Can I buy a retirement residence building and lease it to an operator?

Buying the property and leaving the running of the residence to someone else is a different business from operating it. You become a landlord whose tenant happens to deliver care. Our guide to buying a retirement residence touches on separating the property from the operating business. This page looks at that landlord side.

What you are relying on

Your income depends on the operator paying rent, so you are relying on how well the operator runs the residence. Ask about its experience, its other locations, its staffing and its finances. A strong operator keeps the building full and the rent paid. A weak one puts your property at risk. Treat the tenant review as seriously as a buyer would treat a review of the business.

Lease terms that matter

Read the length of the term, the renewal rights and who handles maintenance and large repairs. Ask who pays for replacing major systems, and what happens when the operator wants to leave or cannot pay. Also look at whether anyone stands behind the operator’s promises. Commercial lease terms differ greatly from one deal to the next, so your lawyer should read each one.

A building made for one purpose

A residence is built for care, with features other tenants rarely want. If the operator leaves, finding a replacement can take time, and converting the building to another use may be costly. Ask your lawyer about the operator’s approvals to run the residence, and ask what they mean for you as owner. Plan for an empty building before you buy.