My RAL (Residential Assisted Living) Care Home Journey
Hi guys I wanted to post an update regarding my RAL (assisted care home) journey and updates on to the current status. I've had quiet a few people reach out and ask about my thoughts about my experience with Gene's RAL Academy and what came of my training. Well, I'm delighted to report that I have indeed opened my very own care house and it has been steadily being filled (more on that later).
From my personal experience I started learning about the RAL model approx 2.5 years ago and I completed Gene's online course only. I never did the live Phoenix course because of time constraints, but I felt I had gotten a pretty good feel for how the model worked. If you wish, P.M. for more info on the course and I can give you more feedback - fyi I have no ties to Gene's academy or have any incentive to promote it. I initially started looking to buy care homes in my local market of Orange County, but quickly realized that everything was too pricey. Additionally, the CA state limits for care homes (known as RCFEs here - Residential Care Facilities for the Eldery) in max 6 beds, whereas Arizona is 10. The limit varies by each state and I think Texas is the most generous with 16 residents!
With a partner I located a suitable property in Scottsdale (a ranch style house with 5 beds and 4 baths but most importantly an attached 2 car garage along with an entirely enclosed 2 story RV garage.) Side note: The house also had a Bayliner boat in the garage which as a semi-joke I asked to be included in the offer. My partner and the realtor thought the idea was ridiculous...but lo and behold I ended up getting it! [Thanks Gene for the tip! In one of his videos he mentions that when placing an offer on a house be sure to ask for "all furnishings including any and all vehicles in the garage." I actually wanted all the furniture....but a boat will do LOL.]
The next phase was the extensive renovations to increase the total house capacity to 10 private bedrooms with 10 private bathrooms. This was accomplished by converting the entire garage space into beds and bathrooms( including one ADA bathroom), and converting the master bed and bath area into two Jr sized master bedrooms and baths. All parts of the house are wheelchair accessible, including the walk-in style bathrooms. Landscaping also had to be performed as prior owners had done nothing to the dirt areas in the front or back. This reno took better part of the year for a variety of reasons (but really could have been accomplished in 6 months with better planning.) Part of this problem is that I reside out of state in California and had to basically run this renovation and troubleshoot problems with little help on the ground in Scottsdale (yikes what a nightmare) to deal with.
We were finally able to obtain the license to operate as a care home in February (got delayed by some water plumbing maintenance issues). After all said and done, I had doors open, hired a good manager, furnished the place with beds, recliners, TVs, call buttons, had professional photos taken, self created the website, and prepped for the SILVER TSUNAMI FLOOD of residents that would pour into this beautiful home in DROVES!!!
....and except that never happened.
For months my house sat lonely and empty, and I continued to dump money into holding costs to run this place. I began to have a crisis, dismayed at the money, time and countless hours I had put towards this project. I was truly exhausted (esp while working full time in my medical practice.) I logged into the net cams installed in the house and prayed no one would break in to steal the furniture or start squatting. I began to panic and had discussions of selling it to other investors, or just renting out the place to other operators for them to run. The issue was not the house but that my manager that I had hired simply did not have connections with placement agents within this geographical area. She had her own house and had run several houses successfully, but none in the area that my house was located in. It quickly became apparent that I would need new management and we parted on good terms. Instead of trying to run things solo again, I decided to partner with a contact I had previously made. His team had also recently renovated and opened their own home not too far from my home and were almost fully filled. Their manager was experienced locally and was a hospice nurse, and well regarded by placement agents. We agreed to terms and we have partnered up.
Our market has been the "higher" end senior market with rents of $4500-$7000/mo. We only just opened in July but we’re already 50% occupied (had two residents pass otherwise would have been at 70% by now.) Additionally, i want to leverage my medical background to offer various medical services that would set our houses apart from the competition.This has convinced me that offering a great product with excellent staff in a caring and committed environment can certainly lead to success.
If this is something of interest certainly do your due diligence on where and what kind of facility you want to open. Get educated from a variety of sources. See what sort of rents (and occupancy rates) similar homes in your area go for (secret shop by asking that you need to see it for a family member). Find out how long licensing will take and how restrictive the target neighborhoods may be.
I'm at a point where I am definitely interested in opening more homes (hopefully with more investors joining us.) I have a good set up where I am more of a passive investor, but still have input on big decisions. My team has been wonderful, communicative, and dedicated to our residents. We don't expect to turn a profit till about 16 months in, but this has always been a long term play.
If you do decide to drink the Kool-aid I wish you the best on this exciting endeavor! I'm not on here much but will do my best to answer any questions.
Our home and more pics can be found at www.thevalenciahome.com
Thank you!
Sendhil
Property prior to conversion
Property after conversion
