Broker question: off-market senior housing
Real Estate Agent · MN · Member since 2025 · 16 posts · 6 votes
Broker question: off-market senior housing
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Brian BurkePro Member
Investor · Santa Rosa, CA · Member since 2012 · 2k+ posts · 7k+ votesI'm not a broker of senior housing, but a buyer so I'll chime in. Since June I've closed on 21 off-market senior housing facilities in 4 states and have 4 more under contract in two states. All of these were sourced off-market, not from brokers.
What's led to that success is entirely driven by long-term relationships. The executive running my senior housing platform has 20+ years in the senior housing industry and knows all the players--owners, operators, REITs, lenders, and so on. Every deal we've bought came from those relationships and networking with colleagues.
One 9-property portfolio deal was brought to us by an operator who called us because the property owner was looking to sell. After closing, that same operator connected us with a lender who was foreclosing on two facilities. We are closing on those next week. We bought a 7-property portfolio that resulted in a chance reconnection with an old friend at a senior housing conference. We brought a 2-property distressed deal from a tip we got from a lender who was contacted by a borrower in trouble.
What we aren't doing is bidding on marketed properties, playing the "best and final" bidding rounds, and all that garbage. One advantage to bidding on marketed properties is the process is quick. Receive the deal, tour, submit LOI, submit best and final LOI, have the broker jack you up for another couple hundred grand and a non-refundable deposit, and then get an accepted LOI, all in the span of 4-8 weeks.
This off-market stuff takes months or even years. We closed on one facility in October where we wrote the first offer last November. Another one has been going back and forth with offers and counter offers for 10 months. And there is another deal where we've been talking to the owner for 10 years, and are finally getting closer.
When you pay too much it's amazing how fast you can buy. When you are disciplined it can take an eternity.
12 Replies
- 10moBrian BurkePro MemberInvestor · Santa Rosa, CA · Member since 2012 · 2k+ posts · 7k+ votes
I'm not a broker of senior housing, but a buyer so I'll chime in. Since June I've closed on 21 off-market senior housing facilities in 4 states and have 4 more under contract in two states. All of these were sourced off-market, not from brokers.
What's led to that success is entirely driven by long-term relationships. The executive running my senior housing platform has 20+ years in the senior housing industry and knows all the players--owners, operators, REITs, lenders, and so on. Every deal we've bought came from those relationships and networking with colleagues.
One 9-property portfolio deal was brought to us by an operator who called us because the property owner was looking to sell. After closing, that same operator connected us with a lender who was foreclosing on two facilities. We are closing on those next week. We bought a 7-property portfolio that resulted in a chance reconnection with an old friend at a senior housing conference. We brought a 2-property distressed deal from a tip we got from a lender who was contacted by a borrower in trouble.
What we aren't doing is bidding on marketed properties, playing the "best and final" bidding rounds, and all that garbage. One advantage to bidding on marketed properties is the process is quick. Receive the deal, tour, submit LOI, submit best and final LOI, have the broker jack you up for another couple hundred grand and a non-refundable deposit, and then get an accepted LOI, all in the span of 4-8 weeks.
This off-market stuff takes months or even years. We closed on one facility in October where we wrote the first offer last November. Another one has been going back and forth with offers and counter offers for 10 months. And there is another deal where we've been talking to the owner for 10 years, and are finally getting closer.
When you pay too much it's amazing how fast you can buy. When you are disciplined it can take an eternity.
Quote from @Brian Burke:
I'm not a broker of senior housing, but a buyer so I'll chime in. Since June I've closed on 21 off-market senior housing facilities in 4 states and have 4 more under contract in two states. All of these were sourced off-market, not from brokers.
What's led to that success is entirely driven by long-term relationships. The executive running my senior housing platform has 20+ years in the senior housing industry and knows all the players--owners, operators, REITs, lenders, and so on. Every deal we've bought came from those relationships and networking with colleagues.
One 9-property portfolio deal was brought to us by an operator who called us because the property owner was looking to sell. After closing, that same operator connected us with a lender who was foreclosing on two facilities. We are closing on those next week. We bought a 7-property portfolio that resulted in a chance reconnection with an old friend at a senior housing conference. We brought a 2-property distressed deal from a tip we got from a lender who was contacted by a borrower in trouble.
What we aren't doing is bidding on marketed properties, playing the "best and final" bidding rounds, and all that garbage. One advantage to bidding on marketed properties is the process is quick. Receive the deal, tour, submit LOI, submit best and final LOI, have the broker jack you up for another couple hundred grand and a non-refundable deposit, and then get an accepted LOI, all in the span of 4-8 weeks.
This off-market stuff takes months or even years. We closed on one facility in October where we wrote the first offer last November. Another one has been going back and forth with offers and counter offers for 10 months. And there is another deal where we've been talking to the owner for 10 years, and are finally getting closer.
When you pay too much it's amazing how fast you can buy. When you are disciplined it can take an eternity.
How do you find people to manage them? Can you say a little bit more about the management process?
- 10moBrian BurkePro MemberInvestor · Santa Rosa, CA · Member since 2012 · 2k+ posts · 7k+ votesYou are right to be concerned about that, Joe. This is the most critical decision you will make. So critical, in fact, that we approach our whole strategy in reverse. Instead of finding a property and then seeking an operator to run it, we first find the operators we want to work with (based on long-term relationships of who we know we want to work with and who we want to avoid) and then we look to buy properties inside their territory that they either already operate or would like to operate. I wouldn’t even attempt this asset class if I didn’t have someone on my team with decades of experience and relationships.
Quote from @Joe S.:
How do you find people to manage them? Can you say a little bit more about the management process?
- So you own the property and the operator runs the business?
Quote from @Brian Burke:
You are right to be concerned about that, Joe. This is the most critical decision you will make. So critical, in fact, that we approach our whole strategy in reverse. Instead of finding a property and then seeking an operator to run it, we first find the operators we want to work with (based on long-term relationships of who we know we want to work with and who we want to avoid) and then we look to buy properties inside their territory that they either already operate or would like to operate. I wouldn’t even attempt this asset class if I didn’t have someone on my team with decades of experience and relationships.Quote from @Joe S.:
How do you find people to manage them? Can you say a little bit more about the management process?
Can you elaborate a little bit more on the profit split? - 10moBrian BurkePro MemberInvestor · Santa Rosa, CA · Member since 2012 · 2k+ posts · 7k+ votes
Quote from @Joe S.:
So you own the property and the operator runs the business?
Can you elaborate a little bit more on the profit split?Correct. In some cases we just triple-net lease the real estate to the operator. In other cases the operator gets a management fee—but in this case the operator must co-invest in the deal…so their “profit split” is their return on capital.
- 10moDon KonipolBusiness MemberInvestor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votesI am usually overwhelmed with financing requests from investors seeking to purchase senior/assisted/nursing facilities. They’re always attracted by the projected ROI believing it’s comparable to compare with other types of commercial properties. As you explained, this industry is as much BUSINESS as INVESTMENT. Therefore, the much higher risk, expertise required, business/management of these properties need generate a much higher return than the pure real estate aspect.
Quote from @Brian Burke:
You are right to be concerned about that, Joe. This is the most critical decision you will make. So critical, in fact, that we approach our whole strategy in reverse. Instead of finding a property and then seeking an operator to run it, we first find the operators we want to work with (based on long-term relationships of who we know we want to work with and who we want to avoid) and then we look to buy properties inside their territory that they either already operate or would like to operate. I wouldn’t even attempt this asset class if I didn’t have someone on my team with decades of experience and relationships.Quote from @Joe S.:
How do you find people to manage them? Can you say a little bit more about the management process?
Here is the typical borrower mindset we see
1. They utilize a cap rate for valuation that is both too low on its face and also understates costs of management and operations
2. They have no experience in investment, ownership or management of these facilities
3. Their knowledge and understanding of regulation, insurance, and liability is rudimentary at best.
4. They acquire a contract on outdated, unlicensed, non competitive and heavily maintenance deferred facilities and using an appraisal done by a general residential appraiser in 2018 think they’re getting the deal of the century
5. They believe that although they’ve never done it before they’ll have no trouble raising equity capital thru “syndication”.
6. They believe they can pay me 13% interest and 4 points for a loan and still be profitable.
The last loan app I received was from someone who had purchased something like 14 facilities in the last 18 months. His financial statement showed he had $2,000 in the bank and $1,000,000 + of overdue bills. He had obviously mastered the use of leverage without profitability; ext stop was BK court. - 10moBrian BurkePro MemberInvestor · Santa Rosa, CA · Member since 2012 · 2k+ posts · 7k+ votesDon it's operators just like that who give this industry a bad name. Fortunately, for every one of those there are many more than one that truly care about delivering quality, compassionate care. Your story here helps underscore the point I was making above that "operator is everything" in this business.
Quote from @Don Konipol:
I am usually overwhelmed with financing requests from investors seeking to purchase senior/assisted/nursing facilities. They’re always attracted by the projected ROI believing it’s comparable to compare with other types of commercial properties. As you explained, this industry is as much BUSINESS as INVESTMENT. Therefore, the much higher risk, expertise required, business/management of these properties need generate a much higher return than the pure real estate aspect.
Here is the typical borrower mindset we see
1. They utilize a cap rate for valuation that is both too low on its face and also understates costs of management and operations
2. They have no experience in investment, ownership or management of these facilities
3. Their knowledge and understanding of regulation, insurance, and liability is rudimentary at best.
4. They acquire a contract on outdated, unlicensed, non competitive and heavily maintenance deferred facilities and using an appraisal done by a general residential appraiser in 2018 think they’re getting the deal of the century
5. They believe that although they’ve never done it before they’ll have no trouble raising equity capital thru “syndication”.
6. They believe they can pay me 13% interest and 4 points for a loan and still be profitable.
The last loan app I received was from someone who had purchased something like 14 facilities in the last 18 months. His financial statement showed he had $2,000 in the bank and $1,000,000 + of overdue bills. He had obviously mastered the use of leverage without profitability; ext stop was BK court.
But it doesn't stop there--ownership on the real estate/capital side must be aligned with this mission as well. Being in it for only the returns is a mistake because that short-sighted approach won't lead to long-term success.
- Rental Property Investor · Arvada, CO · Member since 2016 · 43 posts · 47 votes10mo
Brian, that sounds like a great way to acquire senior living. I have acquired 26 senior living properties in 3 states but only a handful of my deals have been off-market. In fact, the only off-market deals have been residential assisted living. Are you also finding larger commercial facilities off-market?
- 10moBrian BurkePro MemberInvestor · Santa Rosa, CA · Member since 2012 · 2k+ posts · 7k+ votesOurs are all larger facilities, 50-200 beds each. All off-market and most of them were multi-facility portfolio acquisitions.
Quote from @Mitch Conrad:
Brian, that sounds like a great way to acquire senior living. I have acquired 26 senior living properties in 3 states but only a handful of my deals have been off-market. In fact, the only off-market deals have been residential assisted living. Are you also finding larger commercial facilities off-market?
Quote from @Mitch Conrad:
Brian, that sounds like a great way to acquire senior living. I have acquired 26 senior living properties in 3 states but only a handful of my deals have been off-market. In fact, the only off-market deals have been residential assisted living. Are you also finding larger commercial facilities off-market?
How do you find people to manage them?
The Management is what has scared me away from that sector so far.
- Real Estate Agent · MN · Member since 2025 · 16 posts · 6 votes10mo
Thanks for sharing, Brian! We're in a similar position — actively looking to grow but not big fans of competitive bidding. Curious if you've found that growing your CRE broker network has been an integral piece of sourcing your deals.
- 10moBrian BurkePro MemberInvestor · Santa Rosa, CA · Member since 2012 · 2k+ posts · 7k+ votes
Quote from @Paige Simpson:
Thanks for sharing, Brian! We're in a similar position — actively looking to grow but not big fans of competitive bidding. Curious if you've found that growing your CRE broker network has been an integral piece of sourcing your deals.
Maybe a little, but all of what we’ve bought this year was direct to principal. But it never hurts to have brokers make connections—deals can come from anywhere.
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