Gene Guarino goes over 3 mistakes you want to avoid with residential assisted living properties. From the location of the property to staffing, Gene has some excellent recommendations for you.
Location is important for any investment property but for residential assisted living properties, there are particulars that will give your property an advantage from other options, usually further away from town.
Mike: Welcome back to the flipnerd.com REI Classroom where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Gene: Hey, this is Gene Guarino, your host today for the REI Classroom. And I’m going to be talking today about the three biggest mistakes to avoid with residential assisted living.
Mike: This show was sponsored by passiverental.com.
Gene: The first mistake to avoid is going to be location. In real estate, we always talk about location, location, location, and in an assisted living it’s absolutely critical. One of the biggest mistakes that people make, if they’ve never come to my class, it’s all about location.
This is not about, if you build it, they will come, not at all. As a matter of fact, when we talk about assisted living, it’s really all about the location. You see, the resident, the person that’s living in the home, they’re going to live wherever the kids, those kids who are 50-60 years old who are taking care of mom and dad who are 80 and 90 years old, they’re pretty much going to live wherever they decide that it’s time for them to move to a home, and the location of that home is going to be. The location really needs to be where those kids live, nearby where they work, nearby where they live. It’s got to be easy for them to get to.
A big mistake that people make is they’ll find a beautiful home that’s perfect for this, but it’s in the absolute wrong location. Great case in point, yesterday I got a phone call from a builder, and this builder had designed the home, and created the home for somebody who wanted to do residential assisted living. And they built a beautiful home way out in the middle of virtually no where in Arizona. And they built a 7,000 square foot home with 13 bedrooms, and six bathrooms, and it’s a beautiful home, but it’s way out in the middle of nowhere.
As a matter of fact, it’s kind of on the edge of nowhere; on one side, there’s virtually nobody at all. So when I say in the middle of nowhere, what I want to be is in the middle of where other people live, other people with money who are going to be moving mom and dad into a home. So unfortunately, this family that spent a lot of money on the construction, and the builder knew it, spent a lot of money on the construction, number one, not only could not get people to move into the home because it’s so far away, they couldn’t even get staff to come work in the home.
When you think about that, the staff themselves, they’re not even going to drive out to this location, because it’s so far out there, it’ll take them a half an hour just to get back to the edge of civilization. So location is absolutely critical. You want to be in the middle of, not on the edge or way outside of.
Second biggest mistake that people make is going to be staffing. I call my staff my team, because that team is critical to your success. When we talk about the team, and how critical that is, you start with a manager. The manager is the point person who’s going to be on the job, who’s going to be on-site 24/7 availability. They’re not there every day all day, but they’re available, they’re taking those calls in the middle of the night.
When somebody needs help, somebody’s got to be able to call somebody. This is not just a Netflix or something where somebody can go to a website, and be taken care of. These are human beings that are being taken care of in a home situation. So somebody needs to be on-site, on-point at all times. It’s not going to be you, it shouldn’t be you, it’s going to be a staff member, a team member. That is the manager of that home.
Now, the manager is kind of the leader of the team. Now, you’re the business owner, you’re on top of that, but the manager of that home is the leader of that team. Underneath that, immediately underneath that is the caregivers. Those caregivers are the ones who are taking care of the residents. They’re the front-line; they’re the ones that are taking care of mom and dad on a day-to-day basis 24/7. They’re some critical players on your team, they’re really, really important. Those people are hand-selected by the manager of that home, and they’re taking care of those residents, mom and dad, 24/7. So those people are team members, and they’re critical to your success.
Now, you have to be careful, don’t over-work them. They’ll work eight-hour shifts. Some of them will work 12-hour shifts, but a lot of homes, if they do it one way, they’ll work them where they’re doing their 12-hour shifts, and they’re doing 24-hour shifts, because they’re live-in. So somebody has to be available at night to take care of the residents. So if it’s a 24-hour shift, the expectation is, you’re working during the day, and you’re sleeping at night. But what if the resident needs help at night? They’re going to have to get up and take care of them.
Now, if there’s two live-in caregivers that are taking care of people all day long, they need their rest. So one of them is going to have to be available at night, which means if they’re up once, or twice, or three times during the night, they’re going to be a little bit tired the next day, and that can wear them out over the course of five or six days, and then they’re going to need a day off. Just understand that if you do the live-in caregiver model, they’re going to get worn out.
What I typically do is, do four days, four days max, 12-hour shifts, that’s 48 hours. I’m paying some overtime for that person, but that’s good, they earned a little extra, then they get some time off, so they can rest, and recharge their batteries. We’ll bring in somebody who does just the night shift, and they’re up at night, so they can take care of the residents, prepare food, clean rooms, and take care of the home; that is all laid out in our policies and procedures, and how the home is taken care of. But the staff and the team is very, very critically important.
Then the third key piece is going to be, don’t do it all yourself. When we as entrepreneurs do things, we tend to want to do it, and we do it all ourselves. We’re the cook, the baker, the candlestick maker; don’t do this all yourself. Have a manager, have caregivers. Have somebody else who’s cutting the grass and doing the maintenance.
You work on your business, not in your business. Take that do-it-yourself mentality and get it out of your mind. Be the business owner, oversee the business, but have that team mentality, so you bring the right people in, and put them on the bus, and make sure they’re on the right seat on that bus.
Avoid those three mistakes, and you’re on a much better path to success. If you’d like to learn more about residential assisted living, come on over to our website at ralacademy.com. This is Gene your host for the REI Classroom. Enjoy and we’ll see you on the next one.
Mike: Passiverental.com is your source for turnkey, done-for-you rental properties. If you’d like to be an investor, and not a landlord, please visit passiverental.com, to learn how to purchase cash-flowing, professionally managed rental properties in the hottest rental markets across the country. We can also help connect you with financing for your next property. Invest the easy way today, and get started by visiting passiverental.com.
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