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The Subtlety of Real Estate Investment: Senior Housing

Over the past decade, real estate investment in the senior housing sector has been expanding rapidly, with projections indicating continued growth. However, not every investment in this space guarantees success. Market shifts, regulatory changes, and operational challenges can turn a promising opportunity into an unexpected loss.

Real estate investment community exterior with pool
SLF Investments - Invested Community - Summerville, SC

The Risks of Investing in Senior Housing

Consider this scenario: You invest $100,000 in senior housing, confident in its long-term viability due to favorable demographic trends. You sign the purchase agreement with excitement, expecting strong returns from a modern, high-tech skilled nursing facility. However, investing in senior housing isn’t as straightforward as it seems.

Regulatory shifts can have a major impact. The Centers for Medicare and Medicaid Services are pushing for shorter patient stays. In some cases, they recommend bypassing skilled nursing facilities entirely. At the same time, advancements in non-invasive medical technology help patients recover faster. Some no longer need extended rehabilitation at all.

Meanwhile, a nearby assisted living community that once seemed like no competition has adopted a continuum-of-care model. They now offer similar services—except residents never have to leave their homes. Suddenly, your real estate investment’s potential has taken an unexpected hit.

Key Challenges to Consider with Your Investment

Before going into a senior housing investment, it’s necessary to be aware of potential pitfalls:

  • Funding Constraints: Medicaid finances most long-term care, covering 60% of nursing home patients. Any cuts to Medicaid funding could force communities to reduce services or even shut down.
  • Inexperienced Operators: Many operators entering the market lack the experience needed to manage the real estate industry. Profitability hinges on operational expertise—inexperienced management can lead to financial and logistical challenges.
  • Staffing Shortages: Recruiting and retaining staff is an ongoing struggle in senior housing. High turnover rates and understaffing can lower service quality and limit the number of residents a facility can accommodate.
  • Resident Safety Issues: Issues like poor emergency preparedness or allegations of elder abuse can harm a facility’s reputation and impact investment returns.
Photo of four happy individuals smiling and interlocking arms
Investment Community Caregivers - SLF Investments

How to Mitigate These Risks

To protect your investment and ensure long-term success, consider these strategic steps:

  • Choose an Experienced Operator: The success of a senior housing investment largely depends on the operator. Seek out experienced professionals with a strong track record, an in-depth understanding of market trends, and a firm grasp on the evolving U.S. healthcare landscape.
  • Work with a Knowledgeable Advisor or Fund Manager: Not all senior housing advisors or fund managers are equally qualified. Assess their expertise, experience, and performance before committing to their guidance.
  • Understand Market Trends: Every senior housing investment is unique. While skilled nursing facilities may be risky in some markets, they could still be viable in others. Demographic trends are favorable, but understanding the specifics of your chosen market is crucial.

The Bottom Line

Senior housing presents exciting and rewarding investment opportunities for informed investors. Recognizing potential risks, selecting the right partners, and staying informed on market trends lets you position yourself for a successful investment. Proper planning and research will help your senior housing investment succeed in a changing market.

Real Estate Investment Community exterior with bright sunset and full parking lot
SLF Investments - Invested Community - Las Vegas, NV

Want to Learn More About Investments in the Senior Housing Sector?

At Senior Living Fund, we are happy to discuss real estate investment with anyone! If you are considering one of our real estate investment opportunities or evaluating placing your capital elsewhere, we are delighted to answer any questions you may have. If you would like to reach out to one of our team members, please email Team@seniorlivingfund.com, or call (913) 283-7804.

SLF Investments (SLF) is a private equity investment company with 20+ assets under management that generated over $24.9 million ($99.8 million annualized) in revenues during Q4 2024. The majority of assets within our portfolio are Independent Living (IL), Assisted Living (AL) and Memory Care (MC) communities that were developed and constructed by our sponsor partners utilizing SLF equity.

Our Team.

The Senior Living Fund team is comprised of industry, securities, financial, and investment experts, as well as support personnel, based primarily in the Kansas City metropolitan area.

SLF Executive Team.

Dan Brewer, Founder & Chief Fund Manager

Dan has 30+ years of business experience, including 25+ years as an executive and principal in real estate, capital placement, business development and management. Dan has 10+ years of experience in a business consulting and management role for Accenture. Dan also has 10+ years of experience in the senior housing sector.

Mark Shader, Chief Operating Officer

Mark brings strong operations management skills to the SLF team through his 30+ years of experience in business consulting, real estate investment and development, financial analysis and management. Mark currently serves as Chief Operations Officer for Senior Living Fund, LLC and its affiliated entities.

Rick Maner, Chief Financial Officer

Rick brings over 30 years of financial management experience, mostly focused on financial services industry. Rick oversees all of the accounting operations including financial reporting, cash planning, and managing external audit relationships and the Funds tax reporting.

We are at an important juncture in senior care investment. We stand in the midst of the largest demographic shift in history, and we as an investment community have the ability to impact how seniors throughout the country will experience the final chapter of their lives. We must remember that capital always has a voice—and we have a unique opportunity to use that voice for the good.

-Dan Brewer, SLF Chief Fund Manager

Information on this document is not an offer or a solicitation to sell or purchase securities. Statements, descriptions, and data on these pages are for informational purposes only and relate to an investment opportunity which may be offered in the future. No offer or solicitation will be made until the necessary final documentation and agreements have been delivered to you. Forward Looking Statements. The Fund is including the following cautionary statement in this informational summary to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for any forward-looking statements made by, or on behalf of, the Fund. Forward-looking statements include statements concerning plans, objectives, goals, projections, strategies, future events or performance, and underlying assumptions and other statements which are other than statements of historical facts. All such subsequent forward-looking statements, whether written or oral and whether made by or on behalf of the Fund, are also expressly qualified by these cautionary statements. Certain statements contained herein, including, without limitation, those that are identified by the use of the words “anticipates,” “estimates,” “expects,” “forecasts,” “intends,” “plans,” “predicts,” “projects,” “believes,” “seeks,” “targeted,” “will,” “may” and similar expressions, are “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties, which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. The Fund’s expectations, beliefs and projections are expressed in good faith and are believed by the Fund to have a reasonable basis, but there can be no assurance that management’s expectations, beliefs or projections will result or be achieved or accomplished.