The senior housing real estate sector in the US has experienced some positive changes (and continues to). Today, this asset class is no longer under the radar, but rather an investment opportunity that’s getting the attention of real estate investors. According to the 40th annual Emerging Trends in Real Estate Report from PricewaterhouseCoopers (PwC) and the Urban Land Institute (ULI), a senior housing investment is one of the best options for investors.
In the report, which surveyed US investors and real estate professionals, the senior housing sector was found to be the top prospect for both investment and development of residential property types. It also ranked 2nd for investment and 3rd for development prospects in the commercial and multifamily subsectors for the year ahead.
In this blog post, we highlight some of the benefits of investing in senior housing investment properties and provide a list of the 15 best cities in the US housing market to consider for such an investment.
Benefits of a Senior Housing Investment
#1 Demographic Trends
According to Haven Senior Investments, the 85+ population in the US is projected to double from 7.2 million in 2018 to 14.4 million in 2040. As a result, developers of senior housing properties will be forced to meet this increasing demand and expectations in terms of quality and options available. A savvy real estate investor looking for stable, long-term profits will capitalize on this demographic trend through a senior housing investment.
#2 Investment Performance
The senior housing real estate sector has steadily outpaced other investment property types in terms of income stream, appreciation and total return on investment. According to the National Council of Real Estate Investment Fiduciaries (NCREIF), over the last 10 years, senior housing generated:
- Total return on investment of 10.52% versus 6.10% for apartments
- Total income returns of 6.61% versus 5.20% for apartments
- Total appreciation returns of 3.73% versus 1.03% for apartments
As you can see, a senior housing investment is an incredibly promising one.
#3 Downside Protection
Another benefit of investing in senior housing real estate is that it has proven to be recession-resilient. While occupancy rates declined during the Great Recession, rent growth and annual net absorption remained positive in this sector throughout the downturn. This is very different than the other types of real estate rental properties where rent decline was massive and cash flow was severely affected. Not to mention, a senior housing investment will create diversification in your real estate portfolio, which is needed to reduce risks.
Where to Consider Buying a Senior Housing Investment
If you’re seriously considering to invest in the senior housing market, you must be wondering which cities are best for this type of real estate investing. To help you out, we did our research and found that the following 15 cities are the ones that you should keep your eye on. These cities were listed as the best places to retire by U.S News & World Report as they provide the type of life that seniors age 65 and older look for.
Note: The provided data is as projected using Mashvisor’s investment property calculator – the ultimate tool for any real estate investor to find the best properties in the best locations in a matter of minutes.
The Villages, Florida
- Median Property Price: $305,805
- Price Per Sq/Ft: $1,300
- Rental Income: $3,059
- Cash on Cash Return: 7%
Roanoke, Virginia
- Median Property Price: $204,788
- Price Per Sq/Ft: $100
- Rental Income: $1,079
- Cash on Cash Return: 2%
Venice, Florida
- Median Property Price: $352,325
- Price Per Sq/Ft: $200
- Rental Income: $1,921
- Cash on Cash Return: 3%
Washington, D.C.
- Median Property Price: $649,732
- Price Per Sq/Ft: $542
- Rental Income: $2,636
- Cash on Cash Return: 2%
Charleston, South Carolina
- Median Property Price: $215,176
- Price Per Sq/Ft: $103
- Rental Income: $1,023
- Cash on Cash Return: 2%
Bella Vista, Arkansas
- Median Property Price: $222,714
- Price Per Sq/Ft: $103
- Rental Income: $1,132
- Cash on Cash Return: 2%
Pittsburgh, Pennsylvania
- Median Property Price: $301,603
- Price Per Sq/Ft: $243
- Rental Income: $1,215
- Cash on Cash Return: 2%
Colorado Springs, Colorado
- Median Property Price: $387,207
- Price Per Sq/Ft: $157
- Rental Income: $1,443
- Cash on Cash Return: 2%
Lakeland, Florida
- Median Property Price: $251,485
- Price Per Sq/Ft: $122
- Rental Income: $1,166
- Cash on Cash Return: 1%
Daytona Beach, Florida
- Median Property Price: $253,282
- Price Per Sq/Ft: $172
- Rental Income: $1,008
- Cash on Cash Return: 1%
Lexington, Kentucky
- Median Property Price: $344,620
- Price Per Sq/Ft: $409
- Rental Income: $1,327
- Cash on Cash Return: 1%
San Diego, California
- Median Property Price: $791,487
- Price Per Sq/Ft: $503
- Rental Income: $2,741
- Cash on Cash Return: 1%
Jacksonville, Florida
- Median Property Price: $303,877
- Price Per Sq/Ft: $153
- Rental Income: $1,294
- Cash on Cash Return: 1%
Raleigh, North Carolina
- Median Property Price: $425,912
- Price Per Sq/Ft: $1,076
- Rental Income: $1,505
- Cash on Cash Return: 1%
Melbourne, Florida
- Median Property Price: $325,640
- Price Per Sq/Ft: $167
- Rental Income: $1,261
- Cash on Cash Return: 1%
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
The Bottom Line
To sum up, there are a fair amount of reasons to start investing in senior housing real estate in the US. Driven by positive demographic trends and other factors, a senior housing investment is a very attractive option for real estate investors. In addition, the demand for senior housing properties is increasing across the country as Baby Boomers continue to age. In effect, this makes an intermediate to long-term investment in the senior housing market even more practical and appealing.
Keep the above-mentioned cities in mind as you search for your next investment property. We also advise you not to pick just one city – smart real estate investors understand that diversification is key to success. Our Property Finder Tool allows you to search for and find the best investment properties that are currently listed for sale in up to 5 cities at once!
Click here to start your 7-day free trial with Mashvisor and subscribe to our services with a 15% discount after.