Excerpt from the book
Investing in Senior Housing
chapter 1.

Savvy investors and entrepreneurs know the secret: change creates opportunity.
And the senior housing story is—above all else—a story about change. It’s a story that could create enormous financial opportunity for those who are willing to dig deep—understand the evolving needs of our senior demographic—and use their passion
to address those needs in creative, fulfilling ways. In choosing this book, you’ve taken your first step in the process. This truly is the definitive “Insider’s Guide” to understanding both the “why” and “what to do about it” when it comes to senior housing investments. We’re glad you’re reading it. Let’s explore this “change” and
discover what this means to you. Long and short, the change is a demographic one. The
number of seniors in our country is expected to double to more than 72 million by 2030. 1 And by 2050? That number will hit 83 million.2 However, the senior housing story isn’t just about numbers. It’s about understanding how powerful demographics translate into meaningful trends and changes in our society, our culture and the economy. As you know, we’re living longer, families are working more, and the number of loved ones available to care for our aging population is dropping at a record pace. But the real message here is that this demographic shift is creating both tremendous wants and needs—and unparalleled opportunity.

Enter: senior housing.

The Silver Tsunami

There’s no doubt you’ve heard the phrase: “Silver Tsunami.” Yes, it’s heading toward our shores at a record unstoppable pace, and it’s creating a wave of senior-focused financial opportunities—and issues—in its wake. Although the storm technically touched ground in 2010 (the year the first round of Baby Boomers hit retirement age), the bulk of seniors have yet to reach land. By 2040, the global population of those 65+ will reach 1.3 billion, double what it is today.3 In America, those 65+ will hit 25 percent of the population by 2060. The number of people aged 85 and over is projected to grow from 5.9 million (2012) to 8.9 million in 2030.4 The Silver Tsunami isn’t just a storm—it’s a multi-decade,
record-busting gale.

Indeed, whether you’re a numbers person or not, it’s impossible to ignore the implications of this demographic shift. By 2020, the number of people aged 65+ will outnumber those under the age of five—for the first time in global history. This isn’t just a “graying”—it’s an up-ending of the way we’ve historically operated as a

nation. As such, let’s look at a few “operational” metaphors. Imagine you’re the manager of a national apple farm. Over the years, you’ve developed an OK system for harvesting
the apples. After all, they ripen at varied times. There’s always ample supply and demand, and there are always folks willing and able to pick, ship, and sell them. But all
of a sudden, you find out the apple-ripening process is changing. Not only will your trees be producing more apples that ripen all at once, those apples will be staying
ripe longer. What’s more, you’re having a hard time finding enough quality workers to pick them—especially those qualified to manage the new ripening process. On
top of that, you’re running out of quality places to store all these apples! How do you keep the apples safe and fresh, while not—pardon my pun—losing the farm? Let’s take another example. You and a friend decide to go on a hike. Your plan is to climb to the top of a local mountain. You pack your supplies for the day and do a great job divvying them up throughout the journey. In fact, just before hitting the top of the peak, you finish
the last of your water. But as you round the bend to the top of the mountain, you realize what you thought was the peak isn’t the end of the climb at all. You still have a
lot further to go—and no supplies to help you finish out the journey. You’re past the point of no return. How do you stay hydrated when you didn’t properly plan for the
remainder of the climb? In many ways, this is what’s happening in the senior
housing sector right now. The way we planned—.

managed—prepared to care for seniors in the past simply isn’t relevant to today’s—and tomorrow’s—senior explosion. With life expectancies increasing from a global
average of 49 years in 1955 to nearly age 80 (United States!) today. Seniors aren’t just growing in numbers. They’re changing the demands on modern medicine,
modern families, and even retailers and government regulators. After all, seniors don’t age in a bubble. They get sick . . . exercise . . . shop . . . vacation . . . contribute to
the global workforce. And the more there are of them, the more their needs impact society at large. Research shows America simply isn’t ready to deal with
the aging crisis (opportunity as we see it). Just like the procrastinators who fail to stock up on emergency supplies before a hurricane, America has found itself relatively unprepared for the force or duration of the Silver Tsunami. We’re overlooking the apple orchard, still looking up the mountain, realizing we are unprepared and have a long way to go. Increased life spans mean increased chronic illnesses. Increased divorce rates and changing family dynamics mean fewer caregivers to support the aging. (In fact,
the caregiver ratio is expected to drop by more than half by 2050, from 7:1 in 2010 to 3:1). 5 And a tight—and expensive—real estate market, means fewer options for
housing our aging, especially in the type of homelike environment they prefer.

America certainly isn’t alone in the aging storm. But in a country like the United States, which focuses so much on independence and technology—we’re definitely facing
an uphill battle. Not only do we have the fastest growing population of those 60+ (nearly 11 percent6 compared to China at 7 percent), our culture is—well—not the
most senior-friendly. While some cultures revere their elders, America is known for worshipping the fountain of youth. Which means our aging will need even greater
support, beyond their family network, as they get older. Case(s) in point:

• Recent studies showed Americans 65+ were the only population segment7 in the country to experience a significant increase in the number of individuals in poverty, and by 2050, there could be up to 25 million poor seniors…continued on next blog post