My Senior Living RAL Journey (update 3)

[Sendhil Krishnan]

Insane!!!

That’s the short answer about how my Senior Living Assisted Living journey is transpiring. I get a lot of people asking me about how our RAL business has been going and particular advice on specific topics. Unfortunately, with my full work schedule i just don't have time to answer questions individually, so hopefully this will help answer most of those questions. I’m also thinking about probably hosting a weekly to bi-monthly webinar or group chat session. I could not only share my experiences (along with other operators) but also learn from others - all this could not only help unique ways to keep our seniors healthier in our homes.

If you have read my prior posts (links below) I started my journey in this niche in 2017 with limited knowledge of how this business operated – probably better as ignorance can be bliss! It took me about 1.5 years to get my first home of the ground. After renovations and licensing we officially opened doors July 2019. That was 2 years ago. Now fast-forward 2 years: Our group collectively owns 7 homes (and counting), with 60 beds with most of our homes completely full. We have partnered with multiple doctors who want to help expand and create a whole new level of RALs for our seniors to live and enjoy. We have continued to expand by starting an investment fund so accredited investors (geared to physician investors) can join us and participate in the equity of owning more homes. I still have trouble wrapping my head around what has transpired but I owe the vast credit to my amazing operations team and having great partners.

Hopefully with this post, I can answer a lot of the questions that may be on your mind.

As a recap I purchased a SFH in 2017 and then spent most of 2018 renovating it turning it into a 10Bed/11 bath for sale. In 2019, I partnered with a phenomenal partner who runs operations on the ground in Scottsdale. He started his own home and since it was less than a few miles from my place we decided to partner and he would run operations for both places, and thus both homes opened summer of 2019.

Bed count 2019: 20 beds. 2 homes

In 2020, we partnered with another physician to purchase two more homes. We spent over half the year getting the homes renovated, licensed before finally opening doors in October 2020. Because it was a pandemic, it took us over 6 months before we had complete occupancy.

During this time we formed our company - MD Senior Living (MDSL). MDSL was created as our physician-centric brand with a vision of creating safer more caring environments for seniors and with the goal of implementing various health technologies to help our residents as well as physician care panel to help keep a closer eye on our residents. This is a work in progress as we trial new tech in our homes to see what is the most beneficial for the residents.

2020 Count: 4 homes: 30 licensed beds (2 homes are smaller with only 5 bedrooms each)

I would say that 2021 has been bit of a game changer for our company and an epiphany (at least for me). The problem is how do you scale an Senior AL business? it’s much much more than just having real estate. Your tenants are elderly people with real world medical problems. how do you provide for them, and build a thriving business while dealing with all the management issues? it was clear we needed someone for the better business acumen than myself. With my partner running operations on the ground and me in full time practice we had little time to review new deals or crunch numbers to make sure acquiring new properties would be affordable or attractive. We have never wanted to lose the side of the fact that we are here to serve our residents first. it’s very difficult to evaluate new opportunities but it quickly became clear we would need someone in the business side who could really help us expand and grow further.

As luck would have it, another individual came along asking if we would manage homes if he purchased them in our area. In talking with them I quickly realized he was working on a whole different level when it came to an understanding of expanding a business. We brought him on as a partner and founded a whole separate company geared to physicians joining us.

We brought on several doctors as actual general partners into a new company that we formed. I felt that having additional physicians to collaborate would really pay dividends in the future...more on this later. WIth this infusion of capital we were able to acquire our next home, a luxurious AL home with operating business in place. There was little need for any renovation as it already had 11 bedrooms (extra room for the caregivers to live - a very pleasant married couple that have made senior caregiving their passion and life.)

Bed Count: 5 Homes: 40 Licensed Beds (Occupancy rates > 95% across the whole portfolio)

Our business partner convinced us that moving forward we would need to create an investment(SEC Reg D) Fund which would allow accredited investors to participate as members/owners of all homes in the fund. As we have rolled this out this has become an attractive options for many investors to join us and participate in the cash flow that these homes provide. As we raised capital for this we were able to acquire two new RALs (each licensed for 10) last year. We started by buying the business while paying last summer - both sold by the same owner who was in over her head. These homes have been a little of a challenge as both required moderate renovations to increase bedrooms and cosmetically improve. The rates in this region have also been quiet low, but we feel that over time we will gradually be able to bring them up to a higher market rate.

Bed count: 60 beds, 7 homes

I am all about teamwork and collaboration. I brought on physicians because of their insight, different viewpoints and I wanted them to be vested in the company and the long-term vision. With this key element in mind, we are looking at ways for our physician investors to get more actively involved in growing the business. Strategies do not even have to make money, but need to help our residents live stronger, fuller lives. We are evaluating health technologies that can help keep our seniors living healthier. Bands that can track of their activity level, and help alert us if they have slowed down considerably is just one thing we are reviewing.

Finally, there are multiple ways that people can get started in the Senior Living space. I get asked a lot about how people can get involved, and I myself am implementing various strategies (will have to post on this as it progresses.) In the upcoming weeks I hope to have updates on some of the new strategies i am employing into my portfolio -ways that i am involved but necessarily operating the RAL operations.

Future Goals + Webinar:

I'm contemplating doing a webinar or a blog where people can ask questions and we can collaborate together brainstorm ways to make the Senior Living investments more accessible and comprehensible to all. Additionally, I have a vision of a standardized community of care homes across the country having similar polices, procedures. They would have a cores set of values and tenets and principles they would reside by. Families seeking a home in certain area would be able to find homes that belong to this community and feel assured that they all reach a certain standard of achievement.

These are just ideas I want to throw out. If you have thoughts on this, or would be interested in participating in a webinar or even blog discussion please share on here or PM me.

Thank you and good luck on your journey!

Sendhil

Prior posts:

https://www.biggerpockets.com/...

https://www.biggerpockets.com/...