Self-Storage
There are many reasons why
investing in self-storage facilities tops the list this year. Let’s take a look
at a few. The self-storage sector has generated more than $22 billion in annual
U.S. revenues. In a society of over-spenders, people need more space to store
various items for various reasons. The recent recession caused many families to
have to downsize. Naturally, they wanted to be able to keep most of their
stuff. Storing the items in a self-storage facility is a great option for
people downsizing. We become attached to our stuff.
Self-storage facilities
see more of a stable cash flow. Turnover is not a huge issue, as one would
expect. Being that there are so many spaces available for rent, owners are less
susceptible to big dips in vacancy rates. They are also very low-maintenance. One
sweep and the spaces are ready for the next renter.
A few more things to
consider when looking into investing into self-storage facilities are better
CAP rates, fewer tenant problems, lower maintenance, minimal utilities, and
lower expenses.
Neighborhood Shopping Centers
The neighborhood shopping
center is one of the best investments right now. Shopping centers often have
“credit” tenants because they have bond rated credit or have multiple
locations, which usually results in more successful tenants and security of the
centers income. The centers are also multi-tenant, which diversifies the income
and most tenant leases have annual rent increases.
According to the recent
ICSC report, the U.S. shopping center industry is meeting year-over-year growth
in occupancy rates, rents and net operating income. By the end of Q4 in 2014,
shopping center occupancy rates were 92.7 percent, the highest level since
2008.
In today’s world where
everything can be purchased online, one thing we can rely on is the fact that
people still want to go to the grocery store and pick out their own food. This
is one reason that grocery-anchored shopping centers continue to be a reliable
investment.
Seniors Housing
This type of housing
growing exponentially every year and there is a guaranteed demand. According to
the U.S. Census Bureau, seniors will represent 20 percent of the U.S.
population by 2030. More than 500,000 people are expected to be age 65 and
older each year, which could fuel the senior housing sector. And, there are
options for investors looking into this sector of real estate. Senior housing
is divided into four different types: independent living complexes, assisted
living communities, skilled nursing facilities and continuing care retirement
communities.
Independent living
complexes are much like any other multi-tenant apartment complex except that
they are marketed solely to people in their golden years. Independent living
centers make up the second smallest percentage of the senior market with about
10 percent of the share. The average monthly cost of independent living ranges
from about $1,500 to $3,500.
The largest share of the
market goes to assisted living facilities. These types of facilities offer more
services than independent living such as: laundry, food service, arranged activities,
medical services, if needed, and on site drivers. These types of communities
still offer a home-like feel and less institutional. The cost for a room in an
assisted living facility is around $4,000 per month.
Skilled nursing facilities
are also referred to as nursing homes. They provide around-the-clock care for
seniors who need in-depth medical attention. The average cost for a private
room at a nursing facility is $6,000 a month. Experts warn investors that
unless they have a background in healthcare, it may not be wise to take their
first foray into senior living investing in this type of complete care
environment.
Continuing care retirement
communities offer a mix of service levels including independent, assisted
living and nursing home care all on one site.
Student Housing
In recent years, student
housing has had the ability to drive returns. The occupancy figures
outperformed traditional multi-family apartments during the Great Recession.
With more than 20 million students enrolled in a college or university in the
United States, the projected growth by 2022 is expected to be around 24
million. Not to mention, we are seeing record numbers of international students
coming to the U.S. to obtain their bachelors’ and advanced degrees. These
factors, combined with funding strains for some institutions to have their
on-campus housing, this has created a need for more off-campus properties.
Prices for student housing
properties are now comparable to the prices investors pay for apartment
properties. And, although the properties that are within walking distance to
the campuses are more valuable, the demand is still strong for the properties
located a bus ride away from the school. We’re seeing cap rates as low as 5.5
percent for properties within walking distance of tier-one universities, and as
low as 7.5 percent for properties a shuttle bus ride away from tier-two or
tier-three schools.
Suburban Office
The office sector is
predicted to perform well in 2016. Suburban office properties saw no growth for
many years, while office buildings went through significant price increases.
However, that trend is now reversing.
