Once you know and understand the basics of senior housing as an investment opportunity, it is clear why some people see this type of real estate as an attractive area to invest in. Additionally, senior housing is recognized within real estate portfolios as a way to diversify across other core properties.
Senior housing properties aim to provide both housing and services to seniors. The main categories of senior housing and care include independent living, assisted living and skilled nursing facilities. Memory care is another specialized type of senior housing that may be included as its own separate category or as a subset within assisted living. You can read more about the differences in senior housing investments here.
The 2019 Emerging Trends in Real Estate report highlights several trends that could be considered reasons for interest in senior housing investment opportunities. For example, senior housing is, according to the report, the top prospect for the development of residential properties and the third prospect for development in the commercial and multifamily properties for the current year.
Compared to other real estate property types, senior housing has some unique differences that including being an asset class that has an operating business attached to it (like hotels and self-storage facilities). With this in mind, senior housing investors should consider meeting the manager or operator of the business along with examining the fundamentals of the underlying real estate. Senior housing investors who look at the opportunity against criteria such as design, operations strategy, etc. can gain valuable insight into the probability of a particular investment meeting its target goals.
Favorable Considerations for Senior Housing Investments
The senior housing sector is generating buzz and several factors are fueling investor demand.
There is an Increased Demand for Senior Housing
It is a known fact that people are living longer as a result of today’s better healthcare and nutrition. As a result, the number of seniors is rising, and the demand for designated housing arrangements with amenities that serve this population is growing. Those who opt to invest in senior housing facilities are likely to enjoy better returns since this market represents one of the untapped potentials in the property sector.1 The U.S.Census Bureau estimates that this senior-housing-aged group will comprise 10.2 million people by 2025.
Senior Housing Investments Are A Needs-Based Demand
Part of the considerations of those who venture into the property industry is an investment in a stable source of income. This particular sector has a “needs-based” demand which has allowed senior housing like assisted living to withstand many of the recession pressures that other commercial real estate faces.2 With senior housing, the need for long-term medical and health care will be present regardless of what’s going on with the economy.
The needs-based demand characteristic of a senior housing investment positions this type of deal to be a strong sector of the industry as it is not greatly affected by the usual recession pressures that other sectors worry about.
Senior Housing Investment Opportunities Are Better Understood
Greater interest in the senior housing sector means there is a more comprehensive understanding and expanded transparency of the senior housing asset type. Data related to pricing and transaction activity is available through media coverage and professional analysts’ commentaries and investors, operators, and developers have access to more information so all can make informed investment decisions.
Is a Senior Housing Investment Right for You?
As more investors prioritize the property sector, it is wise to consider the options that exist, so that the initial investment can be recouped and profitability realized after venturing into this market. Investment in senior housing facilities is gathering momentum and may be worth consideration as investors look to identify a competitive property.
While the information provided above has been researched and is thought to be reasonable and accurate, it’s important to understand that all investments, including real estate, are speculative in nature and involve substantial risk of loss. Additionally, private placements of securities are not publicly traded, are subject to holding period requirements, and are intended only for accredited investors who do not require a liquid investment.