If you’re looking for a great business opportunity with solid profit potential, consider investing in senior housing. This growing industry offers many advantages, but it also poses some risks, especially for first-time investors. It’s crucial to understand the risks and identify properties that are suitable for this market. Some of these risks include lawsuits, staff turnover, and heightened regulations. There are also management risks, which depend on the type of investment vehicle you choose.
Purchasing a senior housing facility outright is expensive for most investors, but Delaware Statutory Trusts (DSTs) and Real Estate Investment Trusts (REITs) provide more affordable investment opportunities. These funds allow a group of investors to purchase property together, but are only available to accredited investors. Unlike other types of property investments, these trusts don’t qualify for 1031 exchanges.
Another option for senior housing is co-housing. There are two types of co-housing: general co-housing and senior-only co-housing. In co-housing communities, residents own their homes but share common spaces. The communities often work like a homeowners’ association. The Co-housing Association of the United States has a directory of co-housing communities.
As baby boomers enter their retirement years, the demand for housing that fits their lifestyles is on the rise. For investors, this market is especially attractive because of the low level of competition. This means that you can rent to retirees at high rents while enjoying a steady ROI. Furthermore, the senior housing market is expected to continue growing for years to come, which makes investing in senior housing a high-yield, low-risk investment opportunity.
While senior housing is a great investment opportunity, it requires a skilled team and an in-depth understanding of the industry. Because the market is more demanding and complex than traditional real estate, it’s essential to work with a team of experienced investment professionals. For example, the first step in investing in senior housing is to understand the demographics of the area in which you’re planning to invest.
In addition to location, senior housing investors should consider how much competition there is in each submarket. Most seniors prefer to age in their own homes, close to friends and family. This means that they don’t want to move hundreds of miles away. Therefore, research competition within the submarket and ask questions regarding amenities, rent, occupancy, and beds. Then, make a decision based on these criteria. With careful research and preparation, you’ll be able to find a great location and a profitable business.
Another benefit to investing in senior housing is that this sector of the commercial real estate market is more stable than many others. This means that your returns will be consistently high, even if the real estate market is experiencing a slump. The industry has experienced growth and stability over the past decade, and there’s a good chance that it will do the same over the next few decades.