Short-term housing vs Senior Care housing

[Namit Raisurana]

Hello All,

I have a vacant piece of land in East palo Alto, CA that I am looking to develop. Its 5200 sqft and its zoned Residential-Low Density, so I am allowed to build either a 3000 sqft SFR or Senior Care housing. I am contemplating between these 2 options as the specs for both of them would be considerably different.

a) 7-8 bedrooms SFR used for short-term rental -
I do have a similar housing close by and I use it for short-term rental per room (it has 7 rooms). I do have a property manager who takes care of it for me. Although, it cash flows well, its something we have to actively manage. The occupancy rate is always pretty high as the location is close to Stanford, FB, Amazon etc.

b) Senior Care housing - There seems to be quite a shortage for this kind of housing. I could potentially build 5-6 rooms and least it out to a Senior care facility management company for a long term contract. The key reason this is attractive is because the lease would be long-term and I would not have a lot of day to day headache. But I am not sure if the facility will be big enough for a senior care facility. Also, not sure how to go about connecting with a Senior care facility management company so that I can have them to commit to a lease before I invest $1.5-2m in building it.

My key aspects for making a decision would be - initial development cost, potential to be able to lease long-term, monthly rent

Would appreciate any guidance if anyone has experience with something like this

Thanks

Namit