Is Investing in Senior Living a Good Idea? Pros and Cons to Consider.

By
Services for Real Estate Pros with 5homestyle Kate Steven

The Aging Population and the Demand for Assisted Living

The aging population is a hot topic right now. With more and more people hitting retirement age, the demand for assisted living communities is at an all-time high. Investing in a senior living community can be a great way to capitalize on this trend. It's a stable, growing market with high demand and limited supply. As the population ages, the need for memory care services and daily living communities will only increase. However, you shouldn't invest in independent living communities simply because it's a stable market with high demand and relatively low supply. Investing in assisted living with memory care is a major financial decision, and it's important to have all the facts before committing to something like this. Below are a few pros and cons to consider when deciding whether or not to invest in memory care communities is right for you:

The Pros of Investing in Assisted Living Communities

The rewards can be many for those considering investing in senior living communities. A business that caters to seniors has plenty of customers with disposable income. The older adults who live there are typically more active than their peers and are in good shape, so there is a better chance of return on your investment. Some of the primary reasons to invest in home care or assisted living community include:

The tremendous growth opportunity.

Like every other business and asset class, assisted living and memory housing is growing. The senior population is growing at an astonishing 1.9% a year. You don't have to do the math to see the potential here—this growth is larger than most industries.

The sheer volume and size of the opportunity are big draws for investors, but the potential to change people's lives and make a difference is even bigger draw. Just think: more years of life increase your earning power and financial independence, which can translate into more financial resources to spend on those who need you most—your family or the organizations you care about.

It's recession-resistant

Despite what some naysayers may say, memory care facilities and personal care services have proven to be a recession-resistant industry. Since 2008, the residential memory care industry has been one of the fastest-growing industries in the country, according to data from Vivante. Vivante notes that independent living and senior living facilities can look forward to an extremely bright future due to several factors, such as the aging baby boomer population, the impact of health care reform, and favorable operating cost trends.

Senior living facilities are a sound investment.

Real estate is a solid investment, and personally, I think it is even better when you can invest in a business that has to do with the aging population, a growing population that has a lot of disposable income.

Creating jobs in a growing industry

The boom in senior living is creating new jobs and opportunities for everyone.

A wave of baby boomers recently turned 65, and it's expected that the number of people over 65 years old will double to 72.5 million by 2050 in the U.S., accounting for 20 percent of the population. This 2015 statistic alone makes it a great time to invest in senior living.

While the cost of living in assisted living and memory facilities is greater than most housing options, the job market and benefits are also attractive to people specifically trained to work in senior living facilities. For example, many assisted living communities offer free room and board, which can be essential for workers with limited means. The job market for people working in professional care and senior living facilities is stable and the salary is a significant perk for many workers who choose to work in the industry.

You can make a difference in the lives of seniors.

While the right memory care community investment may seem small, you'll be able to make a difference in the lives of seniors and their families. Not only will it be fulfilling, but it will also add value to your retirement. By helping seniors live longer, happier lives in their homes, you're helping them continue living independently. And when aging loved ones can maintain their independence for longer, they have more time to enjoy life and visit with family.

The Cons of Investing in Senior Living Communities

While the pros of investing in senior living facilities are enticing, the cons are equally important. Here are some of the cons to investing in a senior housing and memory care community.

There is no guarantee of a good return.

Maybe you have enough money to invest in an assisted living residence and see this as a way to make some extra income, but the truth is you may not make as much money as you'd hoped. This is because many seniors who live in Costa Mesa senior living community have Medicare and Medicaid. Although they may have additional income, they typically do not have enough funds to cover all expenses.

The upfront investment can be costly.

The national average cost of remodeling and setting up a living or memory care residence can be high. In 2014, the cost of setting up a new assisted living facility in the U.S. was between $1.8 million and $2.2 million. On top of that, healthcare aid salaries and other expenses for the memory care facility can run a few thousand dollars every month.

The residents can be demanding.

One of the challenges of investing in specialized care and senior living communities is that residents can sometimes be demanding. It can be frustrating when living and memory care residents do not cooperate, but you have to remind yourself that it is because they are living in a difficult situation.

The residents you help through your investment may not necessarily be the easiest to take care of, but this is just a part of the reality of the situation you are dealing with in becoming an investor in assisted living facilities.

The possibility of not being able to sell

Investing in living and memory care is unlike any other business opportunity you may have come across. Yes, the profit potential is attractive, but so are the risks. In particular, there is the possibility of not being able to sell your memory care unit investment, which makes this method of investing risky for those without a long-term horizon.

The potential for bad publicity.

Many investors focus on their senior living facility's good publicity when stories about its benefits make the news. However, a negative story can potentially damage your business, and it might end up hurting your reputation even if you are not personally to blame.

The Future of Senior Living

The future of senior living and assisted living is a hot-button issue. With an aging population and a growing demand for regular home care services, the demand for senior living and memory care facilities is rising. The question remains, however, are these institutions worth the money?

Comments (2)

Richard Weeks
Dallas, TX
REALTOR®, Broker

Great information, thanks for sharing.  I hope you have a great day.

Jun 27, 2022 04:07 AM
James Davis

Yes, why not? I think that it's a very interesting option

 
Jul 04, 2022 06:05 AM