Assisted Living Real Estate

[Eli Epstein]

I am writing to see who has experience in elderly assisted living.  I am part of a team that builds new homes in New Jersey and Philadelphia and I am looking into the possibility of building or renovating homes to be assisted living facilities.  We are currently planning on building a 55 and older community and I think putting an assisted living home in the development would be a good idea.  I took a RAL Academy course in the past, which teaches you how to run residential assisted living homes and this seems like a golden opportunity, especially with demand being extremely high with the aging population.  I am curious if anyone has experience in this space and would be willing to discuss their experience?

Thank you,

Eli

[Curt Smith]

Hi Eli,  Just adding some info.  First let me say good idea and nice thinking to add capacity of new elder homes.

This google string brings up good reading and a few states reg's URLs:   building assisted living training

BUT here's some info I heard;

- Due to covid deaths in the elderly some nursing homes (and probably ALF) are running 50% to 70% capacity and this is the break even cash flow point for those facilities.   No doubt in a few years those beds will be taken up by the buldge in the population needing care.

- The recent hurricanes, storms, bad events has really REALLY highlighted the liability risks all facilities taking in folks for $$$ have when rare (rare??)  events happen and you need to evacuate or there's extended duration power outage and no AC, food, etc for the facility.   

I'm not suggesting that you not look into ALF, but recent events has really ripped the roof off (literally) on the business model and difficulty for owners and managers providing for residents AND the resulting law suits that will follow when bad things happen.

It would be my guess that business E&O, liability insurance will reflect these newly visible realities. IMHO extra extra time needs to be put into the DD and financial modeling phase given near term lower occupancy risk, continued covid in our env for years, and bad event contingency planning adding to costs (back up generators etc, relocation place some distance away)..

Best of luck.