Posted 26 days ago

One Big Investment Opportunity You Don't Need to Rush

When it comes to investing, no one wants to miss “the next big thing.” In fact, we can become so focused on the fear of missing out (FOMO) that we lose our senses, rushing into deals that seem too good to be true before performing our own due diligence. But there’s one sector of commercial real estate where you definitely don’t need to rush to get in on strong investment opportunities. That area? Senior housing.

Unlike venture capital deals and trendy or viral investment opportunities, senior housing is a sector poised to grow not just for days—but for decades. By 2030, all baby boomers will have turned 65, and 1 in 5 Americans are expected to be older adults. The number of Americans 65+ will nearly double to 95 million by 2060. Also by 2060: those 85+ will triple from 6 million to 19 million.

Long story short: senior housing can be an incredibly promising investment opportunity, but there is no need to rush to invest in it. The following are a few tips to investing in senior housing the slow and steady way.

  • If you’re being pressured to invest, run. First and foremost, if any investment advisor or fund manager is pressuring you to invest in a senior housing deal, walk away—quickly. There is absolutely no reason to “rush” into an investment in this field. Some deals may be particularly promising, yes. But even those will be bound by the realities of securing funding, hiring construction crews, and finding the right operator partner for the job, among other factors. In other words: there is plenty of time to get in, even on the right deal. If someone makes you feel otherwise, look elsewhere.

  • If the investment seems too good to be true, wait for another one. There will be plenty. In 2016, research showed we in the senior housing space will need to build 1.8 million new units by 2040, with demand increasing from 25,000 units a year now to 96,000 units per year from 2030 to 2035. Further, a significant portion of the current supply is antiquated, and new supply will make it obsolete. There will always be another potential deal to get in on—at least for the next two decades. There’s no harm in waiting for the conditions to feel right.

  • Understand the demographics. By 2035, those 65+ will outnumber those under the age of 18 for the first time in history. Still, population demographics are just one of many factors that make for a strong senior housing investment. Others include, but are not limited to, local market conditions, unemployment rates, average household incomes, and demographic shifts. In a recent study of U.S. markets, senior housing occupancy rates varied 17 percentage points between the highest market (94.1 percent in San Jose) to the lowest market (77.1 percent in Houston). What’s more, occupancy rates within these specific markets varied further due to care type (independent living, assisted living etc.), facility quality, operator quality, and more. When choosing an investment, know that every deal in every market is different. If you don’t have enough information to feel confident in the investment, move on.
  • Strong investment principals still apply. Senior housing is a promising, recession-resistant investment type, but that doesn’t mean you can abandon sound investment principals. Don’t ever invest more than you feel comfortable doing in any single fund or senior community. Work only with investment partners just as committed to your personal investment goals.

  • There are numerous ways to invest. Depending on how much money you have to invest, how long you’re willing to part from it, and how much risk you’re willing to take, there are numerous different ways to invest in senior housing, from private equity funds to REITs and crowdfunding platforms. Know your options before meeting a potential investment partner.

At Senior Living Fund, we believe in thoroughly underwriting each senior housing investment and diversifying our site selections in each fund we open. We also believe in transparency and sharing regular updates about our investment locations. Soon opening our ninth fund offering, we invite potential investors to get to know our company via weekly email communication and project updates before making an investment themselves. To learn more about our company or our ongoing fund offerings, visit us at www.slfinvestments.com.

Quinn Brewer is Communications Manager for Senior Living Fund, a private equity company that invests in quality senior housing opportunities nationwide.



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