SFH into an Assisted Living Facility

[Jason Yarusi]

Looking at a large two story 6,000 square foot home. Kitchen on each floor and 7 bedrooms and 5 bathrooms. House is huge but its proximity to a major road diminishes its value and it is in a flood zone, which I am equipped to handle. This is in a nice area and a large church is across the road. Seems as if this can be an ideal candidate for an ALF conversion. I have done some preliminary research with the county and township here in NJ but would have no business operating this myself.

Any advice on sourcing operators who may be interested in such housing? I understand the build out requirements - elevator and such- and have factored this into the equation. I would be curious to the timeline for others of under contract to licensing requirements met to doors open ? 

[Kevin Vandenboss]

I'm working with two AFCs in which the owners of the properties want to retain ownership of the building and have another operator take over the operations and work out a lease arrangement.

The first one is a 16 bed facility. I first tried marketing it the traditional way with Loopnet , etc and got 0 bites. I then posted it on BizBuySell as a business opportunity for an existing operator to take over the space without having to purchase it. I got 3 qualified leads within a week and am closing the deal with one of them now. 

The other property is a 6 bed facility. I got a list of all of the licensees in the state and narrowed the list down by the number of beds. I made up a flyer advertising it for lease and sent it out to the narrowed down list and got somebody right away that we're signing a deal with. 

Granted, these were already licensed facilities but I think you would get similar results going with the mailer option stating that you will convert the property for them. It lets them exoand their business without the capital requirements of purchasing and converting a new facility themselves. 

Each of these deals were done differently. 

The 6 bed was leased at a flat monthly rate of $3,000 to the operator, which works out to $500/ bed. 

The 16 bed was done where each resident has a separate lease agreement with the property owner for $650/ month for rent and another agreement with the operator for the care. 

The second is a little more risky, but if you have a solid operator that can keep the beds full, it's a great return. It's also attractive to the operator because their margins stay the same. 

I don't think you'll have any problem inking a nice deal with someone. Good luck and feel free to let me know if you have any questions!