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CCRC Entrance Fee Payback Calculator
CCRC entrance fees amortize over expected resident stay.
Net operator NPV value
$777,067
Non-refundable portion
$100,000
Total monthly fees (nominal)
$540,000
How the math works
Non-refundable = fee × (1-refundable%). Refund PV = refund / (1+COC)^years.
$500k × 20% = $100k non-refundable. $400k refund / 1.08^10 = $185k PV. Net: $100k + ($500k − $185k) + PV of fees.
How to Use
- Enter entrance fee.
- Enter refundable %.
- Enter expected length of stay years.
- Enter monthly fee.
- Enter cost of capital %.
- Read NPV economics.
Frequently Asked Questions
What's a CCRC entrance fee?
One-time payment at move-in to a Continuing Care Retirement Community. Provides resident right to live there + continuum of care (independent, assisted, memory, skilled nursing). Typical fee: $150k-2M depending on unit size and amenity level. Can be 0% refundable ('Type A'), 50% refundable, 80-90% refundable, or 100% refundable. Higher refund = lower monthly fee, but higher upfront burden.
Operator economics?
Entrance fees fund construction/acquisition costs — important capital structure. Operator amortizes entrance fee over expected resident stay (8-12 years average). Fee provides capital; monthly fees provide operating revenue. Reserve required for refund obligations (60-80% of outstanding refundable fees typical). Turnover: when resident leaves, refund due to estate; replaced by new entrance fee payment. Net cash flow per turn is positive if refund < new fee.
Regulatory considerations?
States regulate CCRCs under 'continuing care contract' laws. Required reserves. Actuarial analysis on expected fees vs liabilities. Escrow for a% of entrance fees during pre-opening. Consumer protection: right to rescind, disclosure of refund policy, limits on monthly fee increases. Compliance is expensive but protects operator from class-action risk. Experienced senior-living attorney essential.
Why the CCRC model?
Residents: certainty of care progression, price lock-in, community continuity. Operator: committed resident pool, entrance fee capital, diversified care revenue. Not perfect — recent bankruptcies (Covenant Retirement, Erickson) showed risk of over-optimism on entrance fee collection vs refund obligations. Modern CCRCs more conservative on fee/refund structure.
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