Location and accessibility are huge factors in having a successful residential assisted living property. The families of your tenants want a safe, mid-to-upper class neighborhood for their family member to live in and want to make sure that they can easily navigate through the property for their everyday routine.
Mike: Welcome back to the www.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: Hi. This is Gene, the founder of the Residential Assisted Living Academy, and your host today for the REI classroom. Today, we’re going to be talking about, should I, can I convert my home, my rental home that I have now, into residential assisted living?
Mike: This show is sponsored by www.passiverental.com.
Gene: So let’s talk about that. One of the things that I teach all my students, it’s not the real estate, it’s the location that’s key. I can take raw land and convert it, or I can take raw land and I can build on it, or I can take a building and scrape it and build what I want. So it’s not the real estate, the bricks and sticks, it’s the location, the dirt, the plot.
So let’s assume for a minute that you have a rental property, and you’ve been renting it out to a family year after year for $1500, $2000 a month. I mean, it’s a nicer home, it’s not a small home, a two bedroom, one bath. It might be a three, four, five bedroom home. You’re getting good rent for it and it’s in a great area, and you’re now thinking, “Can I, should I convert this home into residential assisted living?”
Well, let me explain to you what is most important. Number one, location. It’s got to be in the right location, and I talked about this before. The concept of your client isn’t the resident living in the home, that bed in that head. The head in the bed. It’s the family, the residence family that’s going to be paying for that. So I’m going to be in a neighborhood, in an area where it’s an upper income area. Not the high end, not the low end, but somewhere in that upper middle class, upper middle income because those people can afford to pay the rates that we’re going to charge for the residential assisted living. So location is critical.
The next thing is, let’s go right into it, the property itself. Single level is a lot easier to deal with than two or three story homes. So single level. Now, I’m in Arizona, we have lots of single level homes, but around the country that’s not as common. There’s a lot of two level or Colonials with three levels. So now just consider this. If it’s on one level, anybody can move around easily. The idea of going up the stair, not a problem. If you have elderly people the concept of going up stairs, well that can become an issue. So if there are stairs, now the next question is, is it a straight staircase? Is it a windy staircase? Is it a steep staircase?
So your solutions are these. Number one, stairs are okay. If the seniors can navigate those stairs, you don’t need to do anything. Don’t need a chair lift, elevator, nothing. But if they can’t or if it’s a bit of a concern, there are two options.
Your two options after, it’s okay, they can handle it, one would be what’s called a chair lift. Now, you can Google this, chair lifts, and there’s a company called Acorne, A-C-O-R-N-E. Just go there. But it’s the chair that has the rails, and it glides up that staircase. It is about two grand for just a straight staircase, might be another thousand dollars to get it installed. So for $3,000, you now have the access for seniors to the second floor.
If there’s a lower level, you can do another set there. Now, if it’s a windy staircase, it’s a little more complicated, a little more expensive. But two grand at the low end, five grand on the high end, for a chair lift to go from one floor to two or three floors.
Now, a more elegant solution, more expensive solution, more permanent, is an elevator. Now, I don’t mean the 10 person elevator you see in the Marriott Hotel, it’s probably a two or three person unit. So if you want to check that out, Google “elevators” or go to Stiltz, S-T-I-L-T-Z. Don’t hold me to that. Stiltz, S-T-I-L-T-Z and check it out.
They have a unique kind of an elevator set up where it’s a 110 plug. It’s not in the foundation, it’s just on the floor. You cut a hole in the second story and it’s a box that rises right through. It’s really cool. You’ll see videos of it and see it there. That might be a $10,000 or $15,000 solution. A full blown elevator maybe $30,000 or $40,000, so you can do it with multiple.
Now, here’s the thing, I know right off the bat, some of you are thinking, “That’s way too expensive. I’m just interested in putting in a new door, or putting in a new carpet or something.”
Hey, guys, here’s the deal. If you haven’t watched my other REI classroom sessions, watch them. We’re talking about making $10,000, $15,000, $20,000 a month in significant residual income. So if you can invest $40,000 one time, and make $20,000 a month for the rest of your life, is that a good investment. Pretty simple, it’s a no brainer. But count the cost, know the numbers, so you really understand what the opportunity is.
Now, once you crunch those numbers, all the other decisions come into place. I’m literally sitting in a home right now that we’re in the midst of converting. And I will be adding five bathrooms, five bathrooms. Not just, “Let me just remodel a bathroom.” We’re talking about adding everything. I’m actually putting in an entire septic system just for those new five bathrooms, that so that I can have half bathrooms in each one of the private bedrooms.
Now, the reason why I do that is an extra bathroom, a private bathroom inside that private room, is going to get me at least $500 a month in addition to what I would normally charge. So $500 a month . . . Let’s just say it cost you $5,000 to install a bathroom, and it doesn’t cost that much when you do it in bulk and it’s only a half bathroom. But $500 a month, $5,000, that’s 10 months to get paid back. Less than one year, after that it’s all pure profit. Do I have to do it? Absolutely not. Am I going to do it? Oh, absolutely yes. So that just gives you an idea and example of.
So if you’re looking at converting your own home, you want to look at it, is it single level, two or three level. Do I need an elevator? The next thing is, is this the best place to do it? Location is key.
And then the third thing that I want you to really consider is, are you going to be doing it within the existing walls, or are you going to have to put on an addition of some kind? Doing inside the existing walls is a lot easier when it comes to renovations and permits and so on. Always get permits, always do it properly, and so on. I don’t need to tell you that, but I did anyway.
But if it’s inside the existing walls maybe, converting a garage, maybe a porch, all good. But if you have to put on an addition, then you can do it your way, but it’s more expensive and time consuming. I have lots of students who do that and they love it.
If you want to learn more about residential assisted living, come right back here to the REI Classroom. I got a lot of sessions on here and I’d love to teach you more. This is Gene, the founder of the Residential Assisted Living Academy. Do good, and do well.
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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