Guest article by Isabelle Guarino Smith
American investors find themselves in a unique place right now, amid a looming recession, a once in a generation inflation levels, and relatively low confidence in market conditions. Add to that, the promising future and subsequent collapsing financial confidence in crypto, NFTs, and similar lucrative ventures, and you have investors putting the brakes on the blissful outlook of endless growth.
It’s a tale as old as time, people who have money want to grow that money, and as quickly as possible. But in this economic climate, investors are increasingly looking for additional stable strategies to expand their portfolios.
Future Property Investments
Real estate has historically been the key to stable and gradual growth. However, in today’s market, with large corporations buying up most of the available housing stock, the market is becoming squeezed and small investors are being priced out entirely. This has many scratching their heads about where to turn for their next investment.
In spite of all these negative economic indicators, there has been a growing trend in one niche sector of real estate investing the past few years. One that relies less on interest rates and affords investors the opportunity to achieve two to three times the fair market rent for their properties. This investment strategy combines the historical stability and gradual growth of residential real estate with the profitability and cash flow of a thriving business.
Financial analysts are always looking for trends that point to opportunity, and right now there is a significant amount of data that points to immense growth in this sector. Population projections indicate that a unique group of consumers is set to create a massive shift in the real estate market. This group of consumers…senior citizens.
Why Invest in Seniors?
The senior demographic in America is expanding at an unprecedented rate. “Every day in the U.S., 10,000 people turn 65, and the number of older adults will more than double over the next several decades to top 88 million people and represent over 20 percent of the population by 2050.”
Many experts have indicated that this could present a potential crisis for the U.S., while others are looking to the opportunity. Some countries, like Japan, Sweden and Italy, are already feeling the impact that this change in elder-heavy demographics has on financial, real estate, and medical sectors.
Why is there such an explosive opportunity in this niche market?
In essence, it is simply down to demand, driven by significant demographic growth.
The Growing Demand in Assisted Living
The reality is, there has always been a need for assisted living homes, and the senior housing industry has been on a steady incline for decades. However, the reason there is such a massive demand now is because of the huge disparity between the population of seniors currently requiring assisted living and those who will need it over the next few decades. Specifically, there is a considerable difference in the size of the Silent Generation, those who have needed assisted living for the past few decades, and the Baby Boomer generation who are just beginning to enter the years where they will need assisted living.
According to the US Census Bureau, there was a 61% growth in U.S. births from the Silent Generation to the Baby Boomers. As these Baby Boomers enter their golden years, it will create a massive demand for assisted living housing. And it is this growing demand that has investors scrambling to find their seated table.
In 2021, the assisted living industry in the U.S. was valued at $87 billion, and it is forecast to expand to $140 billion by 2030.
Fulfilling the Need for Senior Care and Accommodations
The unique thing about this particular investment sector is that it does not depend on what the markets are doing. In fact, even in the midst of the financial and commercial difficulties during the pandemic, the U.S. assisted living market grew while most other markets declined. When Americans face financial setbacks, they will usually reduce or eliminate luxuries and expendable amenities, but what they generally won’t do is stop the care for their aging loved ones. The demand will still be there regardless of market downturns.
Savvy investors who have seen the demographic projections are beginning to position themselves to capitalize on this opportunity. As seniors age, 70% are expected to eventually need assistance and accommodations beyond what their own homes can provide. For decades, the predominant answer to this need was to place large groups of seniors in big-box assisted living facilities. Unfortunately, this is not where most seniors want to spend their golden years. And if the pandemic has taught us anything, it’s that this is not the safest place for them either.
A unique investment strategy has emerged over the past few years that involves the business of caring for seniors and residential real estate investment. Residential assisted living provides investors the opportunity to make significant cash flow, while owning an in-demand business that serves seniors. When done right, many investors enjoy a hands-off approach to the business, without having to get involved in the day-to-day management.
For investors looking for cash flow in an expensive market, residential assisted living might be the investment that many have been waiting for. Visit us to learn how this strategy is performing for investors.
Isabelle is a graduate from Arizona State University, a former flight attendant, Disney employee and now works as the COO of the company and our lead educator. She has taken over the educational aspects form our late Founder, Gene Guarino and leads the company in our pursuit to Do Good and Do Well.