Why Assisted Living Facilities Are the Best Real Estate Investments of 2017

As national demographics shift and Americans between 50 and 90 years of age grow in larger numbers than our country has faced, the real estate market is experiencing a lateral evolution.  According to AARP, there is a rising 77 million baby boomers currently in the US, with 10,000 new people reaching retirement age each day until the 2030s. Per these stats, the need for credible, long-term support is rapidly sprouting into one of our nation’s greatest social and economic demands.

So goes a golden gap for capitalists looking for new entries into a flourishing investment market: assisted living facilities.

An assisted living facility is a care-based residential property where seniors can maintain independence while getting support from a licensed staff. In contrast to the traditional nursing home, assisted living facilities are communities for those who do not need constant supervision but can benefit from a daily support system to help with tasks such as meal preparation and medication regulation.

The Assisted Living Federation of America details that at the cynosure of senior care in assisted living centers should be independence, quality of life, dignity and personal choice, making this a core real estate group for the growing retirement demographic that will be virtually unaffected by seasonal market fluctuations.

Parallel to the demographic demand shift in recent decades, global business has been revolutionized by a technological boom that has eclipsed every industry. In a world where people can you send messages through space with the stroke of a finger, it is easier and faster than ever to diversify business and investment opportunities.

Of such methods enhanced by the ease of technology is real estate crowdfunding platforms; the process of raising money through a collective effort for a single purpose or project. With Realtyevest, accredited investors anywhere can enter the real estate market with ease while alleviating many of the risks associated with traditional investments.

Furthermore, included on our site is a bank of opportunities to make a fruitful and informed entry into the assisted living real estate space, with little to no experience or special insight. Our experts monitor trends and choose partners that offer the greatest benefit to our investment community. Then, we present a myriad of options through an interactive dashboard that allows everyone involved to track the progress of their investment. This is how solutions are created in the future and you can get started TODAY.

 

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Are You an Accredited Investor? Here’s How You Know.

As crowdfunding grants new entries to the market everyday, Realtyevest uses cutting edge technology to connect accredited investors with lucrative real estate deals throughout the nation. By definition, an accredited investor is a person or entity that is qualified by the SEC (Security & Exchange Commission) to make large-scale investments based on income or net worth. At Realtyevest, we go the distance to maintain a secure and transparent community of accredited investors through the most simple process possible.

Accredited Investor: A Profile

To qualify as an accredited investor, one of the following must be true:

  1. A person must have earned more than $200,000 (or $300,000+ joint income for married couples) for the past two years, with a projected third.

OR

  1. A person must have a net worth of at least $1 million (or joint net worth of $1 million for married couples), excluding his or her residential property value.  

To calculate your net worth, use the following formula.

Net Worth = Assets – Liabilities

Accredited Investors can also be entities (i.e. banks, partnerships, corporations, nonprofits, trusts, etc ). To qualify, each entity must:

  1. Have a trust comprised of at least $5 million

OR

  1. Be owned exclusively by a group of accredited investors

We’re honored to set the platform for informed investments that support the continued wealth and success of our partners. Click HERE to sign-up.

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Certainty in an Uncertain World…

 

It’s been said the only thing certain in life is death and taxes.

Of course, properly structured and well-advised real estate investors can usually mitigate most of their taxes.

Meanwhile, before people die, they live.  Along the way, they get older.  And as people age, their needs change …

… and because entrepreneurship is about serving needs, it’s a safe bet there’s some opportunity in meeting the needs of aging people.

In a recent radio show, we talked about investing in undeniable demographics … specifically, the baby boomers … who are moving into retirement and beyond.

A few days later, this headline popped up in our news feed:

More Growth Ahead in Seniors Housing – NREI August 16, 2017

“… research shows continued confidence in improving fundamentals …”

Of course, if you’ve been following The Real Estate Guys™ for any time, you know senior housing in general … and residential assisted living in particular … is a niche we REALLY like.

The article affirms our belief that …

“ Demographics continue to be a big driver for development.”

“ ‘As active as the market is with the product that we have today, we are looking at the tip of the iceberg in terms of boomers hitting retirement age,’ says Scott Stewart, a managing partner at Capitol Seniors Housing, a private equity-backed real estate acquisition, development and investment management firm based in Washington, D.C.”

“ ‘The fast-paced growth of that population in that sector is going to make today’s discussion of overbuilding obsolete, because there just aren’t enough places for everybody today,’ ” he says.”

 The article is addressing … diffusing … concerns about over-building in the niche …

“ Demand mops up new supply.”

 “Despite the new supply coming online, respondents remain confident in improving fundamentals. A majority of respondents (78 percent) anticipate that rents will rise over the next 12 months …”

Other notable comments include …

“When asked to rate the strength of market fundamentals by region, the South/Southeast/Southwest rated the highest.”

 “When comparing with other property types, respondents continue to rate seniors housing as a highly attractive property type. Its scores topped that of the five major property types on a scale of one to 10.”

Okay, so it’s probably clear there’s some real opportunity here.

But if you’re a Mom-and-Pop investor, does it make sense to jump into a niche that’s attracting big players … or are you just cruising for a bruising?

No … and YES!

When you invest in housing for seniors it’s critical to understand the difference between a high-density community and a residential facility …

… and not just from the investor’s perspective, but from the resident’s perspective.

Let’s start with the resident …

There are some seniors … probably MOST … and their children (the decision makers in many cases) who’d rather see Mom or Dad live in a real home …

… in a tree-lined residential neighborhood, with a backyard, and neighbors … where residents don’t feel like inmates in an institution.

Please understand … we’re not slamming the great people or services provided in bigger facilities.

We’re just saying from a senior’s perspective, having a room in a home in a regular neighborhood FEELS a lot different than living in a room at a campus for old people.

But for a BIG investor, those individual homes are a logistical problem.

To move BIG money, you need economies of scale and the ability to buy or build a lot of inventory at one time.

It’s the same problem Warren Buffet alluded to when he told CNBC …

“I’d buy up a ‘couple of hundred thousand” single-family homes if I could.”

The challenge, as noted in this Forbes article about Buffet’s statement, is …

“… the cost and logistics of making such an investment in large enough size to move the needle for Berkshire Hathaway is prohibitive.”

The point is big money can’t play well at the single-family residential (SFR) level …

… even if the SFR’s are being converted into highly-profitable residential assisted living facilities.

But YOU can.  And that’s why we like them.  Think about it …

The supply and demand fundamentals are solid.

The priority for expenditure is near the top of the list for any family.  Taking care of Mom or Dad is far from a discretionary purchase …

… so as an investor, being that far up your tenant’s payment priority ladder is a much safer place to be in uncertain economic times.

Plus, much of the money to pay you comes from insurance, government, and the senior’s estate.  In other words, you’re very likely to get paid … even in a weak jobs and weak wages economy.

Also, you don’t have to compete with big money investors, even though they clearly see the opportunity and are moving into the space.

That’s because the barrier to entry for the big money isn’t how MUCH money is needed … it’s how LITTLE is needed.

Meanwhile, the customers would rather live in YOUR product than big money’s product.  So while big money is adding to supply, they’re not really in your niche.

This is a BEAUTIFUL thing.

But it gets better …

Residential assisted living homes can’t be mass produced.  They need to be built or converted one at a time.  There’s very little threat of a big player glutting the market.

And taking lessons learned from watching hedge funds move into the SFR space … big money was only able to acquire tens of thousands of SFRs because huge blocks of inventory were available temporarily through mass foreclosures.

We don’t think there’ll be mass foreclosures in residential assisted living facilities.  They’re way too profitable.

But because this kind of senior housing is in high demand and highly profitable, at some point big money will start assembling them …

… buying up groups of homes from multi-facility operators … and then buying up nearby individual facilities which can strategically integrate into existing operations.

It’s called consolidation … and when it comes, big money will bid up existing operations (creating equity for those already there) …

… because they can recover the “over-payment” through operational efficiencies and financial leverage.

Between now and then, for the street level investor, the big opportunity is to be part of building the inventory by converting homes into residential assisted living facilities …

… cash-flowing along the way … then one day cashing out to big money players.

And if those big money players never show up … just keep on cash-flowing while providing a much needed service to the community.

Until next time … good investing!

Certainty in an Uncertain World… is a post from The Real Estate Guys Radio Show.

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