Demand rises among seniors to rent rather than own in active-adult communities

Ron and Kathy Bell have owned about a dozen properties together in their decades of married life, but two years ago they happily downsized from a 3,000-square-foot home to a 1,350-square-foot rented villa at the Floridian Club of Sarasota in Venice, Fla.

“We were using about one-half of our house most of the time and the rest was for family visits a couple of times a year,” says Kathy, a retired registered nurse in her early 70s. Ron, also in his early 70s, is a retired General Motors executive. “Most of all, we didn’t want to spend our time tracking down contractors to fix the roof and the pool heater. Managing a home was just more responsibility than we wanted.”

The Bells are among the group of seniors who prefer to rent in an active-adult community rather than buy. While properties restricted or targeted to seniors have always been available, a newer option is to rent an apartment, villa or single-family home within an active-adult community. These communities are designed for younger residents who want plenty of recreational amenities and opportunities to socialize with people in their age group of 55 and older.

“Some of the transition to active-adult rentals and age-restricted apartments has been driven by developers and owners of independent-living communities,” says Deborah Blake, principal of the Ipsum Group in Phoenix, which provides consulting services to developers of 55-and-older communities. “The average age of residents in independent-living facilities used to be in their 70s and in recent years they’re in their 80s. Developers wanted to ‘down-age’ the residents in their communities so they would stay longer. The typical renter in an active-adult community now is a divorced or widowed single woman in her mid-70s who wants to live within 10 miles of her family.”

Offering rentals rather than purchase options is both a lifestyle and financial proposition, says Blake.

“Some baby boomers just like the freedom and flexibility of renting,” Blake says. “Others are looking for affordability because they’ve been priced out of the market in active-adult communities. Demand for homes has pushed prices high in these communities, especially in Arizona and Florida where home prices generally are rising.”

Rental homes in active-adult communities are a relatively new segment for many developers, says Scott Burman, principal and construction president of Engel Burman, a real estate developer, owner and manager of a variety of senior housing options in New York, New Jersey and Florida.

“We’re building 800 rentals in four Sutton Landing buildings in New York, with 200 units in each location,” says Burman. “We know there’s demand for luxury rentals in active-adult communities, but we’re also doing this now because we’ve seen a paradigm shift in attitudes about rental housing. Seven to 10 years ago, we couldn’t have built these communities. There was community and government resistance to rental housing because it was considered transient.”

At Coastal Run, a new section of single-family homes at Heritage Shores, an active-adult community in Bridgeville, Del., leased homes were first offered in June 2020.

“We realized that not everyone wants to buy a home, but that renting typically required downsizing into an apartment,” says Bob Turner, director of residential properties for Allen and Rocks, a developer and operator of apartments working with Brookfield Residential, the developer of Heritage Shores. “We offer single-family homes with two or three bedrooms, a two-car garage, and a two-car driveway, so they get the flexibility of leasing but don’t have to downsize as much.”

One section of the community includes only rentals, and there are another 15 to 20 such units interspersed in Heritage Shores. The homes are the same models as the for-sale properties in the development and range from 1,300 square feet to as large as 2,600 square feet with an optional loft. Most include a screened porch. Rents range from $2,600 to $3,500 per month and include access to all recreational amenities.

“There’s a movement among seniors who don’t want to buy a house and would rather sell their home to use their home equity to travel or give to their kids,” says Larry Lieberman, CEO of the Barrington Group, developers of the Floridian Club of Sarasota. “Some of them are people who lost lots of equity during the housing crash and haven’t forgotten the experience, so they would rather take their cash now and lease.”

However, Lieberman says, many seniors don’t like the idea of renting because they associate it with inexpensive apartments where they can hear the neighbors or have transient neighbors who stay only for a season.

Financial calculation

The lease arrangement at the Floridian relieves the concern about potential rent increases because the two-year lease can be automatically renewed for a predetermined increase based on the consumer price index, says Lieberman.

“We have a 10-year lease at the Floridian, and we know that the rent increases are controlled from the time we moved in,” says Ron Bell. “We’ve been here two years now and our increase was so reasonable, only about $40 per month.”

Kathy Bell also appreciates that they never need to go through the stress of selling a property again.

“We were homeowners for most of our lives, and we might not have opted to lease when we were in our 50s or 60s,” says Ron Bell. “But now we love not being concerned about property values, homeowner’s insurance and property taxes.”

Many renters in active-adult communities are former homeowners, says Blake.

“Renting in an active-adult community fills a gap between living completely alone and taking care of a home and living in an independent-living apartment,” says Blake. “Independent living includes meal services and can be incredibly costly.”

Burman says that about 30 percent of their renters have sold a home, and 70 percent are moving from older rental communities to new communities.

At Coastal Run, many renters have sold a home and want to keep the proceeds for retirement rather than invest in another house, says Turner.

“They like the nimbleness of being able to put $600,000 or $900,000 in the bank,” Turner says. “Later, if they decide they want to buy, Brookfield offers them a 1 percent discount on the purchase. Some residents use the leasing option to try out the community before they buy here.”

Rents in active-adult communities depend on the community’s location and the size of the unit. Options range from affordable to luxury housing.

“We were building higher-end homes, but we’ve seen the demand is there on Long Island for more mid-market rents starting at $2,000 to $3,000 per month,” says Burman. “Twenty percent of all our rentals are affordable units for households with an income of 80 percent or less of area median income.”

At the Floridian Club, rents start at $1,700 for a one-bedroom unit with about 1,000 square feet and at $2,000 for a two-bedroom unit with about 1,300 square feet, says Lieberman. In addition, each unit requires a $192 per month service fee for landscaping, water, sewer and trash services.

Community amenities

For Dori Palant, 65, a former Miami police officer, leasing at the Floridian Club offers relief from the stress of homeownership responsibilities and the worry about increasing property taxes. More important, though, are the social life and support of the community staff.

“We have a pool that is like a tropical paradise, a fitness club with the finest equipment, a complimentary coffee cafe, and a monthly event and fitness calendar,” says Palant. “But it wouldn’t work without the competent, caring, kind and efficient staff who are employed here.”

The Floridian Club has an event coordinator and a 10,000-square-foot clubhouse, says Lieberman. About half of the residents have a place at the Floridian as a second home that they use for months at a time and the other half live there full time, he says.

The amenities found in active-adult communities are similar regardless of whether the homes are rentals or for-purchase, says Blake.

“Amenities are sized to the community, so you’ll have a larger clubhouse and more options in a bigger community,” Blake says. “Typically, all active-adult communities include a fitness center, a swimming pool, gathering areas for socializing, and a lounge or bar with a catering kitchen. You don’t typically see restaurants and dining services, unlike independent-living facilities.”

A lifestyle director, either full- or part-time, is usually on staff to coordinate clubs and activities.

“The activities attract younger residents,” says Burman. “We used to mostly see residents in their 70s in some of our senior condos, but the new apartments tend to attract people in their late 50s and early 60s.”

At Coastal Run, the average age of renters is 63, says Turner. The community offers swimming, tennis, pickleball, a library, a woodshop, restaurants, a ballroom, a fitness center and a full calendar of activities.

At the Floridian, the Bells appreciate the freedom they have to participate in activities rather than manage their homeownership responsibilities.

“We’re in good health and want to enjoy our life,” says Kathy. “It feels like we’re on vacation all the time. Even during the pandemic when everyone had to stay apart, we felt like we were part of a strong community and didn’t feel isolated.”

Building a senior community within existing apartments

Fredda Sheib is looking forward to meeting the roommate she was matched with. No, she’s not a college student.

The 71-year-old custom-storage designer recently moved into her new apartment in Boca Raton, Fla., part of the network of apartments established by UpsideHoM to create an all-inclusive social community within a community. Sheib and other residents, known as “members” of UpsideHoM, live in multi-age apartments and pay a single fee for their rent, utilities and services.

Sheib was renting a home in a small condo community and wanted more social life when she saw an ad on Facebook for UpsideHoM, which launched in January. Her new apartment building has a view of the swimming pool and the community has a fitness center, community rooms and residents of all ages.

“I love that everything comes in one bill, once a month, including my TV, my Internet, my utilities and every home expense,” says Sheib. “I don’t have to change light bulbs or air conditioner filters.”

UpsideHoM, available in three South Florida counties with plans to expand to other locations, rents existing apartments in communities with security, on-site maintenance and recreational amenities and then layers in services for residents age 55 and older, says Jake Rothstein, founder and CEO of UpsideHoM.

“Our members sign a 12-month agreement that’s more flexible than a lease so they can move out with a 60-day notice,” says Rothstein, who started the company after recognizing the need for an alternative to a senior housing facility for his 87-year-old grandmother. “The fee for our services is included in the one bill members pay, which ranges from $1,500 per room in a shared apartment to as much as $5,000 per month for a large, private three-bedroom apartment.”

Sheib was interested in the roommate option because she lived alone for years.

“I thought: ‘I need someone to say good morning to,’ ” says Sheib. “I just think it’s good for someone to not be alone all the time.”

In addition, she appreciates not being responsible for the financial and maintenance burdens of homeownership.

UpsideHoM’s services include biweekly housekeeping, all maintenance such as fixing the blinds or changing light bulbs, and basic Internet and cable service. Members can also request prepared meals, grocery delivery, laundry services, transportation and companion visits for additional fees.

“We cluster the units for our members within an apartment building and within a neighborhood so that we can build a community for them,” says Rothstein. “We host daily activities or provide information about existing activities within the building, such as letting our members know about a happy hour or about a food truck coming to the community.”

Rothstein’s other business, called Papa after his grandfather, pairs college students with older adults for visits, companionship and transportation needs. UpsideHoM residents can request visits from a “Papa Pal” and request one to provide transportation and company to doctor’s appointments and other outings. UpsideHoM also arranges unaccompanied transportation through services such as Uber and Lyft for members. Members range in age from 69 to 85.

“With UpsideHoM, residents are safer than they would be aging in place in alone, because we have our concierge services and community of people keeping their eyes and ears on each other,” Rothstein says. “We’re planning on building the biggest senior-living community in the country without laying a single brick.”