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Seniors Housing Deals Balance Risk, Reward

CHICAGO-The sword in seniors housing cuts both ways. While returns are higher than multifamily, and demographics seem to work in the sector's favor. However, much more operational and regulatory issues are present.

By Mark Ruda | Updated on September 15, 2001

CHICAGO-Investors looking for better returns than they can get in multifamily or other sectors may want to consider seniors housing, which runs the gamut from skilled-nursing facilities to independent living complexes. Returns ranging from 11% to 20% are possible in today’s market, according to information provided by KMF Senior Housing Investors, LLC recently during a panel discussion hosted by the Real Estate Investment Association.

Demographics and politics tend to be working in favor of seniors housing operators, a panel tells the association. However, investors must be aware they are buying not only a real estate deal, but in most cases a health-care operation as well. And those same demographics, including a growing population with longer life expectancies, can cut the other way, too.

“It’s a challenge for guys who come out of the real estate side,” says seniors housing consultant David Citron, who recently left his post as director of the Illinois Department of Public Aid. “You’re dealing with the hospitality side, you’re dealing with the medical side and you’re dealing with the social services side.”

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