Senior housing?? Great opportunity or too much risk?

Question

Hello all,

I recently came across (2) 8 family units in a nice part of town that is an age 55 and up apartment complex. It is not assisted living, but apartments for older tenants. The owner has of course praised how their vacancy is short lived and have small turnover. I'm just a little worried that since you're shrinking your pool of renters down to a smaller section (55 and up) if that would be a concern for finding tenants in a timely manor. On one hand, I know the baby boomers are a large group of individuals right now.. What are your guys thoughts?

William Yeh · Answer

Hey Jonathan,

Yes nationwide there is a wave of babyboomers entering retirement age and they will slowly filter into all of the various housing solutions geared to that demographic. However this type of product is highly localized. You've got to know your market and what the absorption potential is for your product. Having the 55+ chasm will definitely segregate your product from general multifamily for better or worse so do your homework.

Jennifer T. · Answer

I am in a totally different area than you, so the market could be quite different.  But, for what its worth, there is a large apartment building near where I live that has historically been known for being a "seniors" apartment building.

A few years back, I happened to run into a consultant they had hired to change that image.  They also ran a commercial campaign focusing on how "updated" and "modern" the facility is and all the amenities.  And, while I can't speak for other residents of the city, it didn't change my view of that location one iota.  I still think of it as the "old people, fuddy duddy" apartment complex...right down to the independently owned beauty parlor and café on the first floor (very unusual for my area).

The building itself even looks a bit "grandma"...elegant and in great condition, but a bit dated and old fashioned, with heavy Italianate type of architectural features.

Barb Mattis · Answer

If your area is anything like the Cleveland area, this is definitely an underserved group.  I would much rather have this type of multi-family than conventional.

Peter MacKercher · Answer

They can be $$ makers. Make sure that you get all the financials. Also you will want to read up on Senior housing under the Fair Housing Act for St Louis MO.

Ryan Dossey · Answer

Feel free to PM me if you wish. What's the guys story for selling? Moving/retiring to Fl? It sounds really familiar to a guy a talked with extensively for several weeks on a 16 unit in STL. Just want to make sure that it's not the same guy. I was prepared to sign contracts on it and he got sketchy when I asked for profit/loss statements. BIG red flag that the #'s aren't quite what they claim to be. Same story with all older retired folk, vets, and friends. Just watching out for a fellow investor. Are they primarily smaller units (1bd/1bth or 2/1's?)