If you’re new to investing in assisted living facilities, it’s important to know that it’s one of the best risk-adjusted opportunities for general domestic investment and commercial real estate. The United States senior housing industry is also poised for unprecedented growth due to the rise of life expectancies and the increased demand for senior housing.
The senior housing sector is also very resilient in the commercial market and has strong investment performance returns. Regardless of whether the economy is doing well or in a recession, or even if the world is gripped by a pandemic, there will always be demand for assisted living and senior housing.
This is because assisted living provides care for those who require medical attention or are undergoing rehabilitation therapy. They also provide 24-hour care with trained staff, medical professionals, and have various amenities available to ensure residents enjoy their stay. Here are some of the ways you can start investing in assisted living.
Passive Investment
You can make a passive assisted living investment in facilities and reap the returns by investing in a real estate investment trust also known as REITs. Various REITs specialize in the senior care industry and are well-diversified by also investing in other institutional-quality investments related to the asset class. You do not need to actively manage the facilities as they are directly managed by the REIT.
If you are someone new to investing and wish to source for the easiest possible investment in assisted living facilities, you should source for REITs due to their lower risk, greater diversification, and ability to generate dividend income while allowing for capital appreciation. Another option for a passive assisted living investment would be to rent the facility to a third-party management company or private operator for the operations and management of the facility
Through this method, you can earn passive income in the form of rental income and reduce your exposure and risk associated with managing and operating the assisted living facility. This is especially so if you are unsure and do not have any knowledge about the day-to-day operations, programs, and management of the facility.
Active Investment
Actively investing in assisted living facilities is possible through the investor owning and operating the facilities by himself or herself. While this form of assisted living investment brings about greater income potential, it also has greater risks and liabilities. This is because the investor may be unaware of the various legal regulations, requirements, standards, and practice of care that is necessary for the facility to run smoothly.
The investor may also be liable for litigation by the residents for any damages or incidents that occur on the facility. Even though this is a real estate investment business and investors wish to make as much money as possible from this assisted living investment, they should also remember that this business is responsible for the care and livelihood of its residents. By owning the real estate and taking an active role in managing it, they should be able to balance long-term profits with quality care and service.
Buy an Existing Business
An alternative option would be for you to purchase an existing real estate business in the senior care sector that offers residential assisted living facilities. By buying an established real estate business, you can have immediate cash flow and acquire the existing property, contractors, managers, and team members of the care facility.
