Put $40k into a 55-plus syndication. Nobody said the amenities weren't built.

The bit that jumps out at me is that the age restriction was a cost with no matching benefit for over a year. You narrowed demand and gave nothing back. I've been reading paper mostly and even I can see that's backwards.

How did you find out the capex was deferred? Was it just that one letter or was there something in the quarterly reports before it that would have tipped you off if you'd read them closely?

Construction 38 percent over budget on a clubhouse in that period isn't a surprise, it's what happened to nearly everything anyone tried to build. The sponsor either knew their number was stale or didn't reprice it. Either way that's on them, not on you for believing a printed figure.

What I'd want to know is whether the deal had a contingency at all and how big it was.

I'm reading everything about this category twice at the moment and I hadn't understood until now that active-adult and independent living are different products. Rigging, was this being sold to you as independent living or as active adult? Because the guide language I've seen treats independent living as having some light services and active adult as basically apartments with age rules and amenities.

@juniper the deck probably used both words interchangeably because it sounds better. That's common. Independent living usually means some meals or transport or programming in the rent. Active adult 55-plus is closer to what rigging describes, regular housing with a lifestyle package. Neither one includes personal care.

Rigging, the real tell in your post is the $340 premium. That's a big number to hang entirely on unbuilt amenities. Somebody should have asked what the premium was in year one with no clubhouse.

I run small multifamily and the thing that would have scared me here is leasing velocity, not occupancy. 78 percent isn't the problem by itself. How long is the average unit sitting empty between residents? In age-restricted you lose the whole under-55 half of the market and turnover gets slower even in a good building.

Curious about the operating side of this. Was there any programming at all? Resident-led activities, a part-time activity coordinator, anything? That stuff is cheap compared to a clubhouse and it's a lot of what people say they're paying for. If the sponsor deferred capex and also didn't staff any social side then they weren't running an age-targeted asset, they were running apartments with a rule.

@beacon that's the question I'd have too. I've watched a small portfolio teach me that the cheap things you skip show up in renewals about nine months later.

Rigging, did renewal rates hold? If existing residents were renewing fine and only new leasing was slow, that's a marketing and pool problem. If renewals dropped too then residents decided the thing they signed up for didn't exist.

I'm planning a first purchase and reading this with a notebook. The thing I'm writing down is "ask which revenue assumptions require completed construction." That's a question I would never have thought to ask.

Rural markets are where I look and there's a version of this that's worse. In a small town the 55-plus pool is real but thin, and if you take 130 units out of general circulation and restrict them you can genuinely run out of qualified renters. What was the market size here?

Rigging, thanks for putting the number in. Most people who lose money on their first passive deal never post about it.

I want to push back a little on your own conclusion though. You said the mistake was not asking what residents were paying for. I'd say the mistake was earlier. You bought into a repositioning as your first passive deal. A repositioning is a construction bet wearing a demographics costume. The demographics were probably fine. The construction wasn't.

@arbor that lands for me. I want income without a second job and the whole appeal of senior housing to me was "aging population, occupancy above 90, done thinking." But a stabilized asset at 93 and an asset you have to build to 93 are completely different risks and both get sold with the same demographic slides.

Question for rigging that nobody's asked. What did the sponsor's track record look like in this specific product? Not multifamily generally. Age-restricted, active adult, senior anything. I ask because I move slowly on decisions and the one screen that has saved me repeatedly is whether the sponsor has completed the exact thing they're proposing, at roughly the same size, at least twice.

I'd rather do this the low-risk way, and reading the thread the answer is simple: buy the one where the clubhouse is already standing and the residents are already in it. You pay more. You know what you own.

@verity and you'd have bought at a lower yield on paper and be collecting. Rigging's paper yield was higher because someone else's construction risk was priced into it and handed to him.

@anchor's question is the one I'd want answered too. Rigging, was this sponsor's second senior deal or their first?

One more thing worth saying for anyone reading later. Age restrictions in these communities sit on top of federal fair housing exemptions and there are occupancy and verification requirements attached, and how they get enforced varies by state. If you're going into one of these, have a lawyer who does this work look at how the community documents its age qualification. It's not a thing to eyeball.

@orchard that's going in my notes. I've been reading about screening for my first rental and it hadn't occurred to me that in an age-restricted building the screening file itself is a compliance document.

Rigging, if you answer nothing else, answer the sponsor track record one. It'll help more people in this room than the rest of the thread combined.