.

this market is going to implode in about 10 years shorter I think.
and I don't wish to sound like a spruker but when 75 and 80 years old can't get a bed for love or money then the advicer will be pulling there hair out.

Agree totally.

we only have so many beds and have a look the number of here and the number wanting them the numbers don't add up.
there is a very good saying hard but true most people don't ever wish to go into these establishments but at the end of the day they have to.
and most are run on the most part but dodgy back door guys that fine a cheap house or land
build a dodge home and fill it.

I would be surprised if this is the case. During my small input of taking my ex-neighbour to care/nursing homes, they are tightly reglulated.

this is a bit diffferent this is 3 to 4 star and aimed at the people that are used to that market.
the large groups in this market already cater to this market but they will not be able to keep up.
so I am looking at the funding side of this venture
and where better to get feed back them here.
why because when 75 or 88 london to a brick you will be hanging up the welcome home plaque on the wall

Having just witnessed the major stress my ex-neighbour went through, I know that getting somebody in their 80s to understand why their whole life has to change is difficult.

What you are proposing is different - people aged 75 to 88. My dad is 72, but has alzheimers, and wouldn't take moving from home well. He doesn't understand why he has to go to respite twice this past year but accepted it the second time, but resisted strongly the first time.

My mum is 72 and would never consider moving into this type of accommodation until absolutely necessary, many years away, with some luck and continued good health.

I believe there is a market for what you are proposing, but with many of my parents' friends in their mid to late 70s, I don't know any of them who would consider going into this type of arrangement (regardless of how it is financed) until they could no longer care for themselves and/or their partners at home.

Unfortunately, by the time they need the care, they also can be deteriorating physically and mentally, and need somebody to explain it to them, or take over the arrangements. My ex-neighbour is an ex-banker, very clever woman, but dementia is slowing eroding her reasoning powers. I know her step-daughter found it extremely difficult arranging the move to mid-care, and my ex-neighbour fought it every step of the way, up until she had had enough falls that she knew if she didn't find somewhere of her choosing, the likely scenario was she would have a fall and actually break a hip, and then she would be placed in the first available place. She knew that this could be anywhere in Brisbane, so she chose, reluctantly, to view half a dozen places, and then as a place came up, she declined each one until her favourite one came up.

Unfortunately, even with a banking background, she kept telling me that she now had no money. I kept telling her she had $800K sale proceeds from her house, less $500K bond, some of which she will lose for five years, but it will revert to her estate. She just didn't seem to "want" to understand, and thinks she has lost everything she had.

I feel quite sure there is no way she would have even tried to "understand" a bond system.

What you are proposing is one solution, but from my experience, offering a bond to somebody who is in the position of needing care is too much for many of them to handle. And the people handling it possibly don't comprehend it either. I would think not many people facing these decisions are seeing professionals, at least not in my limited experience.

I don't know how this ageing population will resolve these issues, but there will be many changes ahead as the numbers swell.

Personally, I believe the system I have just witnessed works well, but we need multiple times the places, and the best way forward is for somebody (private or government) to build many, many more places where somebody can go when they are ready, or can no longer care for themselves in their own homes.

The other big plus with the aged care place my ex-neighbour has accepted is that when she needs higher care, she doesn't change rooms, but the care is increased. This is a big factor for older people. Her own sister went into low care, and when she became too fragile to be there, had to be moved into a nursing home in a different suburb. It was really upsetting for her to be moved that second time (the first time was bad enough).

So a place like my ex-neighbour is in is (in my opinion) the best. There are little villas where couples or singles can move where they look after themselves, cook for themselves. When that becomes too difficult, they move into a room in the same complex and have their meals and washing done for them etc. When that care needs increasing, they stay in the same room.

In an imperfect system, this seems to be a good outcome.

 

[grossreal]

hi willie
understand and you are spot on.
what we are looking at is a bit different as you option in advance before you get to that stage and thats the differenceyou will fill the place in a couple of weeks of opening but this is to book up in advance.
not sure it will work as yet this is feaso time so lots will change

 

[aaarghhh]

I kept telling her she had $800K sale proceeds from her house, less $500K bond, some of which she will lose for five years, but it will revert to her estate.

$500K for a bond??? Wylie I had no idea that bonds are used in aged care facilities.

PS. ***Peter finished his ident survey for me today. Lost a bit of land on one side and gained a bit on the other side....***


Sounds interesting GR.

You've strung together a few seperate concepts - "options, aged care, boomers, reverse mortgages" and frankensteined a way to create an interesting deal. I like the way you think GR.

No rent, No lease.

 

[grossreal]

hi aaarghhh
500 k is nothing there are alot better then that.
the all heart church ones take your property, hold your property, rent you via the rent assist,
and they as you fly to the big bed in the sky sell your asset and the associted cost leave you with a big 0 just to be big hearted.
and there is a waiting list for them.
frankensteined it has to be if he is going to carry the cash
have a quick squizz at who is the major in this market and have a look at returns.
so yes it does look very interesting and there is nothing in this market like this style of accommodation.
for those interested have a look at verticle nursing homes in qld they are not the same but they are similar and they are aimed at this market and some are selling for higher then the unit prices in southport etc and they are all presold.
looking for presales well this is presale heaven (excuse the pun) as its the only way to get into something you would not like but would be willing to live in.
but hay don't let me try to sell you on it
I want peoples ideas of how to make it better.