Tips & Picks

Ten Questions to Ask Before You Buy in an Active Adult Community

All Active Adult Communities Are Not the Same

A 2007 New York Times article explored how New Yorkers, the most jaded, brazen, and savvy folks in the world, are like lambs led to the slaughter when it comes to purchasing real estate. They have complete command of topics like views and space, but when it comes to examining expenses and community rules that will have a major affect on life in their new homes, they have a shocking lack of curiosity. Here is a link to the NY Times article on active communities

Our editors thought that the parallels of this situation to that of people over fifty buying into active adult communities were strong, so we developed this short list of 10 questions. These questions assume that the new retiree has previously researched the area where there new community is located for concerns about recreational, tax, cultural, and political compatibility., which offers objective reviews and a database of over 400 best retirement cities and towns and 400 active adult communities, can help with that process.

1. Who owns the land your home sits on?

Some communities own the land under their members' homes, but in other cases the developer or other investor owns it. In the latter case you can count on steady rent increases and possibly an uncertain future. Sometimes there is a plan for the community association to buy the land in a certain number of years or under certain conditions.

2. How solid is the financial situation of your developer or association?
There are a host of questions under this topic, but the basic one is this - can they weather a storm, either physically (think mold, hurricane, fire, flood) or financially (a rise in the percentage of people who don't pay common fees on time, or who default on their mortgages). It is worth the time examining annual budgets if you can get them - stability is what you want to see. Contingent liabilities are what you don't want to see (possible lawsuits or claims).

3. Is there a sinking fund for maintenance?

As a baby boomer you have learned by now that roofs wear out, just like air conditioning and septic systems. The smart organization has a sinking (reserve) fund that prepares for these eventualities. The less savvy one will be unprepared and have to hit you with a big assessment, which could cause problems with some of your co-residents. The age and condition of your development is very important - if you see signs of major maintenance being postponed - look out!

4. What type of assessments have there been?

Look for stability and predictability. Sooner or later, almost every development that is community owned will have an assessment. But erratic, big surprises are a bad sign.

5. What is the reputation of the builder/developer?

Sometimes you might love the property and the concept, but the developer or the development is relatively new. In that case you need active due diligence, finding out everything you can about their past projects. In the case of a big name developer, you can go online and find out a lot by typing different queries about them into Google. Or you can demand references and ask them your questions. Caution: there will always be unhappy buyers. You have to look for signs where the developer did their best to resolve complaints. Happy customers are a good sign!

6. What is going to happen with adjacent property?

Be cautious in brand new developments. Everything looks great, and then one day you wake up to smell the bulldozers across the street. Find out everything you can about future plans in your neighborhood. Deed restrictions can be a wonderful thing.

7. Can the community handle future growth?

Unfortunately some communities are a victim of there own success. Even the "new community' concept built on the ideals of the early 20th century (front porches, pedestrian friendly downtowns, wonderful amenities) can turn bad in the presence of uncontrolled growth. Bad as in too many students in the school systems, choked highways and streets, rising taxes etc. Caveat: find out everything you can about future planning.

8. What kind of rules will you have to follow?

Having lived in your own suburban castle all these years, you have probably gotten used to just following (or breaking) the rules you and your family set up. But get ready for lots of rules in your new active adult community. For example: Pets or no pets (numbers, weights and breeds), exterior paint colors, lawn maintenance, renting restrictions, improvement/construction rules, guests, parking, noise, dress codes, children, etc. Some communities are rule-crazy, others are not. Try not to buy before finding out your 3rd dog is not welcome!

9. What is the political atmosphere of the community association?

Let's say at the beginning that most community boards do a great job, run by selfless individuals who want to do well for everyone. It is usually a thankless job to be an officer of a community association. Everyone is a critic; very few people ever do anything constructive. But in the worst cases boards are dysfunctional, led by people who are power crazed, intellectually-challenged, or have borderline personalities. Occasionally the people running the show are well-intentioned, but they don't have the experience, discipline, or skills to do a good job at it. Running even the smallest association is a complex task with many important responsibilities - the people at the helm must be competent. Asking a few questions and reviewing past board minutes could put your mind at ease - or not! And by the way, if you need a great resource the  community association website.

10. What are your new neighbors like?

Presumably many of them are just like you, attracted to the community for the same reasons you are. Talking with some residents will give you a good idea if you will like living with them. Are they approachable and will they make it easy to break in - or are they more distant. One other thought here - how often do they live there? It can be an unpleasant discovery to move into a community and find your neighbors are never there (or the reverse!) We hope these questions will help you make a better search process. We invite you to add your own suggestions and questions to ask in the Forum on active communities.

Happy hunting!

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