With over half of the U.S. population, over 65 million, over 50 and heading households, it’s clear that in the next decades, the demand for a wide range of housing for seniors with diverse needs must be met.
In fact, a researcher in demographics from the University of Virginia by the name of Hamilton Lombard says that the community of over-65ers will grow by 90 percent.
Clearly, there is starting to be and will continue to be a great need for all kinds of elderly housing. And we don’t have it yet. There is a gap in the market and an opportunity.
But how do you successfully build and operate housing for seniors so that it’s profitable and provides excellent care?
Some of you already own senior housing and some are thinking of starting. To help, we’ve put together eight great tips for owners of housing for the elderly. Keep reading to get an idea of how you can develop and operate senior housing, and then step into action if you still think this is a business you want to continue to pursue.
1. Focus on the Independent Living Sector
Those already invested in senior living predict that independent living for seniors is the way to go. Seniors are still active, want to be able to embrace life, and want to engage in urban and community activities. They don’t want to be put out to pasture.
And they have the money to pay for independent living for seniors where they can dine, walk, play, and enjoy the community. In fact, those over 60 will be spending $15 trillion globally by 2020, up from $8 trillion at the start of this decade.
Also, people over 55 in the United States spend double the amount that Millennials do! These senior are ready to invest/buy if you give them the quality they want in a place.
Think of a stimulating environment and lifelong learning opportunities. Think “experiential.” That part’s the same as the Millenials.
2. Let Your Operational Management Team and Executives Do Their Job
You’ve hired a management company to run your operations at your senior living facility. You also worry that things won’t get done and show up and micromanage.
Stop doing that.
Spend your time hiring the professionals that have a track record and that you can trust. It’s okay to check in. And a great idea to have a set schedule where your team can brief you on what’s happening.
Then let go and let them do their job. Your job is to sit back and make the big decisions based on their briefings.
3. Do Pre-Marketing
You might think that it’s okay to begin your marketing efforts to the community just a few months prior to opening. Many developers think two months before is enough. It’s not.
The market appears to be needs driven. You have beds or rooms or apartments or units to purchase. Seniors need any of these and will come.
But it doesn’t work that way and results show that you’re best off if marketing and your senior housing is ready to go about six to eight months in advance.
4. Study the Market and Update Data Regularly
This is about expectations for your business so that you can adjust as needed and be most efficient. Study the market regularly and update. Be conservative in your expectations.
Look at the competition. Examine incentives offered such as discounted rent, waved community fees, and rate locks on care and rent, for example. Examine services offered, amenities offered, rates charged, and fees.
Often, the competition may advertise one rate but actually, charge another. You need to know this so that you can compete.
Look at absorption rates to give you realistic expectations. Often, owners expect absorption of six to eight months in total but two to four units a month is more realistic. Knowing this lets you have a realistic expectation of your operators, benefiting your relationship with them, morale, and trust.
Also, keep track of local regulations regarding senior living. These may change often in the coming years as the market changes.
5. Make Sure Your Leadership, Management, and Staff Feel Valued
It’s a competitive market and you want to keep your operation running smoothly. You want to keep your good people working for you instead of jumping ship for a better offer. And they all will if they don’t feel valued and motivated. And the offers are out there waiting.
Take a look at employment in your area. Match or go a step above to make your people happy. This is not a corner to cut. Loyalty and motivation will keep your business running smoothly and your senior clients happy too.
Also, this is a referral-driven and relationship-driven business. So if your current clients are happy with the management and staff, they will tell their friends. People are looking for longevity and caring relationships much more than a well-branded and shiny-and-new building.
6. Do Your Homework Rather Than Taking the Easy Route
Many newbs to this business expect to build and the seniors will come and their business will be profitable. But this is a competitive marketing-driven business and that’s not the case.
Also, it’s relationship-driven. This means you have to build relationships with your clients. You have to build trust. And you have to provide a service and location that delivers on this trust, otherwise, clients will jump ship in a heartbeat. Other places are waiting with better service.
But if you do your due diligence in research and make a sustainable business plan you won’t need to panic and start cutting rates and services in a rush to keep your business afloat. That doesn’t work here and it’s a mistake many new entrants to this market make.
You have to keep a lot of people happy. Staffing is key. Management is key. And the initial investment is high.
Be prepared to stick to your plan until it works. Don’t veer. That’s when things go sideways and your business tanks.
Look at Options
On a positive note, yes, in the decades to come, the senior population will explode. But all seniors are not alike. Some need more care than others. Some have more money than others. And this gives you options as a developer and owner getting into this market.
Just don’t over-saturate the niches that are saturated. Instead, differentiate so you don’t have to compete on price or location. Fill the missing niche.
The tip here is to investigate what is missing in your market with regards to care and fill it. Do your due diligence researching the market, rates, absorption, staff, and make sure it’s feasible.
Another positive to focus on is incentives. Take a look at Opportunity Zones, for example, and other local benefits from investing in specific areas and with specific services.
7. Keep It Small, Neighborhood Small
You may be thinking that you can build a chain and brand it like a hotel. People will recognize your name and you will have instant trust. That’s not how this business works because it’s a neighborhood business, as in local referrals are what counts.
Remember when we said it’s all about referrals based on how happy your clients are with the management and staff?
Also, you may be thinking you can spread costs over multiple properties. Sure you can, and this can work if you have multiple properties in one city.
But don’t count on this for profitability or make this your business model. You may cut costs but what you do in one facility won’t get clients into another.
What’s the solution then if you want to have multiple properties? Give management control at each facility. Let them build those great relationships on the ground and market based on knowing the community while you save on buying food in bulk and worry about delivery.
8. Consider Partnerships with Operational Management Companies
Managers like to take interest in some of the facilities that they run in order to spread risk over properties. This can benefit you as an owner because your team is financially invested and serves to profit from the business as well. Instant, motivation.
Also, you can work with your partners in their wheelhouse where they can give boots-on-the-ground advice from the start of development to the operation of the facility onward.
Your job here is to do your due diligence in investing your potential partners. Make sure you love the way they run other facilities and that they have a stellar track record.
Also, you need to like them. Really, this business is so relationship-intense. From your relationship to operations management to theirs with staff to everyone with clients and their families.
As the saying goes, “The fish stinks from the head.” If your top relationship stinks, it’ll go down to the clients. So make sure you run your business smelling like a rose with fantastic relationships from head to toe.
Put Tips on Housing for Seniors into Action
These tips on building, owning, and managing housing for seniors have worked for professionals in senior care. Did any of these tips speak to you? Is elderly housing still the business you want to start or continue to engage in?
If so, get started building or reorganizing your senior housing business. Contact us for questions and options with senior housing programs, including CCRCs, or continuing care retirement communities. In the western U.S., there is also assistant living congregate care, as well as Alzheimer’s Care communities.
We’re ready to help you do your due diligence when it comes to knowing the market and running your business.