If you were a real estate investor, say, 10 years ago, you might have heard that senior housing was the next big thing. Back then, the Baby Boomer generation was the largest, and it followed logic that they’d need places to live.
As it turned out, the senior housing boom predicted 10 years ago might have been premature. “Boomers,” as it turned out, were not quite ready to move into senior housing. Even now, the youngest Boomers are only about 70, still 10 years younger than the average person who enters an assisted-living facility.
The lesson is that the hype around senior living that started a decade ago is only now starting to translate into real demand. In fact, the National Investment Center for Seniors Housing and Care (NIC) predicts that there will be twice as much demand for senior housing of various categories by 2045 as there is in 2020.
For real estate investors, it represents an attractive segment of in-demand housing. If you’re a real estate investor who has not yet capitalized on this growing demand, there’s no need to fret. Here are three easy ways to invest in the continuing senior housing boom.
Invest with the crowd
You can find real estate investment trusts (REITs) and individual stocks that specialize in senior housing. If you want to diversify an existing securities portfolio to include the impending demand for senior housing, your options are plentiful.
You could also go online and pretty easily find crowd-funding sites that specialize in senior housing investments. You might have to be an accredited investor for some sites – $1 million net worth and/or $250,000 in annual income – but there are some crowdfunding real estate sites that cater to non-accredited investors that might provide a means to invest in senior housing.
Convert existing facilities
One of the ways that the growing demand for senior housing is being addressed is through the conversion of traditional properties to senior housing.
It involves hotels being transformed into assisted living or memory care facilities. It means that owners of multi-unit apartment buildings are adapting their facilities to accommodate seniors who require certain amenities and access to certain types of care. Why does this make sense?
The occupancy rate for senior housing is above 90 percent in 2019, higher than the historical rates of hotels and better than some traditional apartment buildings. Data also shows that senior housing is statistically less subject to turnover, which means that buildings that once were traditional multi-unit housing can be more profitable as senior-housing spaces, simply because of higher occupancy and lower turnover rates.
Acquire existing properties
Perhaps the easiest way to take advantage of the senior housing boom is to acquire existing properties that qualify as senior housing. This might include single-family homes in a retirement community that already has the amenities seniors seek, or investment in units within a condominium that has been designated for seniors.
According to the NIC, independent living is the segment of senior living most in-demand right now. That’s also the simplest of segments for real estate investors to get into, as it requires the least amount of provided care. Independent living is what it sounds like, often not requiring medical care for residents.
As the population ages, more senior living options will be necessary. The scenario presents an opportunity for investors to buy into growing demand, and there are various ways to accomplish this. Just keep in mind you don’t have to operate a “nursing home” in order to invest in senior housing.
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