All Forum Posts by: Jason Brenizer

A few of you who posted previously in this thread suggested we reach out to @Kreighton Reed at Solera Bank...

He returned my call within an hour. He asked a few questions about my plans for the account and I shared info on short term rental rule changes in Hawaii which he was happy to get an update on.

His staff sent over a link and I was able to complete an online application to set up a bank account for an LLC owned solely by my self-directed IRA (Solo 401K to be exact) in a matter of minutes. That's stellar customer service!

This after being turned down by one national bank, two local banks, and one credit union I've been banking with since 1995.

BiggerPockets has been a gold mine of referrals for me. There is no more consistently useful investing network on the planet!

Same error for me today, too. 

@Guy Gimenez is one of the most giving investor/entrepreneurs in Austin. His MeetUps are always helpful, both from an informational standpoint and for networking. You'll always find a mix of newbies and veterans. Definitely go to his next MeetUp if you can.

  @Daphne V.    @Nathan Gogo   @Brian Peals   @Nick Z.

Hi Ryan,

If your property is already remodeled to meet your state requirements for the number of residents the ALF business will be caring for, you can likely charge 2 or even 3 times market rent. That's assuming the market you are in isn't sorely depressed.

@Zen Ouano, heed @Bill S. 's advice. Most cities shy away from this type of facility because it's not something they have to deal with very often. Outlier projects like this, from their point of view, are fraught with risk. They have fear over making decisions that aren't so cut and dry.

For instance, Austin, TX has an ordinance which states "no more than 4 unrelated adults may live in a property zoned as residential". I'm paraphrasing. That "code" tripped up my architect. I didn't mention it to the city, since it is really in place to crack down on stealth (college) dorms and flop houses. The "Group Home" designation in Austin, under the residential use, has several federally mandated fair uses- -- day care, assisted living for the elderly, disabled, and mentally impaired, etc. These supercede that ordinance.

Knowing the overlapping city, state, and federal codes and guidelines better than the city officials is often necessary so that you can educate them (kindly) into granting your permits. 

If you are going for the residential model, I suggest submitting your documents for your building permits without talking about the intended purpose. They may reject your submission, stating that you have too many rooms and bathrooms. Only then would I break out the "Group Home" explanation and explain the State licensing standards you'll have to meet to run the home. And avoid talking about it as a business, even though that's what it clearly is. That word will likely scare the residential permit reviewers enough to say your project should actually be reviewed by the commercial reviewing division.

Good Luck!

Hi @Zen Ouano, Texas is a great state for this business. Depending on the number of beds in a facility and the type of service, you will need to different levels of state requirements. 

The simplest differentiator in the state of TX is the number 16. If you have 16 or fewer residents, you fall into a small Type B facility and can be located in a residential setting. You would be buying a big house, converting it to meet TAS2012 (Texas Accessibility Standards), including a fire suppression sprinkler system, and would hire staff to care for up to 16 residents 24/7. You will need to apply for a state license to operate.

If you go higher than 16, you will be considered a Large Type facility (there's A, B, and possibly C). You'll be zoned commercial, and have to meet an additional set of requirements to get a state license to operate.

The costs of renovation either way are definitely higher compared to a standard fix-and-flip. And depending on the municipality, you might have a rough time navigating the city permitting process. I'm in the thick of my first residential assisted living remodel down in Austin.

Considering a $500K 1800 square foot house that needs work in Austin rents might rent for $2500 if in a desirable neighborhood (more like $2000 otherwise), it makes a lot of sense to find another model to make a property have positive cashflow.

Other states have lower caps on residential small type B facilities: Arizona 10, California 6, Colorado 10. And DFW, like Austin, is still growing. It's a great time to consider this business!

I agree with @Kevin Schulte. There are fewer staff requirements for the a smaller, but still state certified assisted living site. For instance, the administrator for a Small Type B Facility in Texas (16 or fewer beds) needs a certification, but does not need to be a nurse. The caregivers too need to take a certification course and continuing education each year, but those courses are several days, not whole semesters or even associate degrees. 

Each state will have its own staff requirements, and maximum beds per site will vary as well. California maxes out at 6 beds for this type of facility. Arizona 10. Colorada 10-12. Texas is 16, but then each municipality/city can choose to reduce that number.

All these considerations affect your final outcome in due diligence to see if a given site is viable for residential assisted living.

Assisted Living and Independent Living in a residential setting would both fall under Group Home designation, but the requirements for each according to state and city will again be different. When they say real estate is local, that surely applies to the senior living niche.

Hi @Leshon Hill, I second @Ryan Dossey in welcoming you to the site and being a man of action. A lot of us might know all the ins and outs of terms and be "perfect" in the way we describe a concept or scenario... but then never take action. As long as you are in action and always growing and learning more, you'll skyrocket towards the kind of success you want. Sure, you might make some mistakes and experience some failure along the way, but won't everyone?

I devoured information for a year before I bought my first rental real estate. Some would say that was a smart choice so I would lower my risk. I'd agree with that. But that was a year where you could walk around with a blindfold on and stumble into a deal because of a distressed market.

You seem to have a great attitude about people responding to your post. There's so much wisdom and knowledge in this community. You are in the right place.

Great Fortunes!

Hi @Jaden Ghylin I too am not familiar with the moving parts of this type of financing, but I am interested in learning more.

Hi @Jaden Ghylin