Monday, December 03, 2007
Seniors with high assets and low incomes renting
As we know, corporations for many years pressured associates to retire early, and to become more self-sufficient, as they gradually froze pensions and replaced these with matching 401K’s and sometimes job buyouts. Sometimes people retire early and have significant cash but rather poor income flow from that point on, unless they generate some new opportunity. The trend may change somewhat as labor shortages appear in some areas and as demographics force society to accept later retirement ages (that’s a big part of the social security debate). Nevertheless, it is a problem now.
One issue may be housing. Someone may want to move into an apartment and have the cash to pay rent for several years worth of leases, and may not want to risk the real estate market (right now it’s a double-edged sword with falling prices and the subprime mess). They may not have the net income to qualify for the residence (with pension, often frozen or reduced by social security offset), and social security, but they may in fact be able to pay the rent. It would be possible to set aside a special bank account with an auto-debit to guarantee that the rent is paid electronically at midnight the first of every month.
I have wondered how property managers feel about this situation. In 2003, while still in Minneapolis, I checked seven properties in Northern Virginia, and five of them said the use of assets would be OK (as did the property that I left in Minneapolis); two said that it would not. The two that would not tended to be lower end older “garden” properties than generally rent to working class immigrants. That’s interesting. As it happened, I did not need to do this. Rental agenting companies have not said much, indicating that it varies from property to property, and that often a co-signer is required. I found (on the web) one property in Virginia Beach that mentioned this issue but that insists that a senior have close to a half million in assets.
I’ve also checked "over age 55" property listings (senioroutlook), and noted that 30 or 40 miles outside of the largest cities, the prices tend to become reasonable for seniors who do not need to use any special services (just want a reasonably priced secure apartment with usual residential amenities). They appear to be priced lower than some general population properties. I would hope that they would be amendable to working with people in this situation, since obviously assisted living facilities and nursing homes by definition must, and this “active” population of senior rental customers has fewer needs. I don’t know how this plays out in states with larger senior populations (like Florida).
Some people might rent individually owned houses or condos and fund themselves subject to sudden eviction if the owners default and get foreclosed on.
Anyone who knows more about how this issue plays out in practice is encouraged to comment.