Residential assisted living

15 Replies

Hello @Jack Williams .  I know this is really delayed, but I'm currently looking into it.  I had a meeting with the RAL Academy last week and have another one scheduled.  Currently I'm looking for people with experience in that market.  Let me know if you have made any progress in it and I would be happy to share as I research if you are interested.

@Matt Schambeau @Jack Williams

I'm a broker in Michigan and we specialize in residential assisted living (called adult foster care in Michigan)

Are you looking to get into it strictly as a real estate investment with somebody else operating the business, or get into owning/operating the business as well?

I would be happy to give you any advise that I'm able to.

Good morning @Kevin Vandenboss ,

I'm looking to do both, but I'm early in my discovery.  I have not decided on a market yet and have not looked into Michigan.  I have ruled out my local market in GA due to the limit of 6 beds per home.  Based on a little research it looks like you can have up to 12 beds in a residence there.  Is that right?  What are you normally seeing in the market? What cities are you primarily focusing on. Looks like there are some good markets as far as cost of care in Michigan including Ann Arbor, Lancing, Kalamazoo, Monroe, Midland. 

@Matt Schambeau

We work all over the state. I'm in Lansing and we've done deals all the way up in the upper peninsula.

You can have up to 20 beds here. However, I have seen two adjacent 20-bed facilities connected by a hallway or two connected by a shared kitchen. There's a group that builds four facilities on a lot.

If your focus is on seniors the average bed rate is around $3,500/ month. If it's a memory care facility it's closer to $4,500 - $5,000/ month.

We've primarily been selling the real estate and business together to people who plan on operating it, but we are starting to work with a management company now that has been very succesful in their facilities.

For the developmentally disabled it's getting difficult to get more than $3,000/month since a lot of funding has been getting cut and there are a couple of huge players getting most of those referrals.

Stay away from Assisted Living! Babysitting adults is a nightmare. There is too much competition from big corporations and you cannot compete. You need to feed elderly people meals with specific diets 3 times every day. You need to have a staff working 24/7 and your employee payroll, liability insurance and worker compensation insurance will put you in an Assisted Living home. The turnover rate for employees is super high. A high percent of the homes have multiple lawsuits going on by workers, your clients and lawsuits filed on behalf of their relatives. The legal requirements, government agencies, rules and regulations will put you in the mad house. I owned an Assisted Living home and no amount of money is worth the 24/7 work requirements and demands put on you. There are many other better and easier ways to make money and anyone who tells you they want to do the business because they want to help elderly people is crazy. As stated already, there are many big corporations that house thousands of clients and you cannot compete with them. 

Just imagine one of your clients passing away and their relative doing an autopsy in an attempt to prove that you killed your client by not giving him (or her) the proper medicine at the proper time. Or, your client falls on the floor, dies and you get sued because you did not catch your client. Or, you have to get out of bed at exactly 3:30 am every morning. You thought you would have workers to do the job of cleaning your client's butt, but you cannot find a good employee who will do the job for you. This is exactly what happens. 

Expect to pay $40 per hour for decent workers who will work 24/7 shifts. You have get a few cheap workers in the beginning, but eventually you will find that if you want good workers you will have to pay no less than $25 per hour and when matching payroll taxes and paying worker comp that comes out to about $37 per hour.

incidentally, I am 100% against every wannabe guru who is selling crap b.s. courses for this business. The cost to re-hab a property for this business is enormous and does not justify the income potential. The time to get a home up and running averages more than 1 year. You will need to make the entire property ADA compliant to get wheelchairs up stairs, to get wheelchairs through every doorway inside the house and you need bathrooms large enough so wheelchairs can get to the toilets and sinks..You need shower stalls large enough you can roll a wheelchair inside. 

The client turnover rate is tremendous since you are dealing with clients who are very close to the end of their days and many clients and families decide after a short time that they cannot afford to stay. So, you are spending all your time and a fortune looking for new clients, looking for workers and dealing with problems when workers don't show up.

I really don't know why or how people listen to snake oil salesmen and don't counter their b.s. with these issues. This is a serious business where you can get shut down very easily for what you might think is insignificant and not what do you do with this property you spent all your money on to make it look like a hospital with large doorways and ADA Compliant bathrooms.

@Jack Orthman - I am in the healthcare industry and you have some great points which I could relate. It’s not easy to take care of the elders. Very interesting topic. Following!

@Account Closed Did you own a skilled nursing facility? I ask because the $25 - $40/ hour you mentioned is very high compared to what I've seen in all of the residential assisted living homes I've worked with. I have seen a lot of people shoot themselves in the foot by hiring people for $8 - $10/ hour, though. Like you said, they end up having to cover shifts when people don't show up to work or have a bigger issue if they walk out and leave the place unattended. 

From what I've seen, for somebody to make money in this industry they either have to plan on scaling the business. Either purchase a larger facility or plan to purchase multiple small ones. This also helps with the staff coverage issues.

Converting a home to open up a new facility is a whole other ballgame. I've had several people call me to try selling their empty facility that they never even got open. Ends up being a much larger investment of time and money than they anticipated. 

In California, the rent for a 1-bedroom apartment is $1500+ per month and those apartments are in okay areas, but not the nicest. Most of the workers for Assisted Living are single and $25.00 per hours with the cost of living today is only $1,000 per week minus taxes and that is not a lot. The average secretaries are earning $40+ per hour. Registered nurses are getting $40 to more than $60 per hour. The illegal day laborers at Home Depot are demanding $25 per hour. When you add the insurance and tax burden the cost for $25 per hour is about $37 per hour.


Originally posted by @Jack Orthman:

In California, the rent for a 1-bedroom apartment is $1500+ per month and those apartments are in okay areas, but not the nicest. Most of the workers for Assisted Living are single and $25.00 per hours with the cost of living today is only $1,000 per week minus taxes and that is not a lot. The average secretaries are earning $40+ per hour. Registered nurses are getting $40 to more than $60 per hour. The illegal day laborers at Home Depot are demanding $25 per hour. When you add the insurance and tax burden the cost for $25 per hour is about $37 per hour.

Jack no shade on Cali - but I'm guessing your out of this world pay and cost of living stats are in your homestate.  There's reason #1002 I'd never live there and I'm sure you'd have 1003 reasons you'd never live in a Flyover state such as Kansas.  

In Flyover country we are less - -- surprisingly in Wichita in my opinion medical labor costs less than Topeka, Lawrence or Kansas City.  I dont know if it's due to the larger # of nursing schools or what - but I have to pay more for labor (good labor) in Topeka than I'd have to in Wichita.  I've also got a few friends that are in nursing - they've stated the same - if they moved to KC/Lawrence etc - they'd get paid more than the Wichita area.  

I'm sure Wichita will catch up at some point but the cost of rent and property taxes are certainly lower than Topeka/NE KS in general - that I can attest to.  Anyways our cost of labor is not the same as Cali - but is a decent fraction of it.   I guess we can offset having labor costs that get up near yours but have housing that costs a fraction what yours does.  So it's all relative I guess.

 

@Curtis Green I would love to ask you a few.

I am looking in Northern California and due to the high cost of real estate want to try and do as much due diligence prior to purchasing both business and property.

I am looking at a 6 person residential assisted living facility who is charging around $5400/person. I have not received their cpa certified books but in their bookeeping they did show they listed out $100k in payroll which seems light.

As I am not of a medical background curious on what your weekly expectation of time allotted would be in year one and beyond.

Can you give me some insight into the licensing and transfer concerns I should be aware of. I have reviewed the property for violations already and they are limited in nature.

While I have talked to people about this I don’t know what I don’t know.

Thank you

Do we have any RAL and IL owners or operators in this thread from the the Atlanta / North GA area? We have been on the fence for a while and would really like to visit and meet RAL owner / operators to get a better idea.



@Matt Schambeau - would be glad to connect with you if you'd like to share your experiences thus far.