Using Time Capsule just for backups

If they will have their own modem/router to provide a WiFi signal, then that is fine. As mentioned before, the modem/router will need to have at least one Ethernet port so the Time Capsule can connect.

If there are already a number of devices using the Time Capsule WiFi now, then they will be able to connect to the Time Capsule WiFi at the new location without having to be set up to connect to another new network......if you want to use the Time Capsule WiFi.

If the WiFi from the modem/router will be used, then WiFi devices will all have to be set up again to connect to the new WiFi network. That probably won't be too much of a hassle if there are only a few WiFi devices that will need to connect.

I can't say whether the Time Capsule WiFi or the WiFi from the modem/router will perform better than the other, but a clue would be whether the modem/router uses outboard WiFi antennas, or whether the antennas are located inside the device, which is the same design that the Time Capsule uses.

In general, the outboard antennas tend to work better than internal antennas if the WiFi will have to cover a number of rooms.

As I understand it, they will have their own network (subnetwork?) with their own password

Not unless they have their own personal modem/router in the apartment providing the network. If they will be using a shared WiFi network with other folks at the facility, then everyone will be on the same network......which frankly is a significant security risk......especially if the folks will be using online banking, and other confidential information online.

Imagine going to Starbucks and using the WiFi. There will be multiple other users on the same WiFi network. You would never want to do any personal online financial stuff on the Starbucks network for obvious reasons.

we will definitely think about setting up a separate wifi network with the Time Capsule.

I think you likely understand why this would be the best option, if security is an important requirement for your folks.

Any pointers about what we need to do?

The first and most important requirement would be a free Ethernet port on the wireless modem/router that is provided at the facility. The reason for this is that the Time Capsule must connect to the network at the facility using a permanent, wired Ethernet cable connection.

The second requirement would be that the Time Capsule will need to be reset back to default settings and then set up again.

The third requirement.....it's an option really.....would be to simply turn off the WiFi signal on the Time Capsule, since it will probably not be needed if you plan to use the WiFi at the facility.

However..... in terms of security, it would be better to use the private WiFi on the Time Capsule rather than share the same WiFi signal from the modem/router with everyone else at the facility. In other words, if you use the WiFi on the Time Capsule, you will have your own private network.

If need more help setting things up, should we assume that you will be using a Mac to configure the Time Capsule, correct?