ASSISTED LIVING 101
Assisted living is a unique niche of real estate that requires some serious management challenges but is on the right side of the Baby Boomer (those born between 1946 and 1964) megatrend – the biggest part of the American population is rapidly aging and many are needing assistance in the process. It can be lucrative if you know what you’re doing and find the right property to buy.
The Basic Business Model
Assisted living is a residential housing option for older Americans who need help with some of the basic activities of daily living, such as cooking, getting to the bathroom, cleaning house and getting to appointments. It’s a 24-hour option that has some of the traits of living at home coupled with additional personal care options to make sure that the basics get done. It is not, however, an option if you need 24/7 medical care and supervision, which is what a nursing home offers.
The Types of Structures
Assisted living is a residential facility which can range from a converted home or apartment building to brand new construction. Some facilities provide kitchens, while others have a communal dining facility. They also typically feature a social and recreational area for activities. You will find many names for this type of investment including “residential care facility”, “adult care home”, “adult group home”, “alternative care facility”, and “extra care housing”.
A Full-Service Environment
The typical assisted living facility includes the following:
- Three meals per day.
- Assistance with eating, bathing, dressing, etc.
- Emergency call systems to reach staff.
- Exercise and wellness programs.
- Medication management.
- Laundry service.
- Housekeeping service.
- Social and recreational activities.
Strong Management Skills Necessary
One of the key challenges to owning an assisted living facility is that you have to provide round-the-clock care and that means you have to find sufficient employees to fill in that 24-hour care window. You also have to keep an emergency plan ready if an employee does not show up. Remember that these are very demanding customers with constant needs and there is no ability to “leave it to tomorrow” when a problem manifests itself. Hiring, firing and managing people is a big part of this investment.
Importance of Understanding the Laws
Another issue is staying abreast of 100% of the federal, state and local laws. Remember that if a customer has a problem it could quickly turn adversarial, with potential litigation or filing a grievance with whatever agency controls these properties. You must stay compliant at all times and cannot just guess as to what you’re supposed to do. If you do not like bureaucracy and forms, you will probably not like owning an assisted living property.
Assisted living can be an attractive investment option if you are capable of meeting the demands of staffing and legal requirements and can find the right property to buy. It’s a complicated asset class but is definitely on the correct side of the aging Baby Boomer megatrend.