NEW YORK (TheStreet) -- The U.S. Census Bureau says 40 million Americans are past the traditional retirement age and that figure is expected to double over the next few decades. Ajay Gupta, CEO of Gupta Wealth Management, said these people are going to need someplace to live and supply has not kept up.
That's why he avoids highly leveraged development deals in favor of more stable, higher-quality, long-term investments like privately owned apartment buildings or assisted-living facilities. He said there has been a steady increase in occupancy and rents but a limited supply of new inventory due to a severe contraction in construction lending caused by the credit crisis.
"I also look for opportunities that allow my clients to co-invest alongside some of the biggest family offices and senior housing operators in the country," said Gupta. "Becoming a minority investor in these real estate portfolios allows our clients to take advantage of the deep pockets, expertise and scalability of those already in the space."
Gupta said the benefits of investing in real estate include tax deferral, the 1031 exchange potential and the depreciation of rental income. He said his investors generate yield of approximately 7% in these investments.
Of course, private housing deals are not as liquid as buying a publicly-traded Real Estate Investment Trust, or REIT. For those people worried about getting their money quickly, Gupta said REITs are the better option.
"The primary problems with REITs is that they offer a less attractive rate of return while doing nothing to temper stock market volatility, but for some clients, the liquidity factor is a reasonable tradeoff for taking on additional risk," said Gupta.