How to Kick Your Business Up A Notch by Tapping Into “Baby Boomer Niche”

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If you are serious about taking your real estate business to the next level, you’d better be paying attention to the trends in this business. Those investors that do are always way ahead of the curve. They always seem to be the first ones at the party while everyone else is still trying to figure out where the party is.

Looking in the Right Direction; Follow the Money

The way you figure out where the party is, is to follow the money. So ask yourself this; what is one of the biggest trends and one of the most underserved niches in real estate? That would be baby boomers. When was the last time you thought about this segment of folks when you were deciding looking closely at the direction of your business? I’m guessing these folks have never crossed your mind. But I’m going to give you some reasons you should definitely care.

Here Are 77 Million Reasons

It is estimated that there are approximately 77 million people that fall into this generation called “baby boomers”. These are the folks that were born roughly between 1946 and 1964, and they are the fasting growing segment of the population. Met Life Insurance estimates that they have spending power of at least 2 trillion dollars. This particular group of people owns more real estate than any other single demographic, and they are moving into retirement in huge numbers. It is estimated that 8 out of 10 baby boomers own their home, and many of them have one or more other properties such as a vacation home or investment property.

Now those are some pretty impressive numbers! The question is how do we tap into this potential huge source of business?

What Do They Want and Need?

Understanding what they want and need is crucial, and that depends on their age, their retirement income and a number of other variables. One thing you definitely need to understand is that there are basically two groups of people here.

One group is the younger baby boomers that are ages 47-55. Their needs are slightly different than older boomers. Many of the individuals in the younger group are still looking for larger living spaces where most of the older boomers are looking to downsize. It is estimated that 29% of Americans 50-64 plan to move in the next 5 years. The opportunities for real estate investors will be different for each these groups.

  • It is estimated that only about 1 in 10 baby boomers fall into the category of “boomer elites”; those folks that are very wealthy. But folks that fall into that group are upgrading their homes or buying expensive second homes even though they are retiring soon or are already retired. They want “one last hurrah”. If you live in an upscale area where wealthy folks like to retire, this is a niche you can definitely explore.
  • Some folks are ditching those big suburban homes and moving into urban areas. They want a different kind of life; one that doesn’t require the expense and time involved to take care of those big homes. This group wants to downsize and tap into a more urban lifestyle that includes having restaurants, shopping, theaters and other amenities close by (they are all about the amenities).
  • They are often sophisticated but want to live simply. These baby boomers are making bold lifestyle choices for their “second act”. The vast majority of these folks still want to own property rather than renting so they are looking at condominiums. It is expected that condominiums in urban areas will continue to be a popular choice for many retirees.

Related: BP Podcast 012 : Wholesaling and Marketing with Sharon Vornholt

Speaking of Amenities…

  • Many of these baby boomers will continue to work for some years so they want home offices that will allow them to use the latest technology.
  • They prefer to have everything on one level.
  • They also understand that they will most likely be facing changes down the road, so they want things like wider doors and hallways that can accommodate their needs later in life. Most people moving at this stage of life consider it to be their final home purchase.

What about the Rest of the Boomers?

Some folks like their neighborhoods. They just want to downsize into a smaller house. Look at where this group of people (the ones that will have enough retirement income to be able to live comfortably) will want to live when they retire. Even if they are downsizing, location will be very important to them. They are looking for a good quality of life that is comparable to the one they have today so they may not want to move into a significantly different neighborhood.

Where are the opportunities for you to provide this type of housing?

What Are Some Other Things on the List?

Here are 4 things they will be looking for:

  1. Easy access to quality healthcare
  2. Many people in this group especially older boomers are concerned about security. Safe neighborhoods and gated communities are attractive to them.
  3. Some folks will want to relocate to an area free of weather extremes. If you are located in a warm weather climate, you will have a lot of opportunity.
  4. Access to public transportation will be a concern for at least some baby boomers.

Opportunities in Rental Property

There are a significant number of people that will no longer be able to afford to keep their homes once they retire and these folks will be renters. Where will they want to live? What can you do to provide housing for these folks? This group will also have similar safety concerns and a desire for certain amenities.

There Is Opportunity Here for Every Real Estate Investor

I’m pretty sure that most real estate investors (including me) haven’t given much thought up until now about how they can tap into this vast amount of “potential business”.

Where do you see opportunity in your community to grow your business? How can you adjust your marketing to tap into this market?

Be sure to share your ideas in the comments below.

Photo: Tommy Hemmert Olesen

About Author

Sharon Vornholt

Sharon has been investing in real estate since 1998. She owned and operated a successful home inspection company for 17 years. In January of 2008 she took the leap of closing her business to become a full time real estate investor.

18 Comments

  1. You have done your homework, very good job. There are 10,000 people retiring every day in the US. I was told by a senior (in my area) that they wanted a small rambler (duplex), 2 bedrooms- each having their own bathroom on a single floor with a small yard in a gated community. Provide them with needed amenities and easy living conditions and you will have a recipe for success.
    As for me, if I could rent all my properties to seniors only, I would be in heaven. Foolish me, went for family homes- 3 bedrooms plus. Average family renter- 2 years, average senior renter- 10 years, Hmmmm?

  2. Jeff Brown

    Very interesting and timely, Sharon. I’d challenge whoever estimated that 10% of Boomers are retiring ‘very wealthy’. ‘Course, what does that phrase even mean, right? I’d suggest that roughly 9,000 of those retiring each day are retiring to an existence, not the retirement they envisioned. Duh, your primary point.

    Also, the one thing they really need and want is more income. Many will retire with a few hundred thousand bucks in a retirement plan, which will do virtually nothing to impact their day to day financial reality. Imagine having half a million bucks in your 401k, and being told it can only yield about $20k a year, wait for it, before taxes. That’s gonna be less than most of ’em will be collecting from Social Security, excuse the phrase. They want more income. They wanna be able to travel for themselves and go visit younger relatives when the mood hits ’em. Most of them will not be able to do that at will.

    Again, Sharon, you’ve addressed a very deep topic here.

  3. Hey Jeff –

    I can always count on you to make a “deep topic” even deeper.

    The fact that most people will retire a whole loot poorer than they ever imagined is a sad thing to face. Like you said, even those folks that thought they did everything right are coming up short. I do think there is a whole lot of opportunity here for those real estate investors that can successfully address the housing challenges baby boomers will face down the road. Thanks for your input as always.

    Sharon

  4. Interesting topic for discussion, Sharon!

    There’s definitely a niche here for those in the real estate investing space. I’ve encountered many in this demographic but it’s been a challenge for me going forward. I find the age difference a hindrance at times as it’s not as easy to relate.

    I know of others who have had success in this area but are closer to the demographic especially in the 55+ realm. I guess, sometimes it’s all a matter of what works best personality wise!

    Great topic Sharon!

    p.s. I’m currently working with a seller in this demographic. And, let me tell you — it’s been a very slow process. In many cases I run across, I just find them to have a lot of time on their hands so a lot of items get pushed back and/or it takes awhile for them to make a decision. Just my experience! 🙂

      • Oh, I’ve definitely been down that road Sharon! Many I’ve encountered in this demographic just do not want to do any maintenance or upkeep which I completely understand. Though, it can be problematic especially when it comes to yard work – some communities have issues with these folks who are resistant to keeping up the yard. Though I know this demographic has worked for others, this has just been my experience. Thanks for the suggestion! 🙂

  5. I think that the Boomers retiring will have a significant impact on the housing market in suburban areas. I imagine a 30 year old development having half the residents move or look into tapping their home asset value to fund retirement. Will there be enough buyers to fill the holes left?

  6. A very in-depth and thought-provoking article. Thank you Sharon. This is a demographic I hadn’t really thought about when I purchased my rental (was thinking more young families) but did get to understand firsthand a while back when a prospective tenant loved the neighborhood but was older and didn’t love the quad-style layout with all the stairs. I possibly could have had this renter for multiple years if I’d had a rancher. Something to keep in mind for the next one.

    • Michelle –

      When someone that is older become your tenant, it’s very likely that they will be a tenant for a very long time. This is one of the reasons I think this demographic is definitely worth looking at. They are also not going to tear up the property. Since elderly people don’t always stay on top of repairs needed, you might need to do quarterly inspections or something similar to stay on top of that sort of thing. Thanks for your comments.

      Sharon

  7. Great Article Sharon –
    I didn’t look at this from that perspective and now you have me thinking. If you can find a deficiency in a market and make it efficient before anyone one else does then it can be a great opportunity. Like we are both doing in our business. If you can find where the boomers are going to retire and find a market that is deficient in housing for their specific styles and needs then you can strike gold in selling homes to them? I know there is more to it than that but certainly a strategy that will work. Thanks for a great article.

  8. Huge untapped potential here. There will be many opportunities and voids to be filled in a lot of markets too. A few of which could be conversions of some sort in areas close to healthcare facilities. One thing that comes to mind is converting well located properties into senior condo developments specifically tailored to seniors with the large hallways, etc. Some of that is already going on with the conversion of large homes into assisted living facilities that have 5 bedrooms and 2 beds in each room. Other developers are creating entire “lifestyle communities” that are gated. On the smaller scale though I think picking up duplexes and undesirable 2 bedroom homes with the exit strategy of renting to seniors will become very popular.

    Not sure that the government would have the funding to do this, but in 20 years there very well could be the equivalent of section 8 but in a whole new category specifically geared toward funding senior housing (if there isn’t already)

    I’d also strongly consider investing in retirement community REITs. Just a few things to think about 🙂 great post. Very eye opening!

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