[Calc Review] Help me analyze this Assisted Living Facility deal

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*This link comes directly from our calculators, based on information input by the member who posted.

Price includes real estate and ALF business. Manager in place for 9 years. Current year results reflect transition to a more attractive tenant base, approval for an additional 6 residents and compliance with certain regulatory requirements.

The company is owned and operated as an assisted living facility that operates 6 of its 16 licensed beds. At this time the company primarily serves adults with limited health needs. Nearly all of the residents receive public assistance, with their rents being paid through a combination of SSI payments, Medicaid and Waivers (subsidies from financial providers).

The company has operated continuously as an ALF for over 9 years. Built in 1952, the facility underwent extensive renovations over the last 3 years and has been maintained in accordance with both Florida and federal regulations.

Centrally located in the heart of Miami, on the edge of the affluent Coral Gables neighborhood. It is situated on a large corner lot on the well-known Calle Ocho, which has experienced significant commercial development and tourism growth in recent years.

Purchase price includes the operating business of the licensed 16-bed ALF, as well as all real estate, furniture, fixtures, equipment, and intangible assets, which includes license, goodwill, referral sources and other assets.

More detailed information memorandum available to qualified buyers. 

Please disregard the following paragraph. We're not able to make edits to a post after 15 mins.

"Centrally located in the heart of Miami, on the edge of the affluent Coral Gables neighborhood. It is situated on a large corner lot on the well-known Calle Ocho, which has experienced significant commercial development and tourism growth in recent years."

This property is actually located in North Miami, FL

@Michael Waite, do you know the 1st thing about assisted living? This is a highly regulated and ever-changing business to just jump into. I'd be very wary.

Anyway you can structure this like a NNN lease? You buy the property, but someone else owns the actual business?

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operates 6 of their 16 beds...is it actually licensed and approved for 16?  If so, that is a significant difference than something the new owner could potentially do.  SSI and Medicaid is not the best market to focus on.  If they are able to transition to private pay and get higher rates, there may be a play involved.

I am not clear though.  Are you looking to buy it?  Broker it? or?

G

Originally posted by @Gene Guarino:

operates 6 of their 16 beds...is it actually licensed and approved for 16?  If so, that is a significant difference than something the new owner could potentially do.  SSI and Medicaid is not the best market to focus on.  If they are able to transition to private pay and get higher rates, there may be a play involved.

I am not clear though.  Are you looking to buy it?  Broker it? or?

G

Hi @Gene Guarino. Thanks for your comments. My apologies for the delayed response. 

To clarify, she is approved for 12 beds, not 16. That was a typo. The facility was only approved for the 6 beds until May 2019. She was at 100% capacity. She received approval for an additional 6 beds in June. The 2nd half of the house was NOT being used as an ALF.

She is now marketing for new residents to fill the 6 new empty beds. She agrees that she could get more than the average $2,129 per bed that she currently gets. With new management and cosmetic renovations, I have conservatively estimated the business could get a minimum of $2,500 - $3,000 per bed for a $30,000 - $36,000 gross monthly cash flow. That's based on my limited research and I think that consistent with what you are suggesting focusing on private pay residents. 

I based my deal analysis on a more conservative $2,500 per bed average. The property needs about $30k for mostly cosmetic renovations to bring it up a condition to compete favorably with other ALFs in Miami and attract tenants willing to pay higher monthly rental fees.

The owner's husband is her partner in running the business and recently had a stroke and is hospitalized. She has been considering selling for a while and as a result of her and her family's latest misfortune, she has expressed a desire to move on from running the business.

My interest in the deal is to either to broker the deal an individual or corporation for a fee or partner with experience in running ALFs. I see that you are an expert in the business of establishing and running Assisted Living Facility businesses. I visted your site at https://residentialassistedlivingacademy.com/ . I see you help people get certified as Residential Assisted Living Specialist (RALS). I would love to follow up with you to discuss this further.

Michael

@Michael Waite that price seems pretty high - you really need to look at her books and analyze the deal that way and make sure the books are legit - 

You're not just buying the real estate - the business is where the nuts and bolts are at and that is what you should focus on.  Also depending on your state Medicaid can be a great payer source vs private pay and will make you more money than what you're projecting above except you need to understand how it works and stay on top of the paperwork/processes - not difficult but there is a learning curve.