Is Investing in Senior Housing a Good Investment?

Explore the Potential of Senior Housing Investments: Stability, Demand, and Long-Term Growth

last updated Wednesday, May 21, 2025
#assisted living investment #investing in senior housing

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by John Burson

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Investing in senior housing is increasingly viewed as a strong opportunity, supported by demographic trends, solid financial performance, and a relatively resilient market. However, like any investment, it carries unique risks and considerations.

What should you consider when investing in senior housing?

Many people in the investment community overlook investing in senior housing as a viable long-term investment for steady cash flow. Consequently, they may be missing out on a potentially rewarding investment. Senior housing investments include independent living, assisted living, and nursing homes. Each of these investment types offers various levels of risks and returns.

Regardless of the type of senior housing investment you choose, these five factors apply to all senior living investment options:

1. Demographics
   You should research the age demographics in the city and region of your potential senior housing investment. The oldest members of Gen X are close to retirement. As of this year, Gen Xers comprise 19% of the U.S. population. Right behind them in age is the Millennial generation, with 22% of the U.S. population. This means the demand for senior housing will be strong for the next few decades.
2. Locations
   Location is essential in senior housing investing because seniors generally pick locations with easy access to medical facilities, shopping centers, mass transportation, and other resources. So, you must become familiar with the surrounding services and markets near the senior housing facility.
3. Quality of care
   You should do thorough due diligence on the facility’s history, reputation, and care of its residents. Yelp and Google Reviews are good sources of resident feedback. Also, the staff members’ qualifications are essential to review.
4. Financial Considerations
   Senior housing facilities must keep accurate financial records. If they don’t, it is better to step away. Also, carefully review each potential senior housing investment's free cash flow and net profit.
5. Governance and Regulation
   Federal and state regulations are vital in operating senior housing facilities. Awareness of these regulations and the facility’s compliance record is essential.

Why invest in senior housing?

There are reasons to invest in senior housing:

1. Demand growth
   The population over 65 is growing rapidly, and this trend is expected to continue. This means the demand for senior housing will likely increase in the coming years.
2. Occupancy rates are high.
   Senior housing properties often have high occupancy rates, which can provide investors with a stable source of income. 
   *three-month rolling data for each respective month, i.e., the rolling for Dec 2022 is Oct-Nov-Dec 2022. The data reflects two months' performance and the current month's data.
   
   
   
   Source: NIC MAP Data, powered by NIC MAP Vision
   
   
3. Potential for solid returns
   Senior housing investments can offer substantial returns depending on the location and quality of the property.
   
   
   Source: NCREIF, INC.  National Council of Real Estate Investment Fiduciaries
   
   
4. Social impact
   Assisted living investments can also provide a sense of fulfillment and allow investors to positively impact older adults' lives.

How to Invest in Senior Housing?

Along with knowing how to invest in senior housing, you should follow your usual due diligence protocols before making a final investment decision regarding a senior living housing investment.

There are a few options for how to invest:

• Buying an assisted living facility or nursing home is the most common of the four main ways of investing in senior housing. In this case, you would operate it as a business. If you choose this option, you will need substantial capital and expert experience running a senior living facility.
• Another popular option is to use the stock market to purchase shares in a senior housing company. Many senior housing companies offer publicly traded shares, and this investment is a hands-off way to reap the benefits of a growing senior living housing industry.
• A real estate investment trust (REIT) is another hands-off way to tap into yields from income generated from senior housing facilities. Like senior housing company investments, you can invest in a REIT by buying shares in the company.
• Alternatively, you can invest in senior housing companies through crowdfunding platforms (List of the 13 Best Alternative Investment Platforms by Paperfree Magazine). If you choose this option, you will not need a fraction of the money you would need to buy a senior facility outright.

Is Senior Housing a Good Investment?

Your decision to invest in senior housing depends on your unique investment needs and risk tolerance. However, assisted living investments have benefits that are hard to ignore. It offers a potentially consistent source of passive income, transparency, a growing customer base, and a solid equity appreciation history. Plus, you have a choice of liquid and illiquid investment options.

As with any investment, your thorough research of the senior housing investment weighs heavily on whether you get your desired return on investment. So, you must evaluate the property’s location, condition, and demand for senior housing. It would also be wise to enlist the help of a real estate professional with expertise in the real estate market in that area.

Pros & Cons of Investing in Senior Housing

Pros of investing in assisted living facilities or senior housing in general

Investing in senior housing is a good idea for several reasons, including:

• High Occupancy Rates
  According to the National Investment Center(NIC), the current senior housing occupancy rate is 83%, with six quarters of uninterrupted gains. It’s at the highest level since the NIC reported the rate in 2005. Potential for solid returns: Your senior housing investment can yield substantial returns if you choose the correct location and property. Senior housing returns are 11.6%, over 2% higher than the NIC total investment return of 9.4%. Occupancy rates have steadily increased, reaching 87.2% in late 2024, with forecasts suggesting they could surpass 90% by the end of 2026. Rent growth and stable capitalization rates further enhance the sector’s investment appeal
• Social Factor
  Investing in senior housing can add an ESG component to your portfolio because your investment positively impacts senior citizens’ lives.
• Recession-Resistant Investment
  Other real estate investments are subject to changes in unemployment, the stock market, and the GDP. However, seniors will forever need long-term medical and care facilities. As a result, tenant demand for senior housing stems from need instead of the overall economy. This dynamic means that investors in senior housing experience fewer peaks and valleys than other real estate investors.
• Attractive Returns and Outperformance
  Senior housing posted a total return of 3.64% in 2024, outperforming the broader real estate market and trailing only hotel and retail properties. Independent living, in particular, has shown robust returns and higher occupancy rates than assisted living, with a 5.60% return for 2024.

Cons of investing in independent living facilities or senior housing in general

Like every investment, a senior housing investment opportunity has risks. Here are some cons you should consider.

• Inevitable turnover
  Since tenants tend to have deteriorating health, most will eventually move on to a more intensive care facility. The problem is that it is difficult for senior facilities to find new tenants who meet the age and income requirements. Consequently, the vacancy time can be longer.
• Higher risks in single property investments
  Although the senior housing market is hot, adverse events can happen in one facility or the surrounding area. Consider investing in a few units in multiple facilities to diversify your investment.
• Increasing development and operating costs
  The rising cost of materials and labor can devour your profits. Also, a poorly managed facility can be an enormous money drain. For this reason, you should thoroughly examine the current and projected cost of doing business in your potential senior housing investment. In addition, it helps to consult a knowledgeable local real estate professional before investing.
• Operational Complexity and Regulation
  Senior housing is highly regulated, especially in assisted living and memory care. Regulation changes can increase costs and operational burdens, requiring careful compliance and management.
• Market Saturation in Some Areas
  Overbuilding in high-growth metros can lead to increased competition and compressed margins. Investors should analyze local supply-demand dynamics to avoid saturated markets.

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#1. The Thesis for Investing in Senior Housing by The National Investment Center for Seniors Housing & Care (NIC)



#2. Robert Kiyosaki Says Residential Assisted Living Is The Number One Real Estate Investment Today!

Note: Modern investment approaches.

New senior housing models, such as investments in independent living communities, are available in the modern marketplace. The primary benefit of independent living for investors is the lower medical care requirements than traditional assisted living facilities.

 
 
 

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