UpsideHom — which offers what it calls “deconstructed senior living” — recently announced plans to expand to 100 new markets by the end of 2022.
And UpsideHom is not the only business of its kind, with Appanage being another example of a company that does not own real estate or operate senior living communities, but connects older adults with suitable housing options and services, typically in existing multifamily properties.
Senior housing operators might be inclined to write companies like these off as competitors. After all, these companies don’t have the market share or resources that senior housing operators do, nor do they have experience directly caring for older adults and their families at scale.
But I think writing them off or ignoring them would be a mistake. For one, companies like UpsideHom are trying to attract the same demographic that many senior housing operators are, particularly on the active adult side. And they are growing fast, creating what could be “invisible supply” in markets that otherwise appear wide open for active adult projects.
In this week’s exclusive, members-only SHN+ Update, I analyze these two companies and offer key takeaways for senior living providers, including:
- Appanage and UpsideHom could represent a thorn in the side of operators looking to attract baby boomers to their communities
- Traditional senior living operators should consider what is behind the consumer appeal of these new models
- Companies like Appanage and UpsideHom could also represent an opportunity for the industry
‘Having trouble keeping up with demand’
Although UpsideHom was founded in 2020, the company’s rapid growth is backed by a recent $7.3 million venture capital infusion, and the immense level of demand for its services.
UpsideHom is not an owner or operator of real estate. Instead, the company works to place older adults in units at suitable multifamily communities, then provide residents with some of the services they might normally receive in senior living, such as laundry and housekeeping.
The company typically works with managers of Class A or Class B multifamily buildings, which must meet a long list of requirements demonstrating suitability for older adults, including that they are compliant with the Americans with Disabilities Act, have some first-floor units available and are located near senior centers, health care facilities and pharmacies.
UpsideHom was co-founded by Jake Rothstein, who with his cousin, Andrew Parker, founded Papa, a service that offers on-demand companionship to older adults. Peter Badgley is another co-founder of UpsideHom.
Currently, UpsideHom has “thousands of units” available to residents, and Rothstein was tight-lipped about where exactly the company will grow next. But he said that the company has ambitious plans to enter about 10 new markets per month this year — including secondary and tertiary locations all over the country — and triple its workforce by growing its employee count to around 33 people within six months.
Fueling that growth is a steady surge of demand and a model that can be easily scaled from one market to another.
“We’re having trouble keeping up with the demand, to be honest with you,” Rothstein told SHN during a recent conversation.
UpsideHom is not the only company with the business model and plans to scale up quickly. New York City-based Appanage, which also places older adults in a curated portfolio of upscale apartment buildings, is also set out to expand to all of the major cities across the country.
At the same time, multifamily and senior living real estate developers and operators are reacting to some of the same trends by developing new active adult communities. And they are in some ways less agile, given how long it takes to spin up operations at a new community. Indeed, that is why Rothstein said he favors his company’s approach.
“We want to be able to scale this to impact a lot of people and to do it quickly,” he said. “It’s harder to do that when you need to raise a lot of money to build buildings, and it’s slower to do that.”
It’s not hard to imagine a scenario where a company like UpsideHom might enter a market — even one with multiple projects under development — and grow quickly. Even if the company has just a few hundred units in any given place, that could throw a wrench in the lease-up plans of other operators trying to attract a similar kind of resident.
Without projects actually coming out of the ground, the growth of companies like UpsideHom may be hard to track, meaning operators might not take their operations into consideration when planning new projects. It’s a sort of “shadow supply” — similar to what one seasoned senior living operator described encountering when entering a market without full knowledge about the number of small board-and-care homes in existence.
But even real estate acquisitions or developments are not off the table, and Rothstein said it could make sense down the road to branch into purpose-built communities.
Boomers want something different
When I talk with active adult operators and investors, I often hear about the “demographic upside” of catering to the leading age of the baby boomers.
The logic I hear most often is that active adult communities will be some of the first senior housing options members of that cohort encounter, and thus are the best-positioned to attract the youngest older adults in the coming years.
What often follows that logic is some statement about how active adult communities offer baby boomers the flexibility and vibrant setting they desire.
Compared to traditional senior housing, active adult communities do indeed offer something very different; and if given the choice between the two, I suspect many boomers would choose active adult. But there is no guarantee that the boomers will actually want the kinds of communities that they are presented with.
A few months ago, NIC Chief Economist Beth Mace warned that senior housing developers “need to be careful” to build what consumers really want. I think that lessons especially applies to active adult communities, given that their appeal is almost entirely based on lifestyle and choice, not care needs.
I asked Rothstein what prospective customers typically know about senior housing when they first inquire about UpsideHom, and he told me they typically “ don’t know what they’re looking for.” That tells me for some boomers, UpsideHom is their first exposure to any kind of senior housing. And given their familiarity with apartment-style living and preferences for aging-in-place, it seems likely they’d pick a more familiar multifamily community over senior housing, especially if they view senior living communities as nursing homes.
Companies like these give older adults the chance to live in a multifamily community with people of different generations and walks of life. This could be a plus for some boomers, given their desire to live intergenerationally.
UpsideHom also give residents a range of options from affordable to luxury, with monthly rates around $2,000 to as much as $10,000. And on top of that, it offers additional services with a la carte pricing, meaning residents can have control over how they spend their money.
Companies like UpsideHom are additionally looking to offer something that more established senior housing operators typically can’t: the ability to travel from one community or city to another as they please, which Rothstein told SHN is a long-term goal. That is also the goal of some senior living operators, such as Revel Communities, which last year began piloting a program akin to a “senior living Airbnb.”
The bottom line is that the desires of the baby boomers are still not entirely clear. And if senior housing operators or owners aren’t careful in market and product selection, they could find themselves at a disadvantage. At the very least, they should carefully consider what an UpsideHom or Appanage is offering, and whether to emulate or differentiate their own models.
Though UpsideHom’s Rothstein said partnering with an active adult community is “not something we’re thinking about today,” he added that the company “never wants to say never.”
“There could be synergies there in the future for us,” he told me.
I can imagine a world where companies like UpsideHom and Appanage work in tandem with the senior housing industry. While I don’t foresee either company pivoting to third-party referrals, I can see how they would work to place residents with active adult communities, especially those located in more multifamily-esque mixed-use developments or in master-planned communities.
Rothstein described UpsideHom’s services as “somewhere between active adult and independent living,” as the company not only arranges housing but also certain services, such as home-based care from vetted third-party agencies.
I can see a scenario where UpsideHom would partner with certain active adult communities that meet residents’ preferences, place residents there and then help arrange services. For UpsideHom, this helps achieve the company’s stated goal of “building the biggest senior living community in the world without laying a single brick.” And for community operators, the service could be an opportunity to occupy units that might otherwise have gone unfilled — although depending on how robust the care services are, the model could drive acuity creep in active adult.
And as I mentioned, relatively few operators — save for Revel and a handful of others — have experimented with ways to allow residents to travel from one community to another, for a variety of reasons. Setting aside a few units for residents working with a service like UpsideHom could be a potential way for more providers to tap into boomers’ propensity for travel.
In any case, I think the growth of UpsideHom could present upside for senior living, if providers think creatively about partnerships.