If you’re retiring soon, you may be wondering how to navigate this frenzied market. There’s no single strategy that works for everybody—these days, retirement can mean very different things for different people. But no matter where you fall on the spectrum, one thing’s for certain: Buying what will likely be your last home is nothing like buying your first.
Here are a dozen key ways to get it right:
- Acclimate before you relocate. Weather is a key consideration when you’re buying a retirement home, especially for year-round residents. Places like Florida, Arizona and southern California are significantly more seasonal than they probably seemed during your annual one-week holiday visits. If you’re planning to make one of these vacation locales your primary residence, consider renting during the off season before you buy. Off-season deals like half-price golf might even make Florida’s humidity bearable in the summer.
- Get to know the characters. Take some time to appreciate the personality of the neighborhood and your prospective neighbors. Retirement will bring more downtime than you may have been used to, and social activities are big in planned communities. Your fellow residents will be your new friends—or your new nemeses. Either way, they’ll have a bigger impact on your life than your bathroom fixtures or hardwood floors.
- Check out the medical care. Many retirees endeavor to experience an active lifestyle. Does the community provide medical services? If there are no on-site health care facilities, how far must you travel? Does the community provide in-home health services, or are local physicians willing to make house calls? Remote upscale communities should be equipped with a helipad for airlift.
Factor in local tax rates. Some states are more retirement friendly than others. Income, property and estate taxes are crucial considerations when choosing a location in which to invest. Find the recipe that suits you. For instance, complying with residency requirements in Florida, Wyoming or Texas can create great income-tax advantages, but property taxes are relatively high.
- Time your buy to get the best price. The best time to buy is just as the local high season is ending. In southern states, that’s usually May and June, when the weather gets steamier and the tourist stream slows to a trickle. Buyers gain negotiating power as sellers become nervous about the lull. Like the pricing but not quite ready to retire? Consider buying the home and renting to another retiree.
- Study the community financials. Many retirement and second-home communities were hit hard during the downturn. While a recovery is taking place, some of these places have fared better than others. To avoid surprises, carefully review the financial records of the homeowners’ association. Search county clerks’ offices for liens and foreclosures within the community. Research community assessments through the association and the local property tax appraiser. While you’re at it, ask for the meeting minutes of the community board to learn what they’ve been concerned about lately.
Scope out the approval process. Big-city residents who live in condos and co-ops are used to being scrutinized by boards, but are you? Some retirement communities have stringent approval processes.
- Learn about what’s required by consulting with your broker and current residents. If you’re not crazy about the idea of your new neighbors looking at your banking records, or asking for references, you may want to consider a living situation with a less invasive approval process.
- Explore “membership.” Full-service communities frequently offer specific club-membership structures. Study the requirements and options. In some communities, for instance, the purchase of an ownership stake known as an “equity membership” is mandatory. This investment may run into the hundreds of thousands of dollars, yet its appreciation and resale value can be uncertain. Many communities also charge annual dues and a food and beverage minimum. The equity members are responsible for maintaining the club at any cost. During the downturn, many clubs suffered as fewer members were able to pay their shares.
- Scrutinize the activity calendar. You may not have thought this much about games since your school days. But again, you’re about to have a lot more time on your hands. So spend some time figuring out if the community you’re buying into provides activities you take seriously. In most cases, there are the country club staples—golf, tennis, swimming. But some of the most popular activities for retirees these days may sound foreign to you. Pickleball, for example, is played with paddles on what looks like a badminton court, and has become a craze for seniors who used to play tennis. Bocce, the Italian lawn-bowling game, is also hot, primarily because it can be played with a drink in one hand.
- Research the restrictions. Rental and resale restrictions are common in gated communities and condominiums. Still, you may be startled by what some retirement communities disallow. Pets are just the tip of the iceberg. Some places ban outdoor grilling and cigar smoke. Some won’t let you park a car in your driveway or warn burglars that your home is equipped with a security alarm system. You may not even be allowed to talk on your balcony after dark. And a long list of rules may also indicate a high level of board politics. If you decide to buy in, be prepared to get involved. Condo and co-op dwellers know well that it’s often just one or two people on a board who create 95 percent of the drama.
- Consider the caretakers. Who’s going to take care of your home when you’re out of town, ill, or just don’t feel like it? Some communities offer more maintenance, repair and security services than others. Predictably, well-staffed condos are easier to maintain than individual homes. However, caretaker and home-watch services are common offerings in high-end communities. Some visit 200 to 300 homes per month and charge $50-$100 to open and close the house and make sure your lights, air conditioning and pool pump are working.
- Don’t forget the big city. Homes in walkable cities like New York, Boston and San Francisco can be expensive, but provide many built-in advantages for retirees, including health care services, mass transit and a wealth of activities and social opportunities. It’s not surprising that many people of means move from suburbs back to these cities as empty nesters or retirees. If a retirement community in a place like Naples or Scottsdale just isn’t for you, maybe the big city would work.