Adult Care Living Facility Operating Costs?

Question

I am currently rehabbing a 4400 square foot home/building that I will be selling as an ACLF.  It is currently zoned to have six ACLF beds but am pretty sure I can get approval for 14 beds.  During this rehab, I have started thinking that maybe I should keep this and own this as an ACLF.  I am not sure the costs that may be associated on a monthly basis.  If anyone has owned and operated an ACLF can shed any information on this subject, it would be appreciated.

Michael Ohara · Answer

Anyone interested in developing a home care facility in Hawaii?

Fred Sams · Answer

@Drew Brown I am familiar with California. Also the niche we spent most our time in was he DD (developmentally disabled). If that is the area of interest and focus, and your concentrating in Michigan ? Then I would suggest you find

the similar legal and administrative directives per your state, if that makes sense for example in California we have the Title 22 & The Lanterman Act, you need to find those similar in your state. They lay out the requirement which help you understand your cost.

As for the pro's and cons, I think that weighs more on your(s) strengths and weaknesses. Because this is such a people

and there issues intensive endeavor. You really have to decide your role, arms length ,., etc.  Another thought is to attend / show up to some of the required licensing and certification classes, meet some of the folks who have kicked the can furhter down the proverbial road of licensing.

Im betting you might find some lucrative partnering opportunities. Drew hope that helps, I am happy to chat, give you my 2 cents.

Fred

Oh yeah there are a  couple of good podcast's I have listened to Joe Fairless https://joefairless.com/podcast/

JF1383 is a good one for starters.

Bill Bradfield · Answer

Hey Jerry,

We spoke on the phone the other day. As I mentioned I'm in the AL Real Estate Development Business so I have plenty of info on this subject since I'm involved with the development of 8 facilities in Arizona. FL has it's own rules and regs and it's my understanding that the max number of AL residents is normally 6 like California. It's 10 in Arizona and the market is more suitable for this type of development than other places although the demand will continue to grow through out the country due to the rapid growth of the aging population.

I look forward to your reply.

Bill Bradfield

Drew Brown · Answer

@Fred Sams your post kind of blew my mind. Definitely understood that there are niches in every aspect of real estate, but didn’t realize/know the numerous type of Adult ‘caring’ facilities out there. Would guess that every state is a bit different, but that each state has similar types of facilities.

Is there any good resources that you have, know about or could direct me to where I could learn more about the pro and cons of the different caring facilities. Also would like to know more about the actual operational cost and hazards of each type of facility as well.

Any and all information would be greatly appreciated and coveted. Thank you for the knowledge you already provided!

Drew

Drew Brown · Answer

@Bill Bradfield hi bill as more and more of these facilities come up for sale they had started to peak my interest. I am trying to learn how to analyze these operations being a new and unknown segment of the real estate market to me. I hail from the great state of Michigan and would appreciate any information that you are willing to provide on this very intriguing area of real estate investing. Thank you, Drew.

Fred Sams · Answer

@Bill Bradfield

Hi Bill, My wife and I are looking to attract small balance debt and equity, to participate in our scaling of Adult Residential Facilities-DD (developmentally disabled adults ages 22-59) ARF-DD. Building confidence, and trust along the way.

My wife and I both have 10+ years each working with this population in facility and clinical settings.

There is an increasing demand well into the future to provide quality care/housing to this population.

If done right this is a strong revenue generating niche.

Today we are looking to attract small balance debt and equity, to support the scaling of ARF-DD facilities.

In the last 2 months we have taken control (lease option to purchase) a SFR for this purpose. We are in the licensing process and approval steps which generally takes 3 – 6 months, before licensing completion, and being able to take on clients.

Right now needs involve exterior/interior TI’s tenant improvement’s, and some reserves.

Phase  I (Current)

TI Improvements

Reserves   $75,000

Phase II

Exercise lease option

$100,000 - $150,000  (20% down shared)

Secure long term debt (Fannie /Freddy)

Phase III

Develop out initial property   $250,000

Control of additional ARF-DD  $500,000 - $1.5 MM (transactional)

We are interested in understanding if you can provide some expertise in helping us identify the best fit structure’s to seek the financing:

Starting the facility, opening the facility, scaling the model.

I have of course pro forma and more detail, before barraging you I wanted you to respond with initial interest.

We appreciate your time and consideration.

Best

Fred  & Rose / Casa De Fabiosa

Tyrus Shivers · Answer

@Jerry Rodgers

I have a some rough numbers for you as well just talking with a few people around, it is most likely not as extensive as @Bill Bradfield , but it can give you an idea of expenses.

Your monthly expenses will come from:

Salary of Employees: The model is 2 per 12hr shift at roughly $10-11 dollars and hr. That will be 10K+ monthly.

Food: Depending on how many people can vary and how often you shop. $350 per resident on a bi-weekly basis.

There are state monitored facilities and private- non medical. In order to be state compliant you will need a RN to come in every 45 days or so.

Utilities: These costs will vary as well.

Monthly Mortgage of the property: Depends on where you are.

Recreational activities: Costs Vary

Transportation for appointments: Costs Vary.

From rough estimates from two sources I can out to around 13-15K monthly for expenses for each facility. This is for Maryland. Private owners who operate about 12 beds in 3 different facilities.

Income was anywhere from 2500 to 5K a bed.

Jerry Rodgers · Answer

Thanks Bill.  It was a pleasure speaking with you the other day and you were very helpful with your information.  I have been working on this all day so look forward to what you will be sending.  Thanks again and if you don't have my email...it is...jc9rodgers@yahoo.com

Jerry Rodgers · Answer

Thanks Tyrus,  that would be a great help.  It is currently approved for 6 beds as an ACLF and 12 beds as a group home.  I am submitting a request to increase the ACLF to 12 beds

Tyrus Shivers · Answer

@Jerry Rodgers

I will ask the question to a couple of people who I know own ACLFs. Probably depends on the beds, number of employees, wages, and the rates your are charging, however, let me see what I can get for you.

Adult Care Living Facility Operating Costs?

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