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Residential Care Homes

Residential Care Homes

In the news these past couple years we’ve seen nursing homes that were ill-equipped to handle the needs of the residents. There’s an old cliché; “as you get older, you’ll become your mom and dad‘s mom and dad” and you will take care of their needs. This brings out an interesting conversation and an awesome opportunity for real estate investors that want to tie a real estate investment to a business.

With an ageing population that does not want to go into a nursing home, a more attractive option is to move into a single-family home with a small number of residents, maybe 6 –12. The real estate investor should pick an area that is desirable and close to a good neighborhood. The customer may not be the resident and likely will be the sons and daughters of the resident.

An example would be a four-bedroom, four-bath, three-car garage. There is no need for a garage. Converting the house to bedrooms and bathrooms gives you six additional residences. The residents don’t need parking because cars should not be allowed at the facility. Looking at houses single story is a must. Senior citizens cannot be expected to go up and down stairs. The floors need to be all one level with no sunken living rooms etc. The master bedroom can easily accommodate two people, the other bedrooms typically are one person per bedroom. If the house has a swimming pool, it should have a safety lock. A swimming pool would be used for ascetics just like a fire pit, fireplace, or an aquarium. It’s also important to note that you need a fire escape plan, which is one of the key reasons you want a single-story property. Some states require, based on the number of residents, a sprinkler system to be added to the house that can be anywhere from $8,000 to $12,000.

The money side of assisted living care typically ranges from $2500 a month per bed to more high-end facilities at $5000 to $7000 per bed. The irony is a house that might rent for $3750 a month could potentially gross far greater numbers. The expenses to consider are gas, electricity, food, and care workers. These workers do not need to be nurses or doctors, they need to have basic training in taking care of individual residents. The menus should be planned out and posted one month in advance, so people know what’s for dinner, lunch, and breakfast. Dietary concerns also must be taken into consideration as well as religious considerations for food. Some very successful facilities also have full-time caretakers that live in the house with the residents.

These facilities can also be sold along with the business. This is an excellent way to build a revenue stream as well as a business that has value as it becomes more mature. Organizations like a Place for Mom can help place residents. Having an excellent website will also help optimize search engine traffic. After all evaluations you could also do a long-term lease on a house and rent it to do an assisted living care. You would want a minimum commitment at 5 to 10 years from the landlord. This is an awesome way to build a revenue stream, solve a social problem, leave the world better than you received it, and build a business and an investment at the same time.

Areas of Review

Big picture takeaway points

Big picture takeaway points

  1. Assisted living facilities can be a great investment.
  2. There are multiple things to keep in mind when getting involved with this strategy.

Reflection

Self-reflection questions to think more about the content

  1. Do I have the power team set up to implement this strategy?
  2. Do I have an area in mind?
  3. How will I fund this project?

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