Firms like Nelson Partners specialize in real estate niches like student housing and assisted living, but what can an individual investor do to get in on the action? In this article, we will look at some low-risk, high yield niches that seasoned investors should consider.
Disability Assisted Living Facilities
A recent study by the University of Michigan showed that 1 in 5 adults under 65 have a disability. While many come to terms with their disabilities and learn to live with them, some choose to seek care in a facility that can handle their needs. Meanwhile, as elder baby boomers reach retirement age, being placed in a nursing home is looking less attractive. What is the result? A suitable time for savvy investors to capitalize on the fact that some people want an assisted living facility in their neighborhood.
The best part is that you can expect double-digit returns with most long-term investments if you pick your market wisely. Still, unlike REITs and other public companies, there are no meetings to attend or quarterly reports to analyze. You can stick your money in and walk away for 10+ years.
Senior Housing Facilities
Senior living facilities will also see a huge boom with the aging population. These kinds of homes are often more focused on independent living than assisted living, but many seniors may decide they still need some care and assistance with daily tasks. The drawback is that senior homes tend to be smaller than assisted living facilities, so scale is an issue when you get into large-scale real estate investment. For this reason, commercial investors tend to focus on properties where the owner lives on site because it ensures round-the-clock management. Student Housing Facilities College students are another tenant demographic that has traditionally been difficult to attract — until now. During the past 15 years, the number of students attending college has risen dramatically, and now over 20 million Americans are enrolled in higher education. College enrollment is expected to increase another 10% by 2025. Given the enormous demand for places to live near colleges and universities, savvy investors can expect high profits from student housing facilities. But remember: this market is not immune to economic downturns, so be sure you diversify your investment strategy.
Finally… If you are looking for opportunities outside of senior living or student housing, keep an eye on infrastructure projects that have historically provided steady returns through toll roads, bridges, etc. Also, housing rich areas have stable income sources with homeowners associations (HOA). These organizations usually consist of people who own homes in the same area, pay dues and hire someone to manage the community (like a landscaper or pool cleaner), all paid for by an increase in property values. This means the HOA takes on little risk but still brings value to surrounding homeowners.
Real estate has always been a solid investment, but today’s market provides even more opportunities for savvy investors. There are many ways to profit in the real estate industry — find something you know, or specialize your research so you can take advantage of unique opportunities.