Why invest in a senior residence? Expert advice!

Investing in a senior residence has become the dream of many investors in 2024. Indeed, this type of investment is increasingly standing out, particularly due to the aging of the population and the growing demand for housing adapted to the elderly . Investing in senior residences is distinguished by its stability and profitability, fueled by the growing demand due to the aging of the population. Long-term commercial leases offer income security, while tax schemes such as Censi-Bouvard strengthen the financial attractiveness. In addition, professional rental management and long-term valuation make this investment a secure and lucrative option for real estate investors.

But is it really a good investment choice? This article brings you opinions and advice to help you decide if investing in a senior living facility is the right option for you.

Understanding Investing in Senior Living

Before giving you advice on investing in senior residences, you must understand this type of investment!

What is a senior residence?

A senior residence is a type of housing intended for independent or semi-independent elderly people . It offers individual apartments in a secure environment, often supplemented by shared services such as a catering service, leisure areas, and medical assistance if necessary. Unlike nursing homes (such as EHPADs), senior residences do not provide constant medical care. Instead, they focus on the comfort and quality of life of the residents.

Senior living is the ideal solution for seniors who wish to maintain their independence while benefiting from services adapted to their specific needs. For investors, this type of housing offers an interesting opportunity. Indeed, demand continues to grow, with an increasingly large aging population.

The different types of senior residences

There are several types of senior residences. Each type of residence has its own specificities and advantages.

Classic senior service residences are the most common. They offer a range of senior services such as catering, housekeeping, and social activities . These services are a major asset to attract tenants and ensure a high level of occupancy.

Senior residences with services offer a range of additional services compared to traditional residences. They offer additional services such as a concierge service, entertainment, and personalized support for residents. Rental management is generally provided by specialized operators. This greatly facilitates the investment for the owner.

Why invest in a senior residence in 2024?

Investing in a senior residence has several significant advantages. 

The demand for senior residences is constantly increasing due to the aging of the population . Senior residences often offer attractive rental yields, especially when they are well located and managed by experienced operators. This type of investment also benefits from advantageous tax measures. Among these measures, we can for example mention the Censi-Bouvard law and the status of Non-Professional Furnished Rental (LMNP) .

The appeal of this investment also lies in the security it provides. In fact, commercial leases signed with managers of senior service residences are often long-term, thus offering income stability to investors.

The advantages of investing in senior residences

Are you still hesitating between investing or not in a senior residence? Discover the advantages of this type of investment according to professionals who have already launched this project.

A good rental yield

One of the main attractions of investing in senior living is profitability. On average, the gross rental yield is between 4% and 5% , which is competitive compared to other types of rental investments such as student housing for example. This yield is largely due to the high demand for housing adapted for seniors, which guarantees a high and stable level of occupancy.

In addition, investment senior residences offer a certain financial security thanks to long-term commercial leases, generally between 9 and 12 years. These leases make it possible to secure rental income and avoid the hazards of direct rental management.

Several tax advantages and schemes associated with investment in senior residences

Investing in a senior residence allows you to benefit from several interesting tax advantages. The Censi-Bouvard law , for example, offers a tax reduction of 11% of the cost price of the property, spread over 9 years, up to a limit of 300,000 euros of investment. This system applies to investments in new or renovated service residences.

In addition, the status of Non-Professional Furnished Rental (LMNP) allows you to benefit from an advantageous tax regime, in particular thanks to the depreciation of movable and immovable property, which considerably reduces taxation on rental income. This status is particularly suitable for investments in senior service residences.

A secure investment

Investing in a senior residence is often perceived as secure due to the stability of rental income . Commercial leases signed with senior residence managers are a major asset, as they guarantee a fixed rent, indexed to inflation, over a long period.

In addition, senior residences benefit from rental management by professionals, which lightens the investor's tasks and ensures better profitability. This rental management includes finding tenants, collecting rents, and routine maintenance of the property, which allows the investor to focus on other aspects of his portfolio.

What are the risks and points of attention to take into account for your investment in a senior residence?

Despite these advantages, before launching your project, you must know the risks of this type of investment. You must also pay attention to certain elements to avoid worries.

Risks associated with investing in senior residences

Like any investment, investing in a senior residence involves risks. One of the main disadvantages of investing in a senior residence is rental vacancies, although this is often limited thanks to high demand. The choice of location is crucial to minimize this risk. A residence located in an unattractive area may suffer from a high level of vacancy, which would directly affect the profitability of the investment.

Another risk is related to the quality of the residence's management. Poor management can lead to maintenance problems and a drop in resident satisfaction . This can harm the reputation of the residence and, consequently, the investment.

Pitfalls to avoid when investing

One of the main pitfalls to avoid is being seduced by yields that are too attractive. A high yield can mask underlying risks, such as a poor location or an unreliable rental management company. It is also important not to underestimate the costs associated with purchasing a senior residence , such as notary fees, management fees, and possible condominium charges.

Investing in a senior residence requires a good understanding of the market and the associated risks. It is recommended to be accompanied by real estate investment professionals to avoid common mistakes and maximize gains.

What do experts who have invested in a senior residence say?

Expert opinions on investing in senior living are generally positive. They emphasize the importance of choosing the right residence and manager. Investors who have already taken the plunge emphasize the stability of rental income and the peace of mind that professional rental management provides.

However, there are reports that some investors have encountered difficulties with incompetent managers, which has impacted the profitability of their investment. It is therefore essential to exercise diligence in choosing the operator and to study the market carefully before committing.

How to successfully invest in a senior residence like a pro?

So, ready to invest in a senior residence? Here are our tips for success!

Choose the right one

To make a successful investment in a senior residence, it is important to choose your property carefully. The main criteria to consider include the location, the type of property (house, apartment, etc.) and the quality of the services offered. A well-located residence, close to amenities and medical facilities, will more easily attract tenants and guarantee a high occupancy rate.

The quality of senior services offered is also a determining factor. Residences offering a wide range of senior services and a secure environment are more likely to attract tenants willing to pay a higher rent.

Don't neglect any step of the investment

Investing in a senior residence follows several steps, from purchasing the property to renting it out. First of all, it is important to choose the right real estate program, by checking the quality of the construction and the guarantees offered by the developer. Then, you must ensure that the property is eligible for tax schemes such as Censi-Bouvard or LMNP.

Once the property has been acquired, rental management is generally entrusted to a rental management agency that will take care of renting, collecting rent, and maintaining the property. This professional rental management is a major asset for investors looking to minimize their involvement while optimizing the profitability of their investment.

Adopt the right strategies for high rental yield

To maximize the profitability of your investment , it is essential to properly manage the charges and services offered by the residence. Good rental management, combined with cost optimization, helps improve the net return on investment.

It is also advisable to diversify your investments by combining several tax schemes, such as Censi-Bouvard and LMNP status, to maximize tax benefits. In addition, purchasing a senior residence in an area with high rental demand makes it possible to secure the investment in the long term.

Opinions of investors who have invested in senior living

The opinions of investors who have chosen to invest in senior living are generally very positive , reflecting satisfaction with the security and profitability of this investment. Many investors highlight the stability of rental income as one of the main assets. Commercial leases signed with professional managers guarantee regular rents over periods of 9 to 12 years, which offers peace of mind unmatched compared to other types of real estate investments.

Rental management is also a point often mentioned by investors. By entrusting the daily management to specialized operators, they can benefit from passive income without having to worry about the practical aspects of renting, such as finding tenants or maintaining the property. This delegation allows to maximize profitability while minimizing the effort required.

Furthermore, investors appreciate the tax advantages offered by Censi-Bouvard and the Non-Professional Furnished Rental (LMNP) status, which make it possible to significantly reduce taxation on rental income.

However, some testimonies warn of the risks associated with the choice of manager. Ineffective management can lead to resident satisfaction issues and, consequently, affect profitability. It is therefore crucial to select residences managed by trusted operators with a solid reputation.

In summary, investor opinions on senior living are largely positive, highlighting the combination of security, profitability, and tax advantages, while emphasizing the importance of the choice of manager to guarantee the success of the investment.

Investing in senior residence advice: what you need to remember

Investing in a senior residence has many advantages, particularly in terms of profitability and security of the investment. However, as with any real estate investment, you must take into account the risks of this project and choose the residence and the manager carefully. 

With attractive yields, interesting tax advantages, and a constantly increasing demand, senior living communities represent a real estate investment opportunity that should not be overlooked. Whether you are an experienced or novice investor, this type of investment can be an excellent option to diversify your portfolio and guarantee stable income over the long term.

To learn more about investment opportunities in senior residences, do not hesitate to consult rental investment experts who can guide you in your choices and help you optimize your investment strategy.