The Rising Demand for Senior Living Facilities
Arjun Sehgal
REI for Healthcare, Hospitality, and More, Project Funding Consultant, Alternative Investments Consultant, Tech Founder, Healthcare Franchising, Financial Instruments Provider ?? ?? Consultant, Beer??Fan
Old folks need a home, right? For a plethora of reasons, they can’t always reside with their adult children. Maybe the adult children live too far away. Perhaps they have a few needs they can’t always manage to take care of themselves. The adult children may have mental health issues and may be mentally unstable to care for their elderly parents; on the other end, maybe the adult children have poor physical capacity to care for their parents. In my 13 years of the medical field, I have also seen where the adult children are no longer living; such scenarios often make me, a parent, sad to think about. Enter senior living facilities. A location where seniors can rest assured that they can get more attention than they would living by themselves, whether that’s medical attention, companionship, or even self care needs, like getting to the hair salon. The demand for senior living continues to rise at an alarming rate, so this opens the door for senior living facilities to become a thriving investment opportunity for those willing to get involved. Let’s investigate why the demand continues to soar higher and higher!
1. Aging Population
One of the primary drivers of increased demand for senior living facilities is the aging population. The Baby Boomer generation, which encompasses individuals born between 1946 and 1964, is now entering retirement age. According to the U.S. Census Bureau, the number of people aged 65 and older is projected to nearly double from 52 million in 2018 to 95 million by 2060. This demographic shift is creating a substantial need for senior housing options. Consider this statistic as a wake up call to the number of facilities that need to be established to accommodate for the boom of “The Boomers” and even the generations that come after them!
2. Increased Life Expectancy
Modern medicine continues to advance, further extending life expectancy. Older folks need places to stay. They also need attention of all sorts: medical attention, self-care, engagement in hobbies, mental stimulation, and more. Specialized care and assisted living can facilitate such attention in a wonderfully controlled environment suited for such seniors. The National Institute on Aging reports that the global number of people aged 80 and older is expected to triple by 2050, further amplifying the demand for senior living facilities.
3. Changing Family Dynamics
As a nurse, I have seen that adult children are not always able to reside together with their senior parents who need full-time care. Some reasons for this include:
The sadness of these factors are why senior living facilities exist. To cater to this rising need.
4. Preference for Independent Living
Senior living facilities can be built like communities as there can be an independent living component to their business structure ranging up to complete assisted living, memory care, behavioral care, and even long term acute care (LTAC) requiring ventilators and other life support machines and equipment. The idea is many seniors have preferences to live independently in a community where there is help and support services available if they should need it. If their health condition declines, they then know and trust that their community or facility can manage their change in conditions. I have seen seniors in facilities go this route as they waver from their independent living style room in a facility to the long term acute care floor and then back again to their independent living room. Such facilities and communities make it very?attractive for families and their senior family members to make the transition.
Impact on Investing in Senior Living Facilities
The increasing demand for senior living facilities has a profound impact on the investment landscape. Here’s how:
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1. Stable and Growing Market
With the way demographics are trending, there is strong demand for senior living facilities as investors can anticipate consistent occupancy rates; consistent occupancy rates drive the stability of senior living facilities as an investment vehicle, capable of withstanding economic downturns better than other real estate sectors. Having worked as a registered nurse (RN) in facilities across Illinois and Wisconsin during COVID, I saw tremendously high occupancy rates in all the facilities I worked in despite the economic distress of the world. Whether or not this was healthy on the staff to have such high resident to staff ratios is a discussion for another article…That being said, senior living facilities can be a resilient investment vehicle even in times of chaos.
2. Attractive Returns
There is high yield possible for senior living facility investing as there’s high demand and premium pricing that is connected with care delivered and amenities available at a facility. There’s consistency in income from monthly resident fees AND… specialized care fees for needs such as assisted living care needs, memory care needs, or even skilled nursing needs (if the facility is a skilled nursing facility). Revenue streams also include entrance fees or buy-in fees, especially common in Continuing Care Retirement Communities (CCRCs); sometimes this fee is refundable to the resident upon departure. If a facility offers physical therapy (PT), occupational therapy (OT), wellness programs, housekeeping, laundry, and linen services, these can be a la carte additional fees a facility can charge to increase revenue streams. Specialized meal plans, outings, fitness classes, and transportation (for medical appointments, shopping trips, or recreational outings) can also further drive revenue potential. Fees for high-speed internet can also be an amenity that can be charged for. Some facilities also have guest rooms for visiting family or friends on a nightly basis if they wish to spend the night. There’s also retail and personal services that can be offered such as on-site convenience stores, beauty salons, and barber shops, that can be on the properties. Pet care and personal spa services can also be revenue producing, as well, if a facility has these amenities. Partnerships in revenue sharing with healthcare providers, laboratory services, radiology services, etc, can also be additional revenue streams to bolster returns, as well. With so much revenue coming into a facility, the property value can appreciate quite effectively, as well!
3. Opportunity for Innovation and Expansion
There’s much opportunity and room to grow on multiple fronts of senior living facility investment. Do you want to do a new development? Do you want to renovate an existing facility? Can you implement new technologies? These are all areas and thoughts to consider when looking at opportunities. Modernizing to compete with trends using smart home technologies, telehealth, and eco-friendly design will drive attention and residents to your facility.?
4. Positive Social Impact
Having an engaging role in the care for seniors can play a great impact in the psyche and mentality of investors. Investors can feel great that their investment is providing a place for the elderly to stay and be well taken care of from both a medical standpoint and a well-being standpoint. The social impact can boost investor reputation and draw in additional investors who want to make a difference in the world. Not only are investors earning income, but they’re able to be proud that they are contributing to society in such a tremendous way.?
Outcomes and Future Prospects
The high demand and the impact that investors can have on a social level is apparent. Not only will investors have the ability to have a social impact, but they will also be able to benefit from stable returns from the multiple revenue streams and market resilience that senior living facility investing can have! Changes in demographics, increased life expectancy, family dynamics, and independent living preferences drive significant demand for senior living facilities. The demand positions investors for a financially lucrative and socially impactful opportunity in both real estate AND healthcare. Through investigation of the factors of the demand and carefully investing in this market, investors can benefit on all planes financially, mentally, and emotionally!?
Disclosure: I am not a financial advisor, nor do I claim to be one. Please conduct your own due diligence prior to investing in such ventures.?
Let’s have a chat today about senior living facilities and the ways you can impact society!
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