How to make money in assisted living.
That’s what everybody wants to know. I’m going to share with you the three best ways to get started right now, making money in Residential Assisted Living. 1 – Own the real estate, lease it to an operator and make higher than market rent with a long term, low impact tenant. 2 – Lease the real estate and own and operate the business. The real estate is a good cash flow but the business is much higher. The business is taking care of the residents and charging $4,000, $5,000 or $6,000 a month or more. The net profit before taxes from that is going to be about 30 percent. You’re going to pay rent to somebody for the real estate. But the business itself can be incredibly profitable. 3 – Own the real estate AND operate the business. What I do is I own the real estate in one entity, and I own the business in a separate entity. The entity that operates the business leases the real estate from the entity that owns the real estate. You own and control both entities so it’s the best of both worlds. We own the real estate, get the tax benefits, depreciation, appreciation. The entity that owns the business, the operating entity, pays rent to the property owning entity. We have a long term tenant and we get great financing options on the real estate.
Staffing is 24/7
You can operate your RAL home in a number of ways. You can have live in caregivers where the caregivers are there 24/7. They’re living in the home, they’re asleep at night, and they’re being paid a monthly salary. They may be responsible for five days a week. There are replacement caregivers hired for the other 2 days each week to allow them to have some time off. They also have a place to live, which is part of their compensation package.
Use an agency.
Another way to staff your RAL home is to hire the caregivers from an agency that will provide caregivers to you. If you do this, you’re going to have to pay more than if you hired them yourself. The profit that the staffing company is making is potential profit that comes out of your pocket. It does make it easier if you hire somebody else through an agency but it is more expensive and you have less control over the caregivers. An agency would be the ones that hire those people, train those people and so on.
Contract for care.
There is also way number three, and that would be you bring those residents in the home and they’re paying you to live there, then they contract out for the care to a 3rd party that provides the staffing and care directly. So they may be paying you $2,000 a month to live in that space, but they’re paying $3,000 a month to a caregiver. There are lots of ways to make money with assisted living. The key is to get started.
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