Can you afford senior living housing? Key factors to consider before investing

Senior living homes are an emerging concept in India. Many of us may know a senior relative residing in one such real estate project. While these communities offer older adults a supportive, community-oriented environment tailored to their needs, are they financially feasible? In other words, can you afford one?

Here’s what you should consider before investing in a senior living project.

The affordability Issue

“Senior homes typically offer 24/7 medical care, security, housekeeping, recreational activities, wellness programs, and emergency response systems,” says Kanika Gupta Shori, Founder and COO, Square Yards, a real estate marketplace.

Let us look at the cost of senior living facilities. Senior living home prices depend on location, unit configuration (1–3 BHK and villas), level of care, and premium offerings. In Tier-1 cities, the average property value for senior living projects generally ranges from Rs. 1–2 crore, with villas priced even higher.

In Tier 2 and Tier 3 cities, they would be in the ₹50 lakh to ₹75 lakh range while in rural areas they would be in the ₹20-40 lakh bracket.

When it comes to affordability, you have to remember that after you retire, there would be living costs plus costs of healthcare which will go up with age. If you are investing in a senior living facility, there will be maintenance costs as well.

Also Read: Here’s why south Indian cities such as Bengaluru, Chennai and Hyderabad dominate demand for senior living housing

Senior citizens can avail home loans, but repayment terms depend largely on the lender. Generally, loans must be repaid within 15 years or by the time the borrower turns 70–75 years. However, it might not be a good idea to have a loan after retirement.

So, careful planning is key. “To arrive at a decision, it is important to estimate monthly expenses, assess total assets, and savings, and compare costs with financial capacity,” says Abhishek Kumar, Securities and Exchange Board of India (Sebi) Registered Investment Advisor (RIA) and Founder and Chief Investment Advisor, SahajMoney, a financial planning firm.

Let us consider three profiles and look at whether they can afford a senior living home.

Profile 1: 50-year-old earning ₹3 lakh monthly

With a strong income and 10+ years to save, such a person could accumulate ₹1.5 crore plus before retirement. He should be able to afford senior homes in most locations, including metros, with proper planning.

Here, we need to assume that the person has a retirement corpus over and above the price of the senior home. Also, if he is buying when he is 60, the price would be higher.

Profile 2: 60-year-old with ₹1 lakh pension

This stable guaranteed income can cover maintenance costs at most facilities. Plus, there will be a sum left for living costs.

“However, for upfront payments, he would need existing savings. He could afford tier-2 city options with ₹50 lakh in savings, but metro facilities might be challenging without substantial additional assets,” says Kumar.

Profile 3: 60-year-old with ₹2 crore corpus, no pension

He can afford tier-2 or rural facilities outright. Metro options would require careful evaluation to ensure that enough remains for living expenses and healthcare.

Here’s what you should consider before buying into a senior living project

“One needs to remember that outright purchase offers full ownership but comes with maintenance costs and a long-term financial commitment,” says Shori.

There are assisted living facilities which work on a rental basis where one can stay for a budget of ₹25,000 to ₹1 lakh a month or more. If outright purchase is out of the budget, this can be considered.

Another thing to remember if you are investing in a senior living home is that legal heirs can inherit the property but may face restrictions on occupancy. “While ownership transfer is legally permitted, most senior living communities require occupants to meet the age criteria,” says Shori.

If the heir is not a senior, they may have the option to sell, lease, or rent the property, but they might not be allowed to reside in it themselves, he adds.

Anagh Pal is a personal finance expert who writes on real estate, tax, insurance, mutual funds and other topics