Residential Assisted Living

23 Replies

Hey BP,

Anyone here doing Residential Assisted Living? I'm looking into it and would love someone to bounce ideas off of.

Thanks,

Kyle

@Kyle Mitchell - yes - it's not easy - but rewarding.

I can only answer KS specific stuff - each state is different in their regulations - some will be similar though.  If you still live in Long Beach (not sure how far it is from San Diego) - there is a 3 day conference for NCAL (national center for assisted living) for 3 days in October - I'm 90% I'm going with a friend if I can get the wife to approve - she'll be in her 2nd semester of nursing school so it may be tough for me to get away with us having a 4 yo at home.

https://www.eventscribe.com/2018/AHCANCAL/    (For the nazi mods - I'm only giving him a link to a conference he can attend to better his education and learn about a topic he's expressed interest in)

Thanks @Shane H. !  I will definitely look into this and try to attend.  Have you by chance heard of the Residential Assisted Living Academy out of Arizona hosted by Gene Gaurino?

Originally posted by @Kyle Mitchell :

Thanks @Shane H.!  I will definitely look into this and try to attend.  Have you by chance heard of the Residential Assisted Living Academy out of Arizona hosted by Gene Gaurino?

Yes I have - he seems like a nice guy. I learned the industry (still have LOTS to learn) by exposure from my wife (she had been a CMA/CNA for a # of years) and then seeking out someone who had started an assisted living business and spending some time with them (connect with them via biggerpockets) And by taking the leap.

I've definitely never been happier and it's pretty fulfilling as well - the residents really do depend on you for a lot and are very grateful - much different to experience graciousness from folks compared to what I was doing (insurance claims where everyone was angry all the time - it had wore me out...my insurance experience has come in pretty handy though as we try to navigate and specialize in medicaid payers) 

@shane h
I don't have any experience, and dont have a medical background.
But the management team i have lined up has around 20 properties, that they manage for owners. And they only act as owners and spend a few hours a week(around 10 p/w)
Have you heard of this model being successful?
Me and my wife also plan to get qualified, so in a worse case scenario we could step up and run the place ourselves.
cheers

I’m looking at starting a residential assisted living facility in the future. My experience as a nurse practitioner tells me that this could be a very successful business. In my planning I have figured that labor can go no higher than 40% of revenue in order to contain costs. The average rent for residents is about $3,800 per month. With a facility that would house 10 residents 1 facility could bring in between $38,000 and $30,400 monthly before all expenses considering an 80% occupancy rate. Labor costs would run about $15,200. This would leave between $22,800 and $15,200 to cover day to day expenses. I was figuring the split might go this way 40% for labor, 40% for expenses, and 20% profit. I was wondering what anyone thinks of this breakdown. I figured the labor costs as 40% of the full occupancy amount since the facility will need to be fully staffed 24/7. Any suggestions or ideas would be appreciated. Thanks in advance!

I would think, ideal split s6hould be (best case) 35% - Staffing, 35% Expenses, Net the rest.  With efficient operation and proper location, I would say, you could net 40% (dream!)

I have started to learn about this business (RE + OP) as well. My wife being a nurse, she is confident and very interested in pursuing the venture. 

Hope to learn from this forum. Has any came across any other specialized forum like BP (how can some beat BP though!!)  that directly relates to AFL?

Another question:

Is AFL hidden gem or is it just me  - new to it?

This post has been removed.

One way is to approach existing operators and ask them if they would like to expand.  You can either rent to them or potentially partner with them to make even more money.  If you would like to learn more about this, PM me and I will get you some resources.

Gene

Walter,

 Your numbers are right on track.  I own and operate these homes and I show others how to do it too.  You are being very realistic with your calculations.  If you would like to get more information, feel free to PM me and I will get that to you.

Gene

Originally posted by @Gwilym Griffiths :

@shane h
I don't have any experience, and dont have a medical background.
But the management team i have lined up has around 20 properties, that they manage for owners. And they only act as owners and spend a few hours a week(around 10 p/w)
Have you heard of this model being successful?
Me and my wife also plan to get qualified, so in a worse case scenario we could step up and run the place ourselves.
cheers

Sorry Gwilym - missed your reply.  I'm sure the off site management can be successful but it would boil down to a couple things in my short stint of experience -- how good are they and how good are the people on the front lines working at your facility.

If you want to own the entire business/real estate etc - then it's much more involved than just owning the real estate and leasing it out to an operator.  Your reputation is on the line every day - and this is a very emotional decision families make putting their loved ones in the care of someone else 24/7.  Lots of regulations come with this and how many depend on the size of the facility.  

I had a lot of bumps in the road on my journey and did not buy the business I was supposedly getting on paper however starting this summer I believe we turned a corner.  We had a good reputation in the community and a great operator, but the operator needed guidance and help to steer the ship to calmer waters.  I looked into having someone else run the facility when I was a bit overwhelmed as one of my possible maneuvers earlier this summer/late spring but glad I didnt do it.  I dont think a management company would have taken some of the steps or put the legwork in that I did.  Part of our appeal in the community and amongst the residents and their families is they get to see me active and around (I dont have to be there every day - if I was there one or 2 days a week part of the day that would suffice enough but I like being there at times - will like being there more once I get my office fixed up in view out basement of the facility my office now sucks so I like to work from home a lot)

For example something as simple as changing up how we order food and where we get it and who orders it has saved us approximately $1500-2+k a month roughly (feeding roughly 30-34 people 3 meals a day + snacks).  The way I'm doing it most management companies I dont think would like the system but I could be wrong.  We do not use a food supplier since they are a complete rip off and unless you are spending hundreds or 10's of k's per month you have no leverage on a food supplier to lean on them and get their costs down.   I've set up accounts at 2 of our area grocery stores and Sams and had our lead cook start ordering food instead of our executive director.  The lead cook and our other cook take turns picking it up.  One store is a backup in case of emergencies so we can order food online and have it delivered the next day for $5.  The other store we order the bulk of our stuff from for $5 will have the order ready the next day or same day sometimes and we just park outside, call a # when we're there and they bring it to the car.  In some other markets this same store does delivery but not here yet.  We also get a lot of stuff from Sam's.  I just showed them how I wanted the food ordering done and then stepped back and let them do it.  So far they've been doing a good job.   Having our cooks order the food has also probably freed up around 10 hours or so a week for our ED to do other high level things.  (And also I went in depth on this for a month doing it myself - you'd never think it but the local Kroger chain is for the most part less expensive on MOST things we order vs Sam's and Wal Mart - I was literally breaking everything down to the ounce - and also factoring in time it would take for staff to make it to a Wal Mart and pick up groceries and the overall headache of dealing with Wal Mart staff - anyways if you get off brands if you have a major grocery chain I'd think you'll find they are more cost effective)  (PS - I also spent a lot of time talking about food and supplies as I think most would find this is probably the most expensive monthly line item expense after staffing)

One thing I haven't tackled yet is changing our chemical supplier and firing ecolab - it's a lower hanging fruit of probably saving 200-500 a month depending on who I go with - not insignificant but there's other bigger fish to fry for now but I'll get them out soon.

Anyways the biggest struggles if you want to be owner of RE and business is STAFFING - that will be the biggest struggle - we are doing better but not where I want to be yet.  After that it's controlling costs and cash flow - as if you are not all private pay and for example have some govt payers or local programs you've partnered with they are slow to pay so you have to stay on top of them.

I'm still working on this and have a LONG ways to improve to be a better manager myself but starting January 1 I will start handing out cards with a token of appreciation inside on all staff b-days, employment anniversaries and try to pick someone once a mo or every other month and do something for them or simply bring in lunch, drinks etc.  I already let them eat free at our facility but staff can come from lower means so things like this mean a lot and they are in this line of work more than likely due to the fulfillment they get out of serving people and making them happy.  So If I dont take care of them they'll leave and go somewhere else if they are paid less or even for a simple thing as making .10 cents more an hour.

I'm trying to get our offices redone and mine will be the last to have anything done - first one on the list is my executive director, then our nurse, then I'll construct a decent breakroom/mini office where at the CMA/CNA station - again not things to worry about if you're running a home plus - but dont shove someone running a home plus into a hole and not give them decent equipment or a space they can make their own - take care of them and finding a good operator/executive director will make or sink your business!

I'd try to start with 24 beds with 2 home plusses close together - I'm probably biased but believe it gives you more scale - with that many beds you can find a decent opeator/executive director, keep a nurse on staff etc - with just 12 or less it would be very tough unless you are acting in one of those roles and working in the business.

Shane is right , its Good to learn from someone before you jump, I Opened Own and Operate 2 RAL for last 15 years in Arizona let me know if if need info helped 4 friends open theirs 2 sold couldnt do the whole 24/7 life , other one is a Nurse Practicioners doing it as as house hack ( probably not recomend it) , if it wasn't for dificulty to find workforce in this area ( think chicken processing plants in Alabama have easier time finding workforce) and the Department of Health Requirements and Licensure Requirements i would have 30

@adrian Butas. I live in ok and plan on enrolling in Gene Gaurinos program. But the hands on experience is unbeatable like you said. Anyway I can learn from you from afar? I am a nurse practitioner and would love to own and operate a home in the next couple of years. Please feel free to DM me. Thank you

I was an administrator for a care facility and it is very rewarding. I ran the facility but wasn’t in charge of finding residents a lot of times they had difficulty finding clients or if they did they underpaid. I think the 2 biggest mistakes they made were they didn’t have a strong advertising plan and relied too much on placement agencies and were in an over saturated market. My tip would be pay to have a professional come in to help with advertising it may cost a bit but in the long run it’s going to pay for its self. Second when you looking to find a location go to the state website and look for areas that don’t have many facilities. The book by Sam Walton will give you an idea of how to find the location. Always do it for the people not the money. Dm me if you have any questions. 

That's helpful @Shane H. To start with 24 (at 2 homes close to each other). What does it take cost wise/partner wise to get there? I'm finding this is a long process-hearing two years from some just on licensing. I'm from a social work background and find the AL model fascinating.

@Rhonda McDaniel I'm not sure how licensing works in your state, since they're all a bit different, but we've been able to find ways to get people new to the business in and operating within a couple of months here in Michigan.

Sometimes this involves structuring the deal where the seller of a facility continues to have some level of involvement for up to a year, or utilizing current staff for licensing if it's already a well operating business.

If you become familiar with the local regulations you should be able to find a way to make it work in a reasonable timeframe.

I had a property before that I felt would of made a desirable ALF, but didn’t want to manage one personally. If I could crack that code I would open multiple ALF. 


Originally posted by @Rhonda McDaniel :

That's helpful @Shane H. To start with 24 (at 2 homes close to each other). What does it take cost wise/partner wise to get there? I'm finding this is a long process-hearing two years from some just on licensing. I'm from a social work background and find the AL model fascinating.

I just saw this since it didnt send me an alert.  We are in a much better position than a year ago but still there are struggles like every business.  Have a ways to go where I get it where I want.

As far as licensing it depends on the state - sorry not very helpful - but here in KS it could depend on time of year etc or if there has been turnover in the KDADS dept - I'm sure OK is the same way and whether or not you are buying existing, building new etc.  Someday maybe I'll want to venture out of state but would prefer to stay in KS -- if I ever do it will be MO (Kansas City) or Nebraska or OK -- basically anything that has similar demographics and culture to what i'm used to here - Love other parts of the country but the way people think in some areas, or over regulation (Cali) or the local cultural norms would not be a fit for me -- I'm sure others are the same way.  

 

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