Senior Housing for Legal Entity Management

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The senior housing market is a thriving, resilient commercial real estate (CRE) sector with strong opportunities for investors and developers. With increasing life expectancy rates and the average age of seniors rising to about 87 years old, it’s unsurprising that this market has been consistently successful and remains relatively recession-proof. 

However, there are state-regulated requirements and legal issues concerning senior housing facilities that must be observed. The majority of these rules are geared towards CRE owners/operators, investors, and developers. 

Read ahead to learn about the current state of the senior housing market and factors concerning legal entity management that investors and developers should consider as they look to partner on new projects.


The State of the Senior Housing Market

One of the biggest factors driving demand for senior housing is an aging population. Ten-thousand Baby Boomers turn 70 each day. And by 2030, one million new senior housing units will need to be built in order to accommodate this rapidly growing segment of the population and avoid the anticipated housing shortage.

Today, senior housing facilities are built for the top 20% of seniors – those who can afford minimum rents of $5,000 per month. The bottom 20% of seniors –those who receive government subsidies – also have plenty of housing opportunities. However, the remaining 60% of seniors, with too much income to qualify for income subsidy and assistance programs, but too little income to afford high monthly rents, are underserved and thus need new facilities.

Middle market development is a pressing issue facing operators, developers, policy makers, funding agencies, and families alike. Historically, development of middle market senior housing has not been prioritized as most senior housing built focuses on higher-end products to account for rising land costs. But as the number of seniors in the middle-income bracket increases and the supply of affordable middle market housing remains limited, senior housing development faces new challenges.


State-Regulated Licensing Requirements

Senior housing involves strict, state-regulated licensures. Regardless of the type of senior housing facility (assisted living, memory care, etc.), the state must approve licenses before a facility can legally operate. Although state regulations cover many of the same types of rules, the specifics of the requirements vary from state to state. Additionally, the rules differ depending on the type of facility and amenities. For example, independent living facilities are governed by a separate set of rules than assisted living or 55+ housing. 

Generally, most states mandate regulations concerning:

  • Food service and dietary provisions 
  • Inspection and monitoring requirements
  • Staffing requirements
  • Resident agreements
  • Remedies and sanctions for non-compliance

With regards to licensing, the primary driving factor is the building’s structure. Senior housing facilities must be developed with the intent to eliminate the challenges of exiting the building in the event of a fire or other emergency that requires an evacuation. Also, facilities must have ample space to encourage movement amongst residents.


Compliance Factors Investors and Developers Should Consider

Any business plan for senior housing development should address the aforementioned state-regulated licensure requirements. Investors and developers should consider the differing regulations as they venture into a new project. 

Developers must ensure that the land and the site are zoned for senior housing. Additionally, progressive engineering environments designed with larger hallways and handrails, multipurpose spaces, technology for electronic health records, etc. are mandatory components of senior housing development that must be accounted for.

On the other hand, investors will want to consider if the facility has the proper infrastructure for its asset type. Without the right infrastructure, compliance risks are inevitable, which could impact the investment deal.


How Can an Entity Management Solution Address These Challenges?

As the senior housing market spikes and investors and developers look to expand their portfolios, the investor, its counsel, and other advisors must consider the legalities of the investment. From ownership structures to licenses to insurances, a series of legal matters, deadlines, and documentation must be addressed.

An entity management software, like EntityKeeper, helps you manage entities, build and maintain complex ownership structures, and track filing deadlines in one secure platform. For investors juggling the many requirements and legal entities that accompany senior housing investment and development, a tech solution can simplify the process by providing tools to monitor and stay up-to-date on upcoming deadlines.

Get started with EntityKeeper today. Schedule a demo!