The senior housing market has grown steadily by the day. This is because a significant number of baby boomers have reached retirement age. By preference or through circumstances, most feel more comfortable living in senior homes.
There are many reasons seniors prefer living in senior homes. For instance, some don’t want to live in their large empty houses where they brought up their children who’ve since left home. Senior homes offer them the opportunity for companionship and interaction among their peers who understand them better.
The rise in demand for senior housing has also been favored by the medical advancements and breakthroughs that have played a significant role in seniors’ increased life expectancy.
Who Lives In Senior Homes?
Senior homes vary depending on the type of care the seniors need. There are seniors who can still do things independently but prefer to live in a community. These seniors live in residential senior housing or apartments.
On the other hand, those who have lost the ability to do one or more basic things live in assisted living facilities. Others with health and memory challenges who require higher levels of care mostly stay in nursing homes.
Other kinds of older people you’ll find in senior homes are those who
- have been recently divorced,
- have relocated to live near family,
- can no longer care for or maintain their homes,
- are looking for minimal upkeep costs, and
- have lost their spouses and need companionship.
Some seniors who want the freedom to travel without worrying about their property back home also prefer living in senior communities.
Needless to say, senior housing always has a demand. As someone looking to invest in this industry, here are the most ideal opportunities to get you started:
- Own And Operate A Senior Home
If you’re looking for a way to diversify your investment portfolio, investing in senior housing is an excellent opportunity. Direct investment means you’ll own the facility and run it.
This is one of the most lucrative options for senior housing investment. You’ll reap considerable gains if you have the knowledge and experience required to run this facility. It’s a full-time responsibility requiring you to be knowledgeable about the rules and regulations of the industry.
Additionally, your local laws will require you to know the medical requirements of the seniors. It’s a high-risk business model but also has the potential for high returns. Being in charge, you’ll have a better chance of keeping track of your investment. Senior housing has exceptional resiliency in the commercial market because it carries hospitality, real estate, and need-driven services at the same time.
- Real Estate Investment Trusts (REITs)
REITs are companies that buy and sell or operate income-generating properties. Their investment portfolio is spread across many sectors. Therefore, you dilute your risk of investing in one property. Some REITs specifically invest in senior housing. As a shareholder and investor in a REIT, you’ll get your dividends through regular intervals equivalent to your investment.
REITs are low-risk alternatives for individuals who want to invest in real estate without the hassle of managing it. Since you only have to buy shares and not whole units, you can invest even with minimal capital. REITs provide investors with a steady income, especially if they hold it for a long time because the properties’ value appreciates over time.
- Rent Out Commercial Property To Third Parties
This option is ideal for investors who own property with enough space to hold a senior home. They want to earn from senior housing without shouldering the associated risks.
You can purchase property with the sole purpose of converting it to a senior home. Alternatively, you can buy an already existing senior home and leave the management to entities that have experience running these facilities. That way, you can invest successfully by collecting passive income without any direct involvement with the operations.
- Triple Net Lease
This type of senior housing investment reduces the risks associated with a commercial lease for you as the property owner. The tenant that runs the home will be responsible for insurance, property taxes, and property maintenance costs. Since the tenant will assume most of the risk, they’ll pay lower rental rates.
The advantage of this setup is this investment opportunity usually attracts creditworthy and well-established tenants. Most leases are long-term and last for ten years or longer. This secures your income for the long term.
- 55+ Or Independent Living Communities
When you invest in 55+ or independent living communities, you target a particular group of people. Most are perfectly healthy people who’ve retired early and are looking for a convenient place to spend their leisure years.
You’ll find these properties usually in more temperate areas. They have amenities like gyms, pools, spas, and other activities within or near their locations. They’re more luxurious than other types of senior housing. All investors need to do is appeal to the target group’s demographics for considerable returns.
These facilities operate more like regular real estate investments because the residents need minimal to no support. Investors who own these types of properties have minimal liability and risk. They also have relatively fewer responsibilities compared to other senior homes because they don’t have to keep medical support or round-the-clock care onsite.
This option is ideal if you want to venture into the senior housing market without operating too far from the traditional real estate experience.
Bottom Line
Investing in senior housing is currently one of the more stable real estate developments and investments. Senior housing presents profitable investment options with many untapped possibilities.
The standard question that investors ask before getting into any investment is, ‘Will the demand for this asset increase?’ Senior housing is an asset class that’s gaining popularity because of its outsized growth in demand and limited supply.
As the life spans of older individuals continue to increase and many of the previous generations continue to age, housing and its associated services will be in demand. Whether you’re seeking ways to diversify your investment portfolio or are just getting started in real estate, you should consider investing in senior housing.