Friendship Village Declares bankruptcy

[ychuck46]

My wife was a social worker for the county we lived in before retiring, and dealt for decades with the elderly only, some of whom were in these types of communities. After hearing her stories I wouldn't touch any of them with the proverbial 10' pole. You can be assured that they are going to find some way to screw you or your loved one over, particularly if your care becomes too expensive for their liking. And good luck appealing to government to help you; most of the higher ups in those "public service" jobs have been bought and paid for by the CCRC companies. One person's experience for decades versus someone or ones with far less knowledge than her.

 

[bmcgonig]

When we moved to our CCRC 4 yeas ago I carefully checked their financials, and still review them semi-annually. So far so good. A lot can go wrong financially with a CCRC, like any large organization. Ya gotta keep um on their toes!

Serious question..once you’re in and probably have paid the large entrance fee what can you do?

 

[harllee]

Serious question..once you’re in and probably have paid the large entrance fee what can you do?

Where I am moving you can get a refund of most of your admission fee if you leave within the first 5 years.

 

[bmcgonig]

Where I am moving you can get a refund of most of your admission fee if you leave within the first 5 years.

Most places I’ve seen seem to amortize the feed over 5 years.. ie if you leave after 4 years you only get back 20%.

 

[jazz4cash]

Erickson is a popular senior living provider where I live. We just got a brochure promoting one of their communities. I was bummed out to receive this type of marketing material. It was ~$300-600k up front and ~$2k-4k monthly with 80% refund of the up front fee. I had no idea it worked that way. It seemed to make it artificially exclusive. If a senior couple has a home with equity they could swing it.

 

[CardsFan]

Erickson is a popular senior living provider where I live. We just got a brochure promoting one of their communities. I was bummed out to receive this type of marketing material. It was ~$300-600k up front and ~$2k-4k monthly with 80% refund of the up front fee. I had no idea it worked that way. It seemed to make it artificially exclusive. If a senior couple has a home with equity they could swing it.

I guess I don't get the business model. Just charge us $100k, up front, no refund.

It seems to me there can be funny business going on with the front end fee. The only reason to want more up front is if they really don't intend to give it back, IMHO.

 

[athena53]

It seems to me there can be funny business going on with the front end fee. The only reason to want more up front is if they really don't intend to give it back, IMHO.

Yeah, I'm starting to think that, too. The only possibly legitimate use for it (other than making money on the float) might be to attach it if the resident runs out of money and can no longer pay the monthly costs- but with a thorough financial review beforehand, that shouldn't happen.

 

[Sunset]

Yeah, I'm starting to think that, too. The only possibly legitimate use for it (other than making money on the float) might be to attach it if the resident runs out of money and can no longer pay the monthly costs- but with a thorough financial review beforehand, that shouldn't happen.

There is the float issue, which I think is the real reason, assuming no ill will is intended.
We were going to be charged ~$400K but get it all back maybe in years, this saves the corporation $40K per year in interest charges if they instead had to borrow money instead of using the float.
Or even a very safe aspect, they invest it at 6% and get $24K per year extra above the yearly charges per resident !

Plus, should the resident run out of money, I'm sure there is some small clause that says they can use up the $400K as monthly payments.

 

[jazz4cash]

Wish I had hung on to that brochure. It would be interesting to calculate how many months the buy-in fee would cover. In my area there senior housing options seem extremely limited. If you can afford to buy anything it will very likely appreciate faster than general RE market.

 

[mickeyd]

I haven't studied this too much, but I am having trouble seeing an advantage of this and the CCRC concept over a facility that has independent/assisted living/ memory care in a single location.

Our CCRC has all 3 of those and that impacted our decision to move here 4 years ago. Our IL situation is perfect for us and the hundreds of others who enjoy life here.

 

[youbet]

.The only possibly legitimate use for it (other than making money on the float) might be to attach it if the resident runs out of money and can no longer pay the monthly costs- but with a thorough financial review beforehand, that shouldn't happen.

We've been visiting CCRC's the past few years.

Earnings on your "deposit" are a significant source of income for them. I recently reminded DW that if we give them $500k deposit, they'll earn $3k/mo or so from the earnings. Hardly trivial! And at the end, they'll return $450k, keeping $50k as their 10%.

Having your deposit is a large factor in insuring against having to tap other resources if your income does eventually fall below monthly fees. Say your monthly fees rise to $5k and your income is only $4k. That half million bux they're holding will make up the difference for a long time!

BTW, in addition to tapping your deposit to cover financial gaps, they also move you to the lowest cost apartment available and take control of your incoming income such as SS or pension/annunity.

Around here, it's very rare for CCRC's to loose money because clients can no longer afford the full monthly bill. The issue Friendship Village has is its vacancy rate of almost 30%. We toured there a month ago and the representative told us they went far overboard during COVID and while cliients kept dieing, move-ins were nil.