Starting a Home Healthcare Business – 8 Questions and Answers

Starting a Home Healthcare Business – 8 Questions and Answers

Starting a Home Healthcare Business – 8 Questions and Answers!

Let us answer your most urgent questions about starting your home healthcare business. Learn how to launch your startup and the benefits of doing so now.

Why start a home healthcare business? 

You should start a home healthcare business because it’s the fastest-growing market.

As more and more baby boomers reach senior age, the number of people needing home health care services is increasing. 

Sources say that the demand for home health services could double by 2050. That means the risk of starting a home health business is very low right now!

Who should start a home healthcare business?

Anyone can start a home care business. However, people who have a background in healthcare have the upper hand. 

That’s because these people have the knowledge and understanding of what goes into this type of care. Intimately understanding the ins and outs of healthcare makes a business owner appear more trustworthy and intelligent. 

These people are more likely to land employees and clients. However, if this is not you, go above and beyond in showing people you have the empathy to stand out among the competition.

If you can demonstrate your understanding of the trade and that you care about people, you will have business success.

What are the different services and types of home healthcare businesses?

There are several different types of services that you can provide in your home healthcare business. Which services you offer to people will depend on the employees you hire and the type of home health business you are creating.

Services

The following services can be offered to your potential clients.

  • Doctor care – A doctor will visit the patient at home to diagnose, treat, or perform check-ups.
  • Nurse care – Nursing care is the most common form of medical home care services. Nursing care varies depending on the patient’s needs. They can help with wound care, IV therapy, pain management, and overall monitor the patient’s health.
  • Physical, occupational, and/or speech therapy – Physical therapists help patients gain strength and mobility. Occupational therapists help patients be able to complete their everyday tasks on their own. Speech therapists help patients communicate with others more effectively. 
  • Medical social services – Social services provide patients with counseling and support in recovery. They also provide patients with resources so that they have access to everything they need to recover. 
  • Nurse Aides – Personal assistance usually comes from health aides. They help the person get out of bed, walk, bathe, and get dressed. Some may perform more than basic needs, based on instructions from the resident’s medical team. 
  • Homemaker – A homemaker comes out to a person’s house to help them with their household while being medically cared for. They help with meal preparation, housekeeping, laundry, and basic household chores. 
  • Companionship – Human beings are social creatures. As we age, we start to lose people we love. This can be hard. Providing companionship to senior citizens that need comfort is another great service to offer in your home health agency.
  • Medication services – Medical equipment and medication can be delivered at home. 
  • Transportation – You may or may not offer transportation services for patients to and from their appointments, or even for social gatherings at senior centers.
  • Nutritional support – A dietician comes out to a person’s house to assess their nutritional habits. They will come up with a plan to help the person meet their health goals through the foods they choose. 
  • Lab & imaging – Urine and blood tests can be easily taken from the home. X-rays can also be taken from the comfort of home with the help of portable x-ray machines. 
  • Home-delivered meals – Meals made and delivered to patients or the elderly. Churches normally provide this service, but it is something you can add to your business. 

Types of Business 

Now that you understand what services home health care agencies can offer, it’s time to understand the types of businesses you can have with those services. 

  • Non-medical – A non-medical business would be ideal for those who don’t have a background in healthcare, at least as a starting point. As a non-medical business, you can offer homemaking, companionship, transportation, and/or home-delivered meals. 
  • Medical – A medical home care business can offer services their employee is certified in. Let’s say you hire a dietician. That dietician can do what they are certified to do. This is sometimes also referred to as skilled home care.
  • Short-term – You offer short-term services to your clients (less than 60 days).
  • Long-term – You offer long-term services to your clients (more than 60 days).

You will need to double-check your state requirements for how long you can service your clients. Some states require you to be certified for long-term home health. 

What are the benefits of starting a home healthcare business?

There are a lot of benefits to starting a home healthcare business. 

One is that you will truly make a difference in the lives of others. 

Allowing patients to receive healthcare from home truly makes their lives a whole lot easier. People heal faster in the comfort of their homes. Plus, it’s a lot more cost-effective for the patient because they aren’t paying to rent out a hospital bed. 

This business changes lives. Not just the lives of your clients, but also the lives of your employees. 

You’re creating more opportunities for health professionals to continue doing what they love.

How it affects you…

If you have an entrepreneurial spirit, building and sustaining a business will change how you think and problem solve. 

But, I know what you’re looking for is how much you can make from starting a business in this market. Home health care is one of the most profitable businesses. While most home health care businesses profit over $100,000 per year, many have annual profits in the millions!

How much to start up a home healthcare business?

The average start-up costs for a non-medical home healthcare business total about $80k. The average cost of a medical-based healthcare facility is around $350k. The difference is in the types of employees and the equipment needed.

How do I start my home healthcare business?

Starting a home health business has steps like any business. The steps are…

Step 1. Create a business plan. Plan for at least the next 5 years. What do you need to do to grow your business? Take external forces into consideration where you can.

Step 2. Create a business entity. An LLC is recommended for small business owners. 

Step 3. Get an employer ID from the IRS. It’s like a social security number, but for your business.

Step 4. Register with your state. States need a record of businesses that are established in their state.

Step 5. Get any licenses needed. Check with your state licensing requirements for operating a home health business.

Step 6. Prepare finances. Creating a home health business is an investment!

Step 7. Create or outsource your procedures manual. Your patients are going to need a handout about what they expect when using your services. 

Step 8. Hire employees & fill up the schedule. As long as your business meets the proper requirements and you have the employee help, you can start taking clients. 

Step 9. Build a website & market online. Registering with local and online business directories is very helpful in getting discovered via the web. Create a blog about your services! 

Step 10. Buy or lease an office. An office isn’t necessarily the top priority in a traveling business like this. However, you’ll eventually want a space to go to work on different aspects of the business and dispute anything going on. 

Step 11. Do what you can to grow! It won’t be long before your business is earning a substantial profit.

When should you start a home healthcare business?

Home health trends are up. The sooner you start your business or agency the better. The senior population is rapidly growing, which means the sooner you can take advantage of the demand, the better for you and your business! 

Where is the best place for home health startups?

The best place to start your home health business is near senior housing, 55+ communities or age-restricted apartments. You can even start up near hospitals and try to market yourself in the area.

Starting up your business near one of these communities allows you to easily market your services to people who could benefit from your services. 

Conclusion

Starting a home healthcare business can be extremely profitable and fulfilling, regardless of whether you’re starting a medical or non-medical agency. 

Hopefully, this post helped you find what you need. If you have another question, please comment below. Feel free to help others out with their home health care questions. 

The Costs to Start an Assisted Living Facility

The Costs to Start an Assisted Living Facility

 

The Costs to Start an Assisted Living Facility

 

You have a passion for helping the elderly live both safely and independently, and you’re also passionate about entrepreneurship. So, you’re contemplating marrying the two to start an assisted living facility.

That may be a very smart choice.

The demand for assisted living facilities is likely to rise in the future. After all, the percentage of seniors in the United States lingered at 13% back in 2010, but the figure is projected to reach over 20% by 2030.

When you start putting together your assisted living business plan, one of the first questions is, how much does it cost to start an assisted living facility?

Our assisted living start up guide will give you a rundown on the expenses, startup costs, and factors to consider before you begin the process of opening an assisted living facility.

 

Your Down Payment

The amount of money you need to start an assisted living facility will be based on several factors. Consider the following, for example:

  • How much do properties in your locale cost?
  • How many alterations will the property need?
  • Will you perform any work in your facility, or will you hire full time managers and staff?

Your circumstances will likely be different from another investor’s. However, like many other business owners, you’ll likely be financing the majority of the purchase of your new facility with a small business loan.

As a general rule of thumb, lenders require down payments equaling 20-25% of your cost. Your lender will let you know what your monthly payment will be, going forward, to pay off the purchase of the facility.

 

Assisted Living Startup Costs

Once you’ve secured your assisted living facility building, you’ll need to focus on adding furniture, supplies, and equipment. Equipment may include the following:

  • Nurse call buttons
  • Medical equipment
  • Computer hardware
  • Security cameras

These items may cost between $3,000 and $5,000 for each unit, and this applies to both the resident units and the common areas.

Of course, these furnishing startup costs will depend on the size of your assisted living home as well as the quality and quantity of the items you provide.

In addition, you’ll need to factor marketing and sales into your regular business budget. Other startup costs include your employees’ wages, internet, utilities, plus bedding and meals for the residents.

You might also want to consider buying software designed to make the management of an assisted living facility easier.

Assisted Living Licensing Requirements

Becoming a state licensed facility will involve an application and approval process. There may be education requirements involved which will require you to take certain classes on resident care, and federal and state laws you should be aware of.

The cost of obtaining your license to own and operate an assisted living community will vary between states.

 

Your Ongoing Cost of Running an Assisted Living Facility

So, you’ve purchased your assisted living facility building and covered your startup costs. Now you need to focus on dedicating working capital to fund your operations.

Let’s say you’ve purchased a facility that’s already generating positive cash flow. Estimating how much you need for ongoing expenses will be far easier.

In this case, the total is usually between 30 and 60 days’ worth of facility operating expenses. These expenses include your mortgage payments, payroll, and other costs.

However, let’s say you’re creating an assisted living facility business from scratch, and you have no residents. In this case, you’ll likely have to fund your operations for between three and six months before you reach the break-even point. And this period might be longer for a larger facility.

 

Sample Operating Budget for Assisted Living Facility

Note that an average facility with 80 units is able to generate annual revenues of about $2.75 million. (We’ll discuss later how you can generate this revenue.) However, as a general rule of thumb, your two biggest expenses will be food and caregiver staff.

So, of the $2.75 million total, food will eat up 15% of your income, whereas caregiver staff will take up 17% of it. If you have a lot of employee turnover, your staff expenses will climb even higher.

As far as food goes, your cost will ultimately depend on your food’s quality. You can expect to cough up several thousand dollars each month for meals.

You should also dedicate about $2,000 each month to utilities, plus between $500 and $1,000 each month on your bedding and medical supplies. These items will need to be replaced or replenished over time. Of course, you can change your budget as needed once you develop a better idea of your residents’ needs.

When it comes to some of your core employees, a facility manager licensed by the state will likely expect a $35,000 to $75,000 annual salary. In addition, a director of marketing may cost you $40,000 to $70,000 annually.

Also, you can expect to pay your nursing staff between $30,000 and $50,000 annually, multiplied by the number of nurses you need for the size of your facility. Meanwhile, your administrative employees will cost you $10 to $15 an hour, and your kitchen staff will cost you $10 to $12 per hour.

Staff and management wages can be higher in a memory care facility or nursing home. These specialized facilities require additional qualifications to operate than typical residential care facilities or independent living facilities.

 

Additional Ongoing Costs

You’ll also need to dedicate 9% of your sales to your business liability insurance, utility bills, and property taxes. Meanwhile, 8% of your revenue should be used to pay your high-level administrators, lawyers, and accountants.

Maintenance and security should take up an additional 7% of your revenue, and marketing efforts may gobble up another 5%. You should also plan to spend another 5% of your revenue on laundry and housekeeping services.

Next, dedicate 2% of your budget to an activity director who will keep your facility’s residents busy. Finally, allow 1% to go transportation.

In the end, the average profit margin for assisted living facilities should be 30% before you factor in depreciation, amortization, taxes, and interest.

 

An Example of Your Costs to Start an Assisted Living Facility

Let’s take a peek at an example of how much an assisted living facility costs.

Let’s say you’re purchasing a facility with 40 units for $4 million. Your facility will produce revenue totaling $120,000 per month. However, your debt and expenses will cost you $90,000 per month.

First, you’ll need a down payment of $800,000. Then, you may pay around $50,000 on equipment and furnishings if the facility is already partially furnished.

Finally, set aside $180,000 to cover your operating costs. This is your working capital. Dedicating this amount to your operations will help you avoid getting stressed out financially.

All in all, you’ll need $1.03 million to start your assisted living facility.

 

How to Generate a Profit to Cover Your Facility Costs

You can generate money for your assisted living facility by charging your residents fees for remaining at your facility. You’ll apply this cost on a per-year or per-month basis.

Note that the majority of assisted living facilities have as many residents as they can accommodate within reason. Many of these residents are senior citizens. However, you can also draw in younger patients who need help with their activities of daily living.

In fact, younger residents can actually be ideal because they will likely stay at your facility for many years. Senior citizens, on the other hand, are more likely to pass away sooner, and this can be emotionally difficult for you to cope with.

So, how much should you charge your residents? As a general rule of thumb, you can charge anywhere from $2,000 to $4,000 for each resident every month. Still, your exact charge will ultimately depend on your location as well as the quality of your facility.

When it comes to making profit, note that your profit level depends on your facility’s size and your amenities.

Perhaps you have a fairly large facility featuring top-of-the-line amenities. Let’s say you’re maintaining full capacity. In this situation, your profits could easily reach six figures or more, as long as you’re running your business effectively.

Your goal as an assisted living facility owner should be to build a reputable brand from the start. Also, you may want to consider opening extra assisted living facilities in different locations. In other words, consider scaling your business.

If you develop other facilities in your local area, for example, you could easily generate profit totaling millions of dollars in the years ahead.

 

How We Can Help You to Buy an Assisted Living Facility

We offer top-of-the-line services to individuals interested in either selling or buying an assisted living facility.

If you are interested in starting your own assisted living facility business, we will help you generate a plan that will produce the favorable results you want from your commercial real estate purchase.

In addition, we have loan options designed to meet the needs of your unique deal. We’ll make sure you obtain the terms needed to close your deal.

Our goal is to make your transition into entrepreneurship as easy as possible with our extensive real estate purchase experience.

Get in touch with us to learn more about how to start an assisted living facility, and start turning your dream business into a reality in 2020 and beyond.

 

 

 

How to Measure the Success of Your Assisted Living Center’s Marketing Campaign

How to Measure the Success of Your Assisted Living Center’s Marketing Campaign

Every business relies on a marketing campaign to reach their goals. An assisted living center is no exception. The purpose of any marketing is to raise awareness of the business by engaging with potential customers and then converting those engagements to sales. Most marketing campaigns include several different activities that are coordinated for maximum efficiency. Common aspects of marketing campaigns include publishing ads via radio, television, and the internet.

But is it really worth going to all that effort? Unfortunately, it is often difficult to measure the success or failure of a marketing campaign. An influx of patients to your assisted living care center could be caused by a variety of unrelated factors. The following article is a guide to help you determine whether your current marketing efforts are effective.

Review P&L Statements

What is a P&L statement? P&L means “profit and loss“. The purpose of a P&L statement is to summarize all the expenses, losses, and income in a single document. These statements can be used to get a baseline idea of how effective a marketing campaign has been. Ideally, a good campaign will reflect progress in the P&L statement. Businesses are required to keep track of their income, so this shouldn’t require any extra paperwork.

Determining ROI

ROI stands for “return on investment”. It is a common term among business leaders and marketers. ROI involves weighing the costs of a marketing campaign against the revenue it has helped to generate. Knowing how to calculate ROI is essential when trying to determine how effective a marketing campaign is. Many free resources are available on the web that allow small business owners to easily calculate ROI for any marketing campaign.

Check Social Media Statistics

Most successful modern-day campaigns use social media. This makes tracking the effectiveness and reach of your marketing efforts much easier. You can see how many views your posts have, how many times it has been shared, and even a statistic called “engagement”. Engagement refers to any form of significant interaction that occurred as a result of a marketing post. These stats will help you get a feel for what type of post resonates with your target audience!

As a business leader, you are responsible for making sure that the resources and efforts put into a marketing campaign for your assisted living center actually pay dividends. Use these tips to gauge that success.

Looking to expand your Assisted Living Care? Click here to browse properties perfect for your expansion!

5 Secrets About Investing in Senior Housing in 2020

5 Secrets About Investing in Senior Housing in 2020

5 Secrets About Investing in Senior Housing in 2020

The senior housing market is a service market that provides appropriate housing options for the elderly. Investing in senior housing, a service everyone will eventually need, is a great way to build your portfolio as an investor. (Invest like a pro, even if you’re an amateur.) Here are the 5 secrets I’ve learned about investing in senior housing in 2020. I’m sharing these secrets with you so that you can build your portfolio and wealth like a pro.

Secret #1 – People aren’t paying enough attention to this hot market 

The baby boomer generation has reached their senior years.

Which means right now there are more people who need senior housing than houses currently available. 

The demand for senior housing is high and the risk involved is low, making senior housing investments a great way for you to build your portfolio as an investor.

Despite rumors that the senior housing supply could become oversaturated, not enough people are actively investing in senior housing. 

People aren’t taking action on the opportunity to provide this incredible source of passive income when there’s no reason not to.

The demand for senior housing will continue to grow, which makes it a great opportunity for you!

Secret #2 – The ROI for senior housing can be mind  blowing!

Investing in senior housing is a gold-mine opportunity!

Although senior housing investments take time to grow, investing in senior housing can bring you home a lot of money in due time.

The ROI for senior housing has steadily been around 13% each year, despite economic changes.

The ROI on senior housing can drastically change your life.

Secret #3 – The best time to invest in senior housing is NOW! 

In order to maximize your potential ROI, you need to start investing now!

As an early investor in this growing niche, you’re taking the lead. That means you have time to scale your senior housing business.

The investment has amazing ROI and keeps getting better. 

**Life expectancy continues to increase with the help of modern medicine.**

This means the residents in senior housing will occupy the home for longer than 4 years.

This means the market is more profitable and less risky than a college housing investment.

Secret #4 – Investing in senior housing will make you look like a pro investor! 

Expert investors know when the risk is worth it. They actively educate themselves on what to expect during the process, and most importantly, they know how to budget.

If you invest in senior housing, you will show other investors that you are an expert in all those things yourself. 

After all, you can recognize a good investment opportunity when you see one. You know how to educate yourself in your market and you will demonstrate your budgeting skills.

Secret #5 – There’s a lot of growth potential

There’s a lot of potential in the senior housing market — more than the average investor realizes.

Since the population continues to grow, there will always be older people who need housing. The senior housing market will continue to grow in the coming years, and investing in it is a wise move.

Plus, there are a lot of growth opportunities with this market. You can build your business in one area, then branch off and build your business in another location. You’ll be able to invest more into your growing business and be able to scale it to however big you can manage.

Investing in senior housing is an unpopular trend you want to be in on. It’s much more fruitful than the typical single- and multi-family investments. 

Bonus Secret #6 – Senior living real estate investment trust (also known as REIT) is a great alternative  

Investing in senior housing can consume time, money and energy. But that’s not a bad thing for the right person.

Investment costs that prevent people from investing include start-up costs, regular monthly costs, staff payroll, and the potential for economic changes.

But, maybe you’re like me and you don’t want to go all-in to physically invest in senior housing. A great alternative is senior housing real estate investment trust (REIT).

What types of senior housing are available to invest in? 

There are 4 main types of senior housing you can invest in…

•Senior Cohousing

•Senior Group Home

•Active Living

•Assisted Living 

What is Senior Cohousing? 

Senior cohousing is an age-restricted, 55+ community with multiple houses or condos for senior residents to live together as neighbors.

What is a Senior Group Home? 

A senior group home is a home where seniors are roommates.

The home provides housekeeping, meals, and medication reminders.

In a senior group home, there is no staff except for meals and cleaning.

What is Active Living? 

Active living homes are the new age-restricted apartments for seniors 55+.

Additional services such as laundry and housekeeping are available for residents.

What is Assisted Living?

Assisted living homes provide 24/7 care to residents.

Care includes providing nursing, medication administration, meals, and housekeeping for residents.

What type of senior housing should I invest in? 

To discover what type of senior housing will be the best investment for you, research them all.

The type you choose will depend on a few factors, like the goals you have for your investment and ultimately how much you can invest.

Someone who has more money to put forward may invest in cohousing, while someone with a lower budget may prefer to do a REIT.

Both are great options for the right people.

Conclusion

Senior housing is a much-needed service for people 55+, and amateur investors aren’t taking advantage of the ROI opportunity senior housing offers.

The ROI on senior housing can be much more and last much longer than student housing. This is why the best time to start your senior housing investment is now because the demand for senior housing is on the rise.

Investing in this hot market will make you look like a pro investor while building your wealth and nest egg.

There’s a lot of growth potential in each of the 5 senior housing sectors. Whatever senior housing investment is the best option for you, it will provide you with great benefits and make you look like a pro investor.

There you have it — 5 secrets about investing in senior housing in 2020.

What secret was most shocking to you? 

If you liked this post, please share it with a fellow investor, and best of luck with your investments!

How to Invest in Assisted Living Facilities

How to Invest in Assisted Living Facilities

 

How to Invest in Assisted Living Facilities


People have been talking about investing in assisted living facilities for quite some time, with a keen eye on the aging baby boomer population.

As the number of senior citizens increases, so does the need for assisted living. The question is, how do you invest in assisted living facilities?

 

Is assisted living a good investment?

Assisted living investments are a great opportunity for real estate investors, but you should have a solid investing strategy and reasonable expectations.

While the demand is significant, owning an assisted living facility is much different than a multifamily property or a home healthcare business.

Assisted living facilities go far beyond renting space to residents. A certain level of care must be provided, and in most cases, an assisted living home must be staffed 24/7.

Assisted living care facilities must provide meals and personal care services, including help with bathing, administering medications, housekeeping, and laundry.

There are various types of assisted living, and regulations vary between states. Most facilities require licensing for the property and the person operating it. Therefore, a person usually has to meet certain qualifications to become licensed to operate an assisted living home.

If you have a plan for handling the requirements, investing in an assisted living home can be a very profitable venture. Residents of assisted living facilities pay a fairly high amount per month. Even after the substantial expenses involved with operating a facility, the margins are normally quite high.

 

Methods of investing in assisted living homes

Running an assisted living facility isn’t as simple as a normal real estate investment. There are a few ways to go about investing in assisted living homes, and the type you choose depends on your specific goals.

Being an operator

One popular option for investing in a senior living facility is to become an operator and directly manage the assisted living facility. Being an operator has several requirements, but it can also be the most profitable.

The requirements for owning an assisted living facility vary depending on the state you plan on investing in. The National Center for Assisted Living provides the requirements for each state in their assisted living state regulatory review.

Being a landlord

Another popular option is to find somebody that already runs an assisted living facility, then lease them the property. This makes your assisted living investment similar to any other type of income-generating real estate investment.

There are two common paths for an assisted living facility to be leased to an operator. Many leases are structured just like any other commercial real estate lease, and the assisted living operator simply makes a fixed monthly rent payment to the investor.

But another method requires each resident of the assisted living facility to pay rent directly to the property owner and additionally pay the operator for their care. With this method, income is dependent on how full the facility is. When occupancy is high, rent payments provide a good income, but with fewer residents, your income would obviously suffer. This method has a lot of upside potential, but less consistency. Your income is also dependent on how well the operator is running the business.

 

Hire an assisted living management company

Hiring a management company would allow you to own the property while somebody else meets the requirements and runs the business. In this case, you would find a professional assisted living management company to run the facility. They would be responsible for handling staffing, schedules, finding residents, and all other operational aspects of the business.

All expenses, including staff salaries, come off the top. After that, the management company and the investor usually split the profits at a negotiated rate. You may expect the management company to take 20% or more of the profits, but a good assisted living manager will increase profits enough to make the split worthwhile.

 

How to start investing in assisted living facilities


To start investing in assisted living, there are three typical options to choose from.

  1. Opening an assisted living facility – You can start your own assisted living operation. To do this, you can build or purchase a building and start from scratch with finding staff and residents.
  2. Buy an existing assisted living facility – Purchasing a currently operating facility will give you an assisted living business that already has staff and residents. This option allows you to start receiving income right away.
  3. Invest in an assisted living fund – If you don’t want to be an operator or landlord, you can partner with an experienced investor. This will give you equity in the property and a percentage of the profits from the business.

 

How much does it cost to invest in assisted living?

Just like most other businesses and real estate investments, investments of various sizes are available. Assisted living facilities can be as small as a few beds, and others can have hundreds of beds.

If you’re new to the business, it may be wise to buy a smaller facility, then purchase a larger facility once you learn more about the business.

Whatever your investment budget, there is probably an investment option for you.

 

Types of assisted living facilities to invest in

There are many types of assisted living facilities to invest in, with the main difference being the types of residents. Different types of residents require different levels of care, so the residents will be paying different rates.

Some of the more common types of assisted living facilities are:

  • Senior housing
  • Memory care
  • Developmentally disabled
  • Mentally ill
  • Traumatic brain injury
  • Skilled nursing facilities

 

Investing in an assisted living facility can be a very lucrative venture if you choose the right option for you. If you don’t want to manage a business, being an operator probably isn’t the right option for you. Being an assisted living operator may be a good option if you are interested in a business that takes care of people. However you decide to invest in assisted living facilities, it can be the best investment you ever make.

 

How to Sell An Assisted Living Facility

How to Sell An Assisted Living Facility

Sell Your Assisted Living Facility

You may want to sell an assisted living facility to retire or get into a new business. However, selling an assisted living facility takes more time and planning than selling a home. 

Getting a loan to purchase an assisted living facility is also quite different than it is when buying a home.

A buyer must choose a lender that’s experienced and knowledge with assisted living facilities. The buyer must meet certain qualifications, and the lender has to complete due diligence on the business. The time frame to close on an assisted living facility loan can be quite long. Most sales take between 90 – 120 days. 

Preparing the assisted living facility to be sold

Preparing your assisted living facility to be sold involves more than some fresh paint and a little landscaping. There are many things that may need to be adjusted to make the business more attractive to a buyer. While there are professionals available that can help you with this process, there are a lot of things you may be able to do on your own. 

Get your finances in order

Having clean books is not only important to the buyer, but it also goes a long way to help the lender approve the loan. Make sure that your expenses are clearly categorized and all of the income is accounted for. You’ll also want to make sure that you have financials available for the previous three years. 

Review expenses

Once you have your books in order it’s a good idea to look for expenses you can cut to increase profits. People often get comfortable with certain vendors and don’t realize that they’re paying more than they would elsewhere. You may be able to negotiate better pricing with who you’re currently using, or find a new vendor that can save you money. You may also see other areas that you can improve, such as groceries, supplies, utilities and wages. Being more conscious of the food and supplies you buy or restructuring staff schedules may be able to add more profit to the bottom line. 

Pass of some respsonsibilities 

If you’re the only one that knows how to do certain tasks, like accounting or finding new residents, it’s going to be difficult for a new owner to step into the business and continue running it. Start training other staff members on how to do these tasks so the business can continue to run smoothly when you’re gone. Some buyers may not want to spend as much time in the business as you do so they’ll need somebody who’s capable of running things when they’re not there. 

We also discuss more ways to prepare your assisted living facility to be sold in more detail in another post. 

Determining What Your Assisted Living Facility is Worth

You’ll also need to figure out what your real estate and business are worth, and what they can be sold for. Some sellers make the mistake of asking for too little and leave money on the table, while others ask for too much and are never able to sell.

Asking for the right price will help you sell in a reasonable amount of time and get you a fair price. You can hire an appraiser or business valuation expert to get the most accurate valuation, or you can talk to a broker that’s experienced in selling assisted living facilities to get an opinion of value. While an appraiser will give you the most accurate value that a lender will base their decision on, it can be quite expensive.

Having a recent appraisal may also help the buyer in their loan approval process and speed up the deal. However, what a property and business are appraised at and what they will actually sell for in the current market may be two different things. Discussing your situation and business with a knowledgeable broker can give you a better idea of what you can expect to be offered for your assisted living facility and will cost much less than an appraisal. 

We also discuss determining the value of your assisted living facility in more detail, including different methods of valuation in another post. 

How to Sell Your Assisted Living Facility

When it comes to actually selling your assisted living facility, you’ll need to gather the necessary information on the business and property, locate a capable and qualified buyer and navigate the transaction. While some owners choose to sell without the assistance of a broker, most people that go this route can wait several extra months, or even years, to find a buyer and often lose the deal in the middle of the transaction because they aren’t familiar with the process. While selling on your own to save money in commission may sound attractive, it’s important to understand that it can be a very complicated process and, in most cases, sellers walk away with less money than if they would have paid the commission to have the assistance of a broker.