We’ve been around long enough to see a lot of things come and go … politicians, economic theory … business, social, and investing fads … movements of all kinds …
And the world continues to spin … people work and consume … innovators create … businesses produce … and life goes on.
That’s because there’s one thing underpinning all of it …
And as long as there are people, there will be an economy … and opportunities to grow and produce wealth by serving their needs.
Sure, when times are tough, it’s harder. Not every business or industry survives. And it’s never a level playing field, so get over it.
The rewards go to the people who are best informed, best connected, and most willing to trust their own judgment and act when others hesitate.
One of the keys to success is anticipating what large sub-groups of people are going to want and need … and getting in position early to meet those needs.
Some uber-smart people like Steve Jobs have a nearly superhuman ability to anticipate future needs, create cutting edge products, and literally invent entirely new industries.
We’re nowhere near that smart.
That’s why we’re just real estate guys and not tech guys. We’re more like Forrest Gump than Steve Jobs, Mark Zuckerberg, or Jeff Bezos.
But the right real estate is the perfect wealth building vehicle for average people like us. It’s much more common sense than genius vision.
And real estate investing is primarily based on a very basic understanding of demographics … with a dash or two of economics.
Anyone with even a cursory interest in economics has heard of the baby boomers. This is the ginormous group of people born between 1946 and 1964.
As the boomers moved through the cycles of life, the businesses which served their needs also BOOMED. And it’s not over yet.
But as you can tell from their birthdates, the boomers are a little long in the tooth. It’s no longer rock n’ roll, muscle cars, starter-homes, or mini-vans.
Today, boomers are driving wealth management, healthcare, and leisure industries, to name a few.
So naturally, there’s a lot of opportunity in understanding the boomer demographic … and positioning yourself to profit from meeting their current and coming needs.
So here are some ideas for investors who want to ride what’s left of the boomer wave for the next couple of decades …
Obviously, people need places to live. But as people age, their needs for housing change. And even in the senior housing niche, there are different sub-sectors to consider.
Long-time listeners know one of our favorite sub-niches in senior housing is residential assisted living. It’s a space that’s gaining attention, but still has a LOT of opportunity ahead.
In fact, we’re excited to see commercial real estate consulting firm Jones, Lang and LaSalle (JLL) just launched a semi-annual report on senior housing.
They’re responding to growing investor interest in this asset class.
One of the conclusions of their inaugural survey is “the most desirable sub-sector is … independent and assisted living …”
One of our favorite features of this niche is it’s not a fad or discretionary expense. No matter what happens, people will make caring for the elderly a top priority … which means cash flowing your way.
Vacation and Leisure
To no surprise, each year at our annual goal setting workshop we find many people have dreams of traveling and vacationing in their retirement.
Boomers are no different … except they’re retiring right NOW. AARP’s 2018 Travel Trends report says …
“The percentage of boomers saying they travel to relax and rejuvenate jumped from 38% to 49%.”
“Forty-seven percent plan to travel domestically and internationally. Top choices for going abroad: the Caribbean/Latin America and Europe.”
“Sixty-two percent of boomers stay in hotels or motels … over staying in private homes … they prefer the amenities, like concierge and room service, offered at a hotel.”
Perhaps obviously, resort properties are another effective way to earn rents from affluent tenants … and a great way to have renters pay for YOUR vacation home.
Best of all, because the tenants aren’t in long-term leases, you can enjoy your beautiful property when it isn’t rented out. You’ve probably never thought that about your C-class apartment building. 😉
Of course, you need to get the market right, especially when talking about Latin America and the Caribbean.
It’s no secret we’ve been … and continue to be … enamored of Belize, and the island of Ambergris Caye in particular.
There are lots of reasons why we love Belize, which we discuss on our field trips, but important factors in picking any resort property market are …
- supply and demand dynamic
- price to rental income ratios
- friendliness to foreign ownership (if non-domestic)
- great property management
- ease of access (plane flights)
When you get the market and property right, resort property is a really fun and profitable niche.
Another of our favorite topics is syndication … for good reason.
More than $30 TRILLION in wealth controlled by boomers. And there’s a HUGE opportunity to help them manage it.
And one of the the biggest need for boomers is to protect their wealth while generating income to live on.
But even with recent increases in interest rates, yields on bank deposits are pathetically low.
And in a rising rate world, bonds can be tricky … because each increase in rates tomorrow means the bonds you buy today lose principal value.
The obvious answer is income property.
The yields are better. Real estate hedges against inflation. Even prudent use of debt creates very attractive equity growth rates.
The problem is real estate investing is work most boomers don’t want to do. But that’s where YOU can help … and create a profitable business for yourself
Demographics Trumps Politics and Financial Engineering
While there are certainly some VERY significant dynamics occurring which may dramatically impact the future of money and wealth (things you should absolutely be paying attention to) …
Ultimately, the basic needs and desires of people drive economic activity and opportunity much more profoundly than anything politicians and bankers do.
The bottom line is we think investors who own properties and businesses which serve basic human needs will be best positioned to survive and thrive in virtually any economic environment.
Until next time … good investing!
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