There are many different types of real estate investing that new and experienced investors can consider. However, senior housing is an often overlooked area that has interested fewer investors; it also boasts plenty of opportunities for growth and profit. Here are a few pros and cons that this type of investment property offers.
As Baby Boomers reach their senior years, the demand for senior housing has increased significantly, but many investors have failed to notice this uptick in demand. For that reason, there are plenty of opportunities for investors and very little competition.
Investing in senior housing is more lucrative than the average person realizes, particularly because most people will need this type of housing at some point in their lives. As an investor, you can expect to earn a 13% or higher annual return on your senior housing investments.
People are living longer in general, which means the senior population is consistently growing. Those seniors will need housing, and many prefer to live in communities filled with others in their same age brackets. This means the need for senior housing will consistently grow well into the future, allowing you to expand existing investments, or to launch new development opportunities.
Invest in a REIT
Inexperienced investors can invest in senior housing by contributing their money to a REIT, or a real estate investment trust. This allows you to make investments without having to get involved in the physical aspects of managing the property. You will earn a percentage of the net income earned by the property.
If you buy a rental property within a retirement community, you’ll be responsible for covering fees that will have to be paid to the community managers. Typically, these fees cover things like utilities, lawn care, and other essentials. While you can include this fee in the rent you charge tenants, you’ll still have to pay the fee when the property is vacant.
Senior housing represents a one niche market in overall real estate investing. In order to live in a senior living community, residents cannot be younger than 55, so a large portion of the population will be excluded from occupying any senior housing property that you own.
While there are some limitations, senior housing is a growing need that offers impressive growth potential. As an investor, you can find plenty of projects in this area of real estate investing that will help you grow your wealth.