EXAMPLE OF FEE STRUCTURE: FAMILY HOME $500,000.00
SEASIDE ESTATE HOME $400,000.00
Family home
 $500,000.00
Seaside Estate home
 $400,000.00
Weekly service fee
 $55.00 indexed to CPI
Deferred Management fee (DMF)
 3% of entry fee capped at 10 years
Capital Gains Share (CGS) 30% facility & 70% clients

You sell the family home for $500,000.00 and move to a $400,000.00 seaside estate home. You incur $15,000.00 selling costs, leaving you $85,000 in cash, which you invest at 5%pa, giving you $4,250.00pa interest income. You pay no tax leaving you $4,250.00net cash each year or $81.73 per week.

This interest income pays your seaside estate weekly service fee of $55.00, leaving you $26.73 per week extra cash to enjoy.

THE SEASIDE ESTATE OPTION – MONEY TO LIVE ON
Interest income
 $81.73 p.w.
Weekly service fee $55.00 p.w.
Spending money $ 26.73 p.w.
Spare cash for emergency $85,000.00

Note: weekly service fee rises over 10 years with CPI increases

THE SEASIDE ESTATE OPTION – AT THE END OF 10 YEARS
Clients Facility
Seaside Estate home purchase price Year 1 $400,000
Capital Gains @ 7% per annum Year 3 $484,000 9% DMF 30% CGS $61,200
Year 7 $596,000 12% DMF 30% CGS $81,600
Year 10 $680,000 9% DMF 30% CGS $61,200
Total Capital Gain $280,000 Total Payable $204,000
Summary: you receive original $400,000 purchase price less DMF and CGS $204,000 plus capital gains of $280,000.00 under the assumption you sell the property at 10 years.
Total profit achieved $476,000
Add your cash in bank $ 85,000
Total cash after 10 years $561,000

STAY IN THE FAMILY HOME – AT THE END OF 10 YEARS
Costs of family home over 10 years
Note: allow 3% CPI compound increases in costs or 30% over the 10 years
Council rates: 10 years ($1,500pa + 30%) -$19,500
Water rates: 10 years ($1,000pa + 50%) -$15,000
Garden maintenance: 10 years ($1,040pa + 30%) -$13,520
House repairs & maintenance: 10 years ($30,000 + 30%) -$39,000
Ageing friendly services, say $10,000 + 30% -$13,000
Sale of house preparation costs ($30,000 + 30%) -$39,000
Estate agent selling costs: 3% -$21,000
Total costs of staying in family home for 10 years -$160,020
Sale value of home with 75% capital gain* $700,000
Net cash position after 10 years (Sale price – 10 years costs) $539,980
Less interest not earned with village option -$67,500
Net financial position of staying in the family home over 10 years $472,480

*Assumption: Historically housing doubles in value every 10 years. Looking forward this is unlikely given the world economy. Village homes however are driven by the issue health, not the housing market and, when combined with low supply due to lack of DA approvals, capital growth is forecast to remain at least 100% over the next 10 year period.

SEASIDE ESTATE OR STAY IN THE FAMILY HOME FACTORS TO CONSIDER

DOWNSIZING TO A SEASIDE ESTATE

  • Releases cash to invest, to live on and to provide a financial buffer
  • Is lower in all operating costs, with co-op purchasing
  • Replaces an old house with a new house
  • Is designed for ageing safely in place with links to Thungarra lodge
  • Provides emergency support at no extra cost
 STAYING IN THE FAMILY HOME

  • Locks away the asset/cash value
  • Ongoing maintenance requires cash
  • Poor maintenance will affect the value of the home
  • Renovations may be required to make ageing friendly
  • Solo residents may have to increase security measures / isolation
  • No direct emergency medical support

What You Pay For and What You Don’t in Thungarra Seaside Estate

The financial concept behind Thungarra Seaside Estate is that you are joining a co-operative where all the residents share the costs of running the estate.

You pay a weekly service fee of $55.00 and that covers all costs. The Facility Manager is required by law to operate the estate without a mark-up. This means they pass on all expenses to the residents with no management fees. If they make a saving in purchasing bulk electricity for instance, they have to pass that on with no fees or extras.

Residents have a level of control over these costs. The Facility Manager has to submit regular accounts and budgets to the Resident Committee for approval. The residents can reject expenditures and price increases, plus suggest ways to reduce costs such as mowing the lawns every two weeks rather than every week. From year to year the fee should not increase by more than the CPI – so you can plan your annual household budget.

You are responsible for the direct costs of your own home – but only the operating costs, not the capital or structural costs, such as repairs to gutters, roofs, plumbing etc.

Your weekly fees cover:

  • Emergency assistance call systems / monitors
  • Cleaning of all common areas
  • Administration of the country estate
  • Insurance – of the buildings, common areas, public liability, fidelity
  • Management and staff wages and expenses
  • Gardens and grounds maintenance (common areas)
  • Building repairs and maintenance (common areas, external facades, roads, footpaths)
  • Garden watering  (reticulation provided)
  • Rubbish removal and recycling
  • Capital and asset renewal infrastructure needs

What you pay for yourself:

  • Interior furnishings of your home
  • Contents Insurance
  • Maintenance of backyards
  • Electricity Usage
  • Gas Usage via bottles
  • Telephone / Internet