3 Ways to Simplify Getting Started in Residential Assisted Living
By Gene Guarino
There are three ways to simplify getting started in assisted living right now:
Buy an Existing Assisted Living Home
The one option that most people would really love to do—and the one that is probably the easiest way to get started, is buying an existing home that’s already up and running and operational.
Some of them are for sale right now, but they’re not good businesses. The reason why they’re selling them is that it’s in the wrong location. It’s too small. You can’t profit. But if you can buy the right business and the right location, then paying for that business that is already up and running right now is definitely the best way to simplify the process of getting started.
Partner with Someone Who Is Doing It
Now realize there are not that many people that are out there operating residential assisted living homes, but if you find someone who is, you could approach them and say you’re interested in getting involved, let’s partner together—maybe you’re the one that puts up the money or the real estate or the property and they’re the one who is going to operate the business itself, that partnership.
You bring something to the table, they bring something to the table, it could be perfect, but again, I’m going to encourage you: don’t partner with somebody unless you need to or it’s important to.
Focus on the Real Estate
You’re the one that buys the home or finds the home. You’re the one who does the renovation and now you’re going to lease it to the operator. So what you’re going to get out of it is that long-term lease at a higher than market value.
That long-term lease, which means you’re not going to have vacancies, repairs and maintenance. You’re making money there and if it’s at a higher rate, that’s even better, and if it’s a long-term lease that makes it simple for you, but also do it with a profit share so you’re getting a share of the profit.
Let them do the work so that you get your rent, plus a share of the profit. If the profit is $10-$15,000 a month, maybe you just charge them the regular rent, enough to pay your bills, but you also get 25 percent of the profit. This way you’re getting best of both worlds.
You’re getting a percentage of the cash flow, the profit from it. You own the real estate, so you get the appreciation, the depreciation, all the benefits of owning the real estate.
What If You Want to Be the One in Control?
At the end of the five-year lease, you now have a choice. You could re-up the lease at a different rate, or now that the home has already been established and the business is already there, you could open it up in your name, and now you’re the one who’s in control.
It’s your property. You could now restart that business. Many of the residents won’t be able to move out right away so you could walk right into that business and make it your own.
Gene is one 8 national speakers for this year’s conference on February 21 – 23. He will be presenting on Friday, February 22nd at 1:10pm at DeVos Place, River Overlook E – F.