By Susan Saldibar
We’re hearing more these days about investment opportunities in residential assisted living. Organizations like Gene Guarino’s RAL Academy (a Senior Living Foresight partner) are providing education and connections into the industry for individuals (and, often couples) who real estate investors are looking for.
Gene recently shared with me the video portfolio of sessions from October’s RAL National Convention. One, in particular, grabbed my attention because it involved a panel of actual RAL investors with some good wisdom to share. And they were couples, which made it even more interesting. Each is part of, what Gene refers to as the Inside Circle; a group of individuals who have not only completed the RAL coursework but are active in the industry, remain involved in RAL Academy, and are successful in their own RAL businesses.
Three couples took the stage:
- Mitch and Jennifer Conrad/Colorado with 7 care homes
- Brad and Angie Jones/Texas with 1 care home and working on their second
- Scott and Jenna Olson/Kansas with 4 care homes
What’s great is that their stories are diverse, and yet there is a common thread running between them: While they all liked the financial security of RAL property ownership, they found they ultimately got much more out of the experience from an emotional standpoint than they had ever anticipated.
Case in point is Jennifer, who never thought she’d end up doing shift work on occasion in her own RAL. But she did. And, to her own surprise, she had a hard time giving it up. Mitch, on the other hand, is the self-proclaimed “investment guy” who found himself “not just supplying a home but rather supplying an experience”.
They all agreed that people are what really makes the difference in RAL ownership. “Find people who know how to do it,” Jenna tells the audience. “Seek out people who have talents in areas you don’t.” Brad agrees. “We’ve gone through lots of employees in 2 years, but our turnover rate has gone down from 20% to about 8%. It does take time to find the right kind of people,” he says.
The session quickly segued into a lively audience Q&A. You’ll want to download the entire session to get the maximum benefit of their collective wisdom. But here are a couple:
- What was the biggest hurdle you faced and how did you overcome it?
For Mitch it was funding. “We got into our first house with a hard money loan to get started. That was easy,” he told the audience. But then when it came to re-financing, after they got the work done, they ran into challenges. As Mitch tells it, all the banks wanted at least two years of experience to get into an SBA loan. “I got 50 to 60 ‘nos’ from banks before I found someone who was willing to talk to us. So that was a huge hurdle for us.”
Angie struggled with deciding how “hands on” she wanted to be in their first RAL property. And it wasn’t easy. But she found that she was able to put her unique stamp on the property without getting sucked into the day-to-day operations. “It can still be ‘you’. It’s your brand; you can still be involved,” she said. “It’s a big hurdle to know when to let go, but you need to at some point,” she added.
- Should you build from scratch or buy and develop?
Angie outlined some of the pros and cons. “In a perfect world we would build,” she said. And yet she acknowledges there are existing properties in desirable locations that are ripe for conversion. “Each deal will be unique. Just look at it and analyze the numbers from that perspective,” she says.
Brad stressed the importance of knowing your long-term and short-term goals. “If the short-term is to have cash to live on and operate the business, then it’s best to buy an existing business,” he said. “If you have a long-term goal for retirement, then it would make sense to buy an existing home and convert it, because you are going to buy that at a lower price than an existing home and business. The bigger profit will come when you sell it in the future.” Makes sense.
It May Be a Business, but the Human Side Comes Through
The only thing ending this energetic session was the clock (and the happy hour that followed). But it was a lively and connected group of people hungry to learn more from these couples who had made their RAL investment properties work, with valuable, full-to-capacity assets to show for it.
Throughout the session, the group kept coming back to the human aspect of the business. At one point Gene asked the couples what words of wisdom they had for others interested in getting into RAL ownership. Scott’s answer really drives home the emotional layer to this, one that’s not often taken into consideration. “Just keep your ‘why’ out front,” he tells the audience. “Not only what it is you want to accomplish, but don’t forget why you’re doing it.”