Gene Guarino goes over the steps you need to take in order to make a home appealing and functional for an operator looking for their next residential assisted living home.
Renovations such as widening doors and smooth floors can make a home easier to transition into a residential assisted living home.
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. Now, let’s meet today’s expert host.
Gene: Hello. This is Gene Guarino, the Founder of Residential Assisted Living Academy, and your host for the REI Classroom. So today, what we’re going to talk about is how to get your rent home get twice as much rent, twice the fair market rent, using residential assisted living.
Mike: This show is sponsored by PassiveRental.com.
Gene: So here’s the deal. If somebody is going to operate this business in a single-family home, they’re either going to own the home or rent the home. If you’re a real estate investor and would like to get twice the fair market rent, one way to do that is to lease it to an operator of residential assisted living. Now, the reason why they’d be willing to pay you twice the fair market rent is they’re going to be making $5,000, $10,000, $15,000, $20,000 a month in profit, even after they pay you the rent.
In addition, you’re the one who bought the property. So you’ve got the down payment, the renovation, all of those expenses. They just walk in as a tenant. Now, what might you have to do in order to get twice the fair market rent? Because, let’s face it. That’s a really cool thing, and if the property you own is getting $2,000 or $3,000 a month, that’s a pretty good rent. But if it’s an expensive property, $400,000 or $500,000, then they just cover it, break even, or maybe you’re making $100 or $200 a month.
So instead of getting $2,500, if you could get $5,000 a month in rent, well, all of that extra money comes right to your bottom line, and it makes a real sweet deal for you. So that is what you want, and I’ll tell you some other reasons why. But what you might have to do is, number one, you’ve got to find that tenant. You need to know who this person is. How do you find that tenant? It’s not just a single-family dwelling for just a husband, a wife, two kids, and a dog. It’s going to be an operator of this business.
So when we train people, we have people looking for the homes. But why would they pay you twice as much, and what might you have to do? The renovations, frankly, are probably going to be a little bit different. Instead of having a regular home with a regular bathroom, and regular flooring, it might be something a little different where the bathroom, maybe you took the tubs out and you just got showers, and a shower that’s a roll-in, smooth shower so that wheelchairs or walkers can get in easily. Now, I know the first thing you’re thinking is, “Gene, if I take out the bathtub, and then I want to rent the house to a family later, it’s going to cost me money to put it back in.”
Well, stop. If you’re getting twice the fair market rent, you’ve got a long-term tenant, because they’re going to want a five-year lease, and they’re going to be low-impact. They’re not trashing your property, because there is no dog. There is no Harley Davidson and [inaudible 00:02:42] your family room floor. I think you’ll be okay with leaving the shower in place. But frankly, even if you want to put the tub back in, what does a tub cost, $500? The plumbing is in place. You put the tile around it. For less than $1,000, your bathroom is just the way you want it, with a dangerous tub.
I say it that way because with the assisted living, you want the roll-in shower. There’s no impediment for somebody getting in. It’s much safer for any kind of tenancy. So you might be doing some things like that. I mentioned flooring. Carpet is great in bedrooms. But carpets in an assisted living home, I’d rather have a smooth, harder surface, meaning tile, hardwood, linoleum, something like that. A carpet is soft, and a carpet also could be a tripping hazard. So somebody dragging their feet, for you and I, not a big deal. We lift our feet when we walk.
For somebody who’s older, they could drag their feet and that could catch on the carpet, causing the fall. So on one hand you’re thinking, “All right. If they fall the carpet is softer. They’re safer.” True. But if it caused them to fall, that isn’t good. I don’t want them to fall at all. But if they fall on carpet or if they fall on the tile, either way, grandma is probably going to bruise or break her hip. So we want to avoid the fall at all costs. A smoother surface, hardwood, linoleum, tile, that’s what I prefer. That’s what we do in our homes.
Doors, I make them as wide as we can. The average door at a Home Depot or a Lowe’s, the largest door they have in stock is 36-inch. That’s plenty big for walkers and wheelchairs. So wide doors, smooth floors, take out the bathtubs, roll-in showers. If you’re willing to do some of that work, maybe put in the smoke detectors and the sprinkler system if it’s required, hey, it may cost you some extra money on the renovation. But if you’ve got a tenant for five years at twice the fair market rent with zero vacancies, zero maintenance because they do it, not you, and they’re not trashing your house, I know a lot of investors say, “That is the dream tenant. That’d be perfect for me.”
By the way, they may end up being there for 5, 10, or 15 years, and then give them the option to buy that property from you. So now you can sell it at full market price in the future. So that is one way to really move ahead with getting twice the fair market rent. You know what’s in it for them, and why they would do it. Now you know what’s in it for you, a long-term, low-impact tenant, zero maintenance, and zero headaches. If that looks good to you, residential assisted living is the way to get that twice the fair market rent. This is Gene with the REI Classroom. Keep listening. We’ve got more for you every single time. Come on back.
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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