Assisted Living Facilities?!
Damir KamberPro Member
Investor · Roswell, GA · Member since 2014 · 234 posts · 97 votesGreetings all,
As I am driving on my way to share knowledge with my current place of employment (that's all it is), I came across an interesting, creative RE idea which generates additional revenue when turned into a business. Assisted Living Facilities! What?! One of those things "When I was 20, I wish I knew half of what I know now." Don't we all.
Not sure how many of you listen to The Real Estate Guys radio show, but that's where this came from. They had Gene Guarino on the show and this concept completely blindsided me.
As always, BP is the spot for further discussion. I would love to hear from everyone on this. How familiar is this venue in our industry? Is it one of those "This has been going on for years" thing and I am arriving late to the party? What are some personal experiences you've had with Assisted Living Facilities?
Cheers,
Damir
All, I have spent the last eight years providing equity financing for senior housing, mostly assisted living and memory care. It is an extremely HOT sector to be in. Its consistently been the # performing commercial sector for the last 10 years. My focus is completely on traditional, larger senior housing communities, and not on the conversion of houses into senior housing, which has been a trend in recent years. I have been asked often to provide financing for the conversion of homes into senior housing communities, and I have declined for three reasons: 1: I am overwhelmed with my current focus. 2. I am not convinced the economics work for smaller (6-10 bed) bed converted homes. 3. These are operating businesses, not just rental arrangements. You are investing in some way, shape or form into licensed, state registered businesses, and at present the quality of the operator for such converted homes is either non-existent, unproven, or not someone to whom I feel I can commit investor dollars. The quality of the operator is the #1 determining factor in the success of a senior housing community.
There is a growing emergence of operating companies that solely focus on providing senior housing operational management for smaller 6-10 bed converted houses. Once such services are more common and proven, it will help the converted-house senior housing sector. Until then, just be careful as you venture forth in such a segment. It is far from proven. An alternative is to focus your time and efforts more on the traditional large senior housing community sector; it will be white hot for the next many years.
Thanks, Dan Brewer
With the status of the health care industry and baby boomers, I can see why your considering this.
My parent was in a Residential Assisted Care facility for dementia, and cared till end of life. It was a huge house 10 bedrooms with stair lift and converted bathrooms for handicap. They cared for 10 people and the house was rural setting and lovely.
To own a home like this and to then have staff and comply with state and county inspections is quite a undertaking, Let alone manage the daily lives of 10 . State guidelines set the amounts they can charge for care for those that aren't private pay so they have limitations on what they can charge, so limited income for "rent increases" on projected income. And you have unexpected TURNS,, death... you also have a waiting list but getting someone approved with Medical assistance even if on a wait list takes time.. so lost income, if you don't have a private pay person in line.
If I had to choose in the future between a large facility or this type of setting, this hands down, is where I would personally want to be cared for and would feel most comfortable about investing in.
Very interesting perspective @Deanna McCormick, thank you. @Eric Jacobs, I have never invested in ALFs, therefore my knowledge is very minimal. It seems like state regulations play a large part and that private payers bring in the most security.
It is something I am monitoring based on the current markets and our overwhelmingly aging population. Smart move in my opinion in this current demographic shift.
Cheers,
Damir
assisted living exemplifies the shift from "care as service" to "care as business" in the broader health care arena predicted more than three decades ago. A consumer-driven industry, assisted living offers a wide range of options, levels of care, and diversity of services ) and is subject to state rather than federal regulatory oversight. Exactly what "assisted living" means depends on both the state and provider in question: variations in state regulatory definitions are significant and provider variables include everything from philosophy, geographic location and auspice, to organizational size and structure. Assisted living evolved from small "board and care" or "personal care" homes and offers a "social model" of care (compared to the medical model of a skilled nursing facility). The assisted living industry is a segment of the senior housing industry and assisted living services can be delivered in stand-alone facilities or as part of multi-level senior living community.