Financial gurus have always asserted that real estate investments are good sources of passive income. They have repeatedly stated to have multiple sources of income and invest to reach financial stability. For this reason alone, it is worth considering an investment in the senior housing industry.
There is a notable increase in demand for senior housing because of the “baby boomer” generation. According to the census, more than ten thousand “baby boomers” are turning 65 every day. It’s clear that the world has never seen a generation like the Baby Boomers. What’s not clear is how the world will respond as this active, vibrant, educated generation gets older. Experts estimate that the boomer generation will bring a 75% increase in people over the age of 65 needing senior care, to nearly 2.3 million people by 2030. That is a good sign that senior housing would be a lucrative investment in the coming decade.
Every investment is a risk that comes with an advantage and a disadvantage. Here are some of the pros and cons of investing in senior housing to help you make an informed decision.
Pros of investing in senior housing
The industry is not yet saturated
Real estate is a generally jam-packed space, but not all investors are eyeing the senior housing market, mainly because it’s only beginning to pick up its pace. This means it isn’t quite as stiff yet compared to other real estate sectors. For you, this means a prime opportunity to lock in your investment in a profitable industry.
Renting to couples looking to expand a family or university students would yield a high turnover. Seniors, on the other hand, usually stay in a retirement home for a long time. And thanks to technology and healthcare, people now have longer life expectancy compared to previous generations. The type of tenants you will be catering to are stable, with fewer turnovers than other real estate properties.
Most investments can be affected by various economic factors like the rate of unemployment or the stock market. But the long-term care and facilities needed by seniors will always be there. The demand for senior housing will be dependent on the needs of the elderly and not necessarily on the economy.
For the next few decades, thousands of Americans will turn 65 every day. This makes the senior housing market one with incredible growth potential. As more and more people become senior citizens, senior housing investors can expect a steady stream of tenants that require housing or at least some form of senior living facilities. To err on the side of caution, many investors start with one senior housing investment type, and then expand their positions once the profits start rolling in.
Cons of investing in senior housing
As with any investment, it’s important to weigh both sides when it comes to senior housing. Yes, there is profit to be made, but there are potential drawbacks you need to be aware of too. These include:
There are five major types of franchising:
Possible squabbles and disagreements
The aged people in senior housings live close to one another. This closeness, sense of community, and social interactions are part of why they chose to live in lodgings for seniors. However, this also means there’s a potential for squabbles to arise.
As such, you may need to look after the accommodation set up closely. If you’re not sure you can manage the property yourself, you may need to hire someone experienced in senior care.
Although senior tenants have lower turnover than their younger counterparts, it is an immovable fact that there will eventually be turnovers. Additionally, most senior living communities have age and income restrictions, which can make it a lot harder to find new tenants.
The cost of running the place
Senior housing facilities flourish because they are run as a small community. You may have to hire a professional crew to handle the everyday routine. Senior care is often about individualized services, which means you need experts in everything from cooking and cleaning to specialized caregiving and assisted living.
You’ll also need people who know how to plan engaging activities for the senior residents. Remember, A poorly-maintained senior housing community will not attract new tenants and it may make your current renters leave too.
Senior housing investments, as with any real estate investment, is a long term haul. A projected boom in the following decade in the senior home market can deliver lucrative profits for you if you start early. If you’re thinking of investing in senior housing, we can help.
Apricus is a renowned leader in the senior living industry. We offer a variety of specialized consulting services, including senior housing constructions, management, and even franchising. Get in touch with us today to get started with a FREE investing consultation.