INVEST IN RETIREMENT COMMUNITIES
Frequently Asked Questions
Senior living provides added security to an investor’s portfolio. Due to the demand for senior housing and the continued growth of the senior population, the combination of the security in real estate combined with the security in the demand for senior housing makes for a solid return on investment.
Depending on whether the property is vacant or functional there are different variables to consider when looking for a “great buy”. Let’s look at functioning senior living communities first. The strength of the business is crucial. What makes a business strong? Length of time in operation, public reviews, survey audits from The Department of Health Services, the reputation of the management/caregivers, and of course attrition rates are all factors that impact the business’s strength. We find that communities with well-loved management have the ability to generate higher gross income and retention of both employees and clients. In turn, this adds to the stability of the investment and with a proper transition period, aids in the overall success rate for the investor. When looking at the real estate including both active senior living communities and vacant, the soundness of the dwelling is key. The layout is also very important. Private suites tend to generate the highest rental rates and if that can be combined with necessities such as in-wall oxygen administration, call buttons, individual climate control, and private baths with zero-grade shower accessibility we find these ideal real estate investments. Aside from the layout, the condition of the home is paramount. Is the roof sound? What age is the HVAC? How are the windows? Are the hallways/doors large enough to accommodate wheelchairs? In real estate, location is always key. For senior living communities, this also holds true. Key features regarding location are accessibility to regional hospitals/specialty medical clinics, freeways, and then the more traditional places of interest such as grocery stores, libraries, post offices, entertainment, parks/recreation, and so forth.
Experienced builders understand the needs of the communities they serve. We are seeing new developments including thoughtful layouts with community and gathering in mind. Dining areas which feel more like a fine dining experience incorporating smaller intimate spaces with different themes throughout are impressive for sure. Having choices for residents can promote an increased sense of well-being and satisfaction. Dedicated fitness centers offering both private and group instruction, craft rooms where collaboration, learning, and fun are able to blossom, small nooks for reading built-in throughout, and salons where daily grooming services are offered all contribute to a more resort-style feel and destination. Private living quarters with optional exterior courtyards draw a premium, and state-of-the-art technology for the safety and well-being of residents provides for an enhanced independent living feel is a trend we don’t see going away. Another trend is providing additional amenities and resources to the labor force. 2020 shook up the industry. Employee satisfaction and retention are key. Builders who incorporate spaces designed to enhance the well-being of the labor force provide an attractive benefit that aids in the retention of quality labor.
For those experienced in multi-family investments, independent living communities will be familiar. The benefits here come from the population served. Most seniors are on a fixed income and either receive government assistance or have significant savings to support them during this phase of life. Unlike multi-family and diverse populations they serve, the senior population with stable monthly income can provide additional security to the investment.
Assisted living homes are licensed for supervisory, personal, and directed levels of care. These homes care for residents who need supervision, mild to full assistance with activities of daily living, and mild to advanced forms of dementia. Most homes will have residents across various levels of care at one time.
Assisted living homes that specialize in behavioral health or memory care often have more staff and specialized training due to the higher level of care. These homes must have multiple levels of security to keep the residents safe. These specialized homes cater to the highest levels of care and therefore have a higher monthly cost to the resident with the potential to generate higher gross income for the business owner.
When investing in retirement communities, there’s an added value in contributing to the well-being of the population served. The investor, while gaining a monetary return, has the ability to impact the well-being of the seniors they serve. Any investor willing to put the time, money, and effort into their investment has the potential to increase their net profits and positively impact the lives of those who use their services. We do see a direct correlation between increased net profit and the involvement of the investor.
