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  1. Brick-by-brick guide to buying a retirement home

Brick-by-brick guide to buying a retirement home

Everyone craves for a peaceful retired life. After having worked hard for several years, doesn’t it make sense to enjoy some comfortable golden years? Gone are the days when parents had to save not just for the children’s education, but also for their post-marriage days. Today, youngsters are more responsible and prefer to manage liabilities […]

Updated: October 31, 2014 12:25 PM

Everyone craves for a peaceful retired life. After having worked hard for several years, doesn’t it make sense to enjoy some comfortable golden years?

Gone are the days when parents had to save not just for the children’s education, but also for their post-marriage days. Today, youngsters are more responsible and prefer to manage liabilities on their own. They are no longer dependent on parental funding within a few years of their working lives. In such a backdrop, it makes little sense to keep watching your money grow for generations to come.

Retirement homes

Traditionally, Indians have taken pride in joint families. Things are changing now. With youngsters switching jobs regularly and moving from one city to another, often parents are left to fend for themselves in their twilight years.

However, many senior citizens are financially independent today, which is a good sign.

The need to socialise, safety and healthcare concerns and a yearning for a peaceful life are prompting many to think about investing in retirement homes. Those who are working abroad also want their parents to have a safe life back home and are willing to spend on retirement homes.

Things to note before investing

When to invest: Those who have just entered their 40s can think about investing in retirement communities for a peaceful time later. Prices will only escalate as time passes and, therefore, this is the right time to invest.

Invest in pilgrim centres: Pilgrim places like Hardwar, Mathura and Hrishikesh are some of the ideal destinations. Though realty rates are nearly 40% higher in these areas, they are ideal for a peaceful life in the sunset years. Also, being tourist places, they could fetch high rentals.

Are they senior-friendly? Many builders hype their retirement home projects by promising premium facilities. And while they advertise senior-friendly designs and doctor-on-call services, the reality is quite different. Therefore, it’s crucial to make a background check of the builder’s reputation before taking the plunge. Many developers rebrand their projects if units go unsold because of far-off locations. Beware of these.

Invest in smaller cities: Small towns provide twin benefits: They are relatively cheaper and pollution levels are lower

than bigger cities. In such places, realty rates also jump at a quicker pace because of their huge potential.

Inheritance & liquidity issues: Like any other property, legal heirs can inherit a retirement home. But they can live there only when they become senior citizens themselves. Also, they can sell such properties to senior citizens only. At times, builders build in a clause that only senior citizens could rent or sell the property. This leads to liquidity issues.

Tough to get loans: Most banks are unwilling to fund retirement homes, and not just because you are applying for a loan in your later years. Liquidity issues also prove a deterrent for banks. Reverse mortgage is not an option because of the same reason.

The cons

Many builders hype their retirement home projects by promising premium facilities, but the reality is quite different

Many developers rebrand their projects if units go unsold because of far-off locations

Like any other property, legal heirs can inherit a retirement home. But they can live there only when they become senior citizens themselves. Also, they can sell such properties to senior citizens only. This leads to liquidity issues

Most banks are unwilling to fund retirement homes, and not just because you are applying for a loan in your later years. Liquidity issues also prove a deterrent for banks. Reverse mortgage is not an option because of the same reason

The writer is CEO, BankBazaar.com

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