Assisted Living Facilities?!

[Damir Kamber]

Greetings all, 

As I am driving on my way to share knowledge with my current place of employment (that's all it is), I came across an interesting, creative RE idea which generates additional revenue when turned into a business. Assisted Living Facilities! What?! One of those things "When I was 20, I wish I knew half of what I know now." Don't we all. 

Not sure how many of you listen to The Real Estate Guys radio show, but that's where this came from. They had Gene Guarino on the show and this concept completely blindsided me. 

As always, BP is the spot for further discussion. I would love to hear from everyone on this. How familiar is this venue in our industry? Is it one of those "This has been going on for years" thing and I am arriving late to the party? What are some personal experiences you've had with Assisted Living Facilities? 

Cheers,  

Damir 

[Dan Brewer]

All, I have spent the last eight years providing equity financing for senior housing, mostly assisted living and memory care.  It is an extremely HOT sector to be in. Its consistently been the # performing commercial sector for the last 10 years.  My focus is completely on traditional, larger senior housing communities, and not on the conversion of houses into senior housing, which has been a trend in recent years.  I have been asked often to provide financing for the conversion of homes into senior housing communities, and I have declined for three reasons: 1: I am overwhelmed with my current focus.  2. I am not convinced the economics work for smaller (6-10 bed) bed converted homes.  3. These are operating businesses, not just rental arrangements.  You are investing in some way, shape or form into licensed, state registered businesses, and at present the quality of the operator for such converted homes is either non-existent, unproven, or not someone to whom I feel I can commit investor dollars.  The quality of the operator is the #1 determining factor in the success of a senior housing community.   

There is a growing emergence of operating companies that solely focus on providing senior housing operational management for smaller 6-10 bed converted houses.  Once such services are more common and proven, it will help the converted-house senior housing sector.   Until then, just be careful as you venture forth in such a segment.  It is far from proven.   An alternative is to focus your time and efforts more on the traditional large senior housing community sector; it will be white hot for the next many years.   

Thanks, Dan Brewer