Investing in senior housing to drive stable returns.

FAQ

Why invest in senior housing?

If you are wondering whether to invest in senior housing, here are five reasons why investing in senior housing can be an intelligent decision:

1. Demographic advantage
   The Gen X population comprises 19.3% of US residents. This is significant because the oldest Gen Xers are five to six years away from senior citizenship. So, they will soon join the nation's second-largest generation, Baby Boomers, in continuing the robust demand for senior housing. As of 2023, around 28 million US citizens are over 75, and 9.6 million are over the average move-in age for senior housing residents, 85. The oldest baby boomer will reach 85 in 2031. Subsequently, an avalanche of senior housing investments will soon follow. Experts estimate that senior care facility residents will double from today's number to two million. They also predict that the population aged 65 or older will grow from 15.6% today to 20% by 2050.
2. Consistent income stream
   One of the significant advantages of investing in senior housing lies in the potential for a reliable passive income stream. Since many seniors need long-term care, they usually agree to pay for premium housing and age-related services, mainly through long-term leases. This consumer dynamic provides a stable income source.
   
    
   Source: NCREIF, INC.  National Council of Real Estate Investment Fiduciaries
   
   
3. Less sensitive to economic trends and factors
   Unlike other real estate investments, economic changes have a less significant impact on them because seniors need housing and assistance in all economic conditions. As a result, the demand for senior housing is practically unwavering.
4. Government backing
   Seniors usually get financial help from governments for housing and special care. This government support for seniors' living conditions provides a guaranteed stable income stream through investments in senior housing.
5. Social score
   Investing in senior housing aligns with Environmental, Social, and Corporate Governance (ESG) best practices, as it helps enrich the lives of seniors in this country. By financially backing quality housing and assistance for people who can no longer care for themselves, you can ensure that the standard of senior housing and care remains high.

Considering these five reasons for investing in senior housing, it's apparent that this option can be financially and socially rewarding.

How to invest in senior housing?

You can invest in senior housing in several forms through four primary investment vehicles:

1. Real Estate Investment Trusts (REITs)
   REITs offer investors shares in companies that own and operate senior housing properties. Since these REITs deal with large-scale old properties and facilities, they offer you an opportunity once reserved for the mega-wealthy: fractional ownership of a significant real estate asset. By law, REITs must distribute 90% or more of taxable profits to shareholders. Moreover, a senior housing REIT investment is an effortless way to diversify your portfolio.
2. Private equity funds
   You could invest in senior housing private equity funds if you can cover a higher minimum investment. These funds aim to deliver generous investor returns by investing in existing housing properties and providing operational management.
3. Crowdfunding
   Crowdfunding platforms like Paperfree create an environment where investors bundle their funds and invest in senior housing projects or REITs. This investment format is an excellent choice for those with limited funds to invest in senior housing.
4. Direct ownership
   The most straightforward way of investing in senior housing is to purchase the property outright. However, it would be best to have a powerful combination of abundant capital, real estate investing expertise, and successful experience in senior housing operations. Direct ownership of senior housing can be hazardous if you lack these essential assets.

Investing in senior housing carries some of the same risks as other real estate investments, and a few are unique to the senior housing sector. As a result, moving ahead on senior housing investment requires the support of in-depth research and strict attention to detail. We also recommend you seek expert guidance from a financial or real estate professional with a respected reputation in senior housing investing.