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Invest Today to Create a Long-Term Care Plan for Tomorrow

Senior housing is in high-demand and the waitlists are mounting. Over the past year there has been a surge of interest for senior housing that is due, in large part, to the demographic trend of our aging baby boomer population. In Hawaii, it is estimated that our senior population, age 65 and older, is increasing three-times faster than the total population. The correlation between the rising demand and census projections indicate that interest for senior housing will continue to exponentially increase from now to the year 2030.

The escalating interest for senior housing is influenced by two primary factors. The first is needs based. As we age, our need for personal support and healthcare-related services drives the demand for senior housing. The second factor is lifestyle. Seniors are opting to live in 55+ communities for the friendships, socialization, amenities, meals, and activities. According to the National Investment Center for Seniors Housing & Care Industry (NIC), the total size of the senior housing and care investment property market is estimated to be between $250 billion and $270 billion.

According to Shari Motooka- Higa, Vice President and Certified Senior Advisor, Engel & Volkers one notable change in recent years is the attraction of investors to the senior housing sector. These private investors are individual owners that purchase a unit in a 55+ retirement community with the intent to hang-on to the property and rent it. Across all types of senior living communities, there has been a continued shift away from institutional style facilities to retirement communities. Parents, along with their adult children have higher expectations for support care and services. Motooka-Higa shares, what was acceptable twenty years ago is not the same today and the standards for long-term healthcare have changed. As a result, there is little doubt as to the reason why families are choosing to retain these properties, even after their parents have passed.

Christina Nishiyama, Senior Vice President of Engel & Volkers states, senior housing tends to be more resilient to the ups and downs of the real estate market. Over the years, senior living communities have maintained a high level of occupancy and not as susceptible to the swings as other real estate properties have been in accordance mortgage interest rates and the economy.

For investors, senior housing properties offer distinct differences in comparison to other real estate property types. To start, senior housing aims to provide both housing and services such as nursing, therapeutic, and memory care. It is essentially real estate combined with having a healthcare operator. By analyzing the increasing senior population, robust demand, and extremely low supply, it all adds up for investors who clearly recognize the value. One real estate tax strategy to consider is to purchase a property through a 1031 investment exchange that you may consider in the future moving into as your primary residence. This concept provides many benefits such as saving on capital gains taxes, and the ability to utilize the home tax exclusion credit. In addition, investing in a senior living community with the intent that you may retire and live-in provides reassurance that you will never have to be on a waitlist for any senior community.

Join Shari Motooka-Higa, VP and Christina Nishiyama, SVP of Engel & Volkers for an informative free session for senior homeowners. Prior to making any decisions, it is strongly recommended that readers consult appropriate experts and licensed professionals for any legal, tax, and accounting advice to determine how this information may apply to their particular circumstances.

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