While building a retirement home may not be on the radar of most investors, it can provide big returns on investment for savvy business entrepreneurs who combine high-value real estate opportunities with sustainable living.
The reason green retirement homes are a solid investment is that seniors now look at retirement as the golden years of their lives rather than the conclusion, which has altered perspectives toward retirement homes. Many seniors actually prefer to have the added support, services, and comfort that these facilities provide. In fact, studies show that seniors who reside in retirement communities are generally happier and healthier than seniors who remain at home.
Meanwhile, forward-thinking senior living communities have been actively reducing their carbon footprint in recent years. A Harvard study shows that green buildings can greatly benefit human health and cognitive function, which is why the new direction is to encourage greener living in retirement homes to improve residents’ mental and physical well-being.
Why Is Investing in Retirement Homes a Good Idea?
Why is investing in retirement homes a good idea? It can be highly profitable if you provide the right care and services for residents at a reasonable price. Some of the reasons why building a retirement home is a smart investment are the following:
Low management and upkeep: Many people want to downsize in their senior years when their children have left, and they find their home too big for themselves and their spouses. Retirement homes offer the perfect solution because they are typically built for one or two residents, making them smaller spaces that are more manageable and less prone to wear and tear.
The real estate is significantly cheaper: Retirement homes are usually located on the outskirts of cities, meaning more space is available to build larger retirement communities with more housing for residents, leading to a higher return on investment. Plus, being located outside the main city means retirement homes have the opportunity to provide additional (chargeable) services, like beauty and barber, personal care, laundry, and special dietary services.
The target demographic is usually financially secure: While residents in retirement homes are no longer working and may have a limited budget, they typically have a steady and substantial retirement income. This is important because the benefits of retirement homes—like a low-maintenance lifestyle, personal care options, safety and security, and socializing opportunities—are notoriously expensive. So, generally speaking, only middle or upper-income seniors can afford to move into a retirement home.
Depending on the state, retirement home costs can vary from $1,500 to $4,000 per month. These costs are usually funded privately by the resident or through their long-term care insurance policy, including accommodation costs, food, medication, transportation, and utilities. While these costs may seem high, most residents who move into a retirement home can afford to pay the fees. Therefore, making it a profitable business for anyone who wants to build a retirement home.
Contact us here to learn how our long-term care software can aid processes in retirement homes.
5 Green Ways to Guarantee a Return on a Retirement Home Investment
By now, we know that building a retirement home is a worthwhile and profitable venture. However, the retirement home market is already saturated, making it more difficult to succeed. Therefore, when building a retirement home, it is essential to differentiate yourself from other such homes. One way to do so is to create sustainable buildings that reduce toxic carbon emissions.
In recent years, the idea of going green and living more sustainably is growing in popularity. Many environmentally-conscious individuals want a more purposeful way of life that conserves energy while creating an eco-friendly world for the next generation. And senior living is no exception, as many in the industry have started to transition to green energy by building new and sustainable communities, looking to make a healthy return on the retirement home investment.
Below, we will look at several ways of building a retirement home sustainably through smart construction choices, energy conservation methods, and recycling programs to create a green senior living retirement home.
- LEED (Leadership in Energy and Environmental Design)
When looking for tips on how to build a retirement home sustainably, the LEED model is a good place to start. LEED buildings are nationally recognized for being efficient, carbon-friendly, cost-saving, and healthy green buildings. The LEED framework measures six categories:
- Site sustainability
- Innovation and design process
- Materials and resources
- Water efficiency
- Energy and atmosphere
- Indoor environmental quality
To gain a LEED certification, the retirement home must earn points in the categories above to gain credits during construction, as well as in interior design, operations, and maintenance.
- Introduce recycling programs
When investing in retirement homes, a great way to lower the home’s carbon footprint is to introduce sustainable programs, such as setting up recycling bins in communal areas so residents can recycle aluminum, glass, cardboard, or other materials.
This also provides the perfect opportunity to share regular updates with your residents, their families, and the local community in social media and newsletters, enhancing the retirement home’s reputation and prestige as a green retirement community.
- Encourage the use of energy-efficient smart devices
Another way to encourage a greener retirement home is to use energy-efficient smart home devices, like smart thermostats, sensors, and lighting. Installing smart devices has many benefits because they provide a 24/7 connection while assisting with daily tasks.
Smart lighting can be used in entrances, hallways, and rooms, automatically turning on and off according to the sensors. While smart thermostats have timers to ensure heaters and fans are turned on and off at appropriate times. These energy-efficient devices can reduce electricity costs while helping the environment for future generations.
- Build a communal garden
When considering senior housing investment returns, it is worth building an inviting space for senior adults. One way to do this is to offer an on-site communal garden for residents to enjoy. You can create an organic vegetable or fruit patch for residents with green thumbs using natural and chemical-free materials while encouraging community gardening activities. Those who do not like gardening can still appreciate the garden and benefit from the outdoor space and natural light.
- Go paperless
Even though a retirement home is designed to cater to the needs of the residents, it is equally important to build a retirement home that is profitable while operating efficiently and sustainably.
A great way to reduce paper waste is to invest in an effective long-term care software system that supports staff with financial and operational processes. This means providing the retirement home with a reliable cloud-based management system that can automate processes via the senior care software and connected devices, so staff does not need to print paperwork as often, thus saving paper.
Final Thoughts on Building a Retirement Home
As the American population ages, the demand for more long-term care services will undoubtedly increase, leading to more investment opportunities for building a retirement home. However, like any business venture, there are risks associated with building a retirement home, such as high labor costs, a limited pool of potential residents, and fierce competition in the retirement home market.
While these potential risks may sway some investors, tried and tested tips can help to make the retirement home venture a success.
- Create a strong business plan outlining the entire planning process, including costs, materials, realistic timeframes, and the target market.
- Research the demographic profile of the location, specifically focusing on the local income and net worth, population growth or loss, community impact, access to natural resources and renewable energy, and the number of competitors in the local area.
- Invest in cloud-based elder care software to document all records.
- Use effective marketing strategies to entice potential seniors to the business, such as creating an engaging website, providing formal training for the sales team, appearing in local search results, using paid ads, and spreading the word on social media channels.
Without a doubt, building and operating a retirement home is hard work. However, understanding the risks puts you in a much stronger position to overcome them and succeed in building a retirement home. And with that, the only thing left to say is, good luck!
For more on recent trends in long-term care, read our blog and subscribe to the LTC Heroes podcast.
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