WELCOME to Assisted Living Investing
assisted living investing brandon gustafson getting started Sep 18, 2023
Hi! I’m Brandon
I’ve worked in the healthcare industry for over a decade. Throughout my professional career, I’ve gained a lot of experience working in the health system, including time as a CNA, medical billing, and working with Government Programs (think Medicare and Medicaid). In addition to my work in the healthcare industry, I have an MBA and MHA (Master’s of Healthcare Administration) from the University of Utah. All this is to say; I’m quite familiar with the healthcare system!
In 2020 I started getting interested in real estate investing, and when I found residential assisted living, I knew this was the asset class for me! As I went along in the process, I thought it would be a good idea to help others learn the process of acquiring a facility; I couldn’t find many resources myself when I was getting started, so I decided to launch AssistedLivingInvesting.net along with its partner YouTube channel.
I created AssistedLivingInvesting.net to help you learn the ins and outs of investing in assisted living. As you follow me, you’ll learn:
– How I purchased two assisted living facilities using an SBA loan.
– How I found my deals
– How to work with a broker
– What the licensing process is like
– How to operate a facility out of state
– And a WHOLE LOTE MORE!!!
Here’s how I got started investing in assisted living:
In June 2019, my daughter woke up sick, and I had to stay home from church and a family dinner to take care of her. I had been meaning to read Rich Dad, Poor Dad for years, but I had never gotten around to it, and I decided that today was the day! I started reading, and I COULD NOT put it down! I finished the entire book in one day! I had found exactly what I was looking for!
In August 2019, I joined a local real estate group to further my education on investing in real estate and start building a foundational understanding of the ins and outs of real estate investing. As I was doing this real estate education, I became particularly interested in the asset class of assisted living. Assisted living was attractive to me because of its tie into my healthcare background and my newfound passion for real estate. As 2019 came to a close, I was wrapping up my real estate education, and I started gearing up for a big year in 2020.
As 2020 started, I began putting my education into practice despite the COVID-19 pandemic. As my full-time job shifted from office work to working from home, I found an abundance of time, and rather than binging on shows or video games; I started putting into practice my real estate education; I did this by looking for potential residential assisted living facilities on LoopNet and cold calling brokers. It didn’t take long before I found my first opportunity!
Once I found this opportunity, I started creating an assisted living-specific underwriting calculator heavily modeled from multi-family real estate underwriting calculators; my background in analytics lent itself very well to this project. Once I finished the calculator and analyzed the deal, I found it was not a profitable opportunity. Despite the excellent location and the desire to get into assisted living investing, I wasn’t comfortable with the risk of purchasing an asset that wasn’t going to produce.
Rather than getting discouraged by this initially failed opportunity, I doubled down on my efforts. I started networking through my real estate group and found somebody who had just purchased an assisted living facility in Denver, CO. Through that conversation; I found the sellers of the Denver facility had another facility in Colorado Springs, CO. I was introduced to the listing agent and had an immediate connection with him. Through the conversation with the broker, I received financials for the facility in Colorado Springs, and I ran these numbers through my calculator. I also took this opportunity to further refine my calculator and understanding of the underwriting process. The Colorado Springs facility showed promise with positive cash flow, an existing business structure (including key staff willing to stay on), and a great real estate asset. I was now ready to move forward, but I had a problem; I didn’t have sufficient funds to move forward with the purchase on my own. As I went through the real estate education process, I had been having conversations about a desire to invest in assisted living with several people. My father was particularly interested, and when I brought the deal to his attention, my father, who had sufficient funds for the deal, jumped at the opportunity.
My father and I went under contract on the Colorado facility in May 2020. Through continued due diligence, including a site visit, vetting of employees, and a deeper dive into financials and running different scenarios for profitability, we closed on the purchase in September 2020. We used an SBA 7A loan to complete the purchase. This experience was extremely valuable in learning the lending process and understanding how to scrutinize a deal, specifically with a government-run program like the SBA.
Upon closing the deal in Colorado Springs, my father and I found there were sufficient funds available for another facility, and we started looking to expand our portfolio. We loved the Colorado Springs real estate market but had already experienced several roadblocks associated with running a business in Colorado. I started doing a deeper dive into market research to find a good market to expand into. In addition to market research, I set some more specific criteria for an assisted living facility; specifically, we were looking for something with a purchase price between $600K-$750K, a cap rate of 10%, a facility with 10+ beds, and in our markets of interest. Our criteria were set based on analyzing the Colorado Springs facility and some other opportunities along the way. In truth, while the Colorado Springs deal was a good deal and is still one I would do again, I was probably a little too aggressive in wanting to get started on my investment journey. I learned a valuable lesson from this first acquisition and used that experience to better define my criteria for finding a new deal.
Having recently gone through the acquisition process, this second go-round went much more smoothly. I engaged the broker who helped us purchase the facility in Colorado Springs to start searching for a new opportunity with defined criteria in place. In October 2020, we found an opportunity that met our criteria in Nampa, ID, and we went under contract on that facility shortly after. We were able to close the deal in Nampa in February 2021.
Since they were acquired, I have been operating these two facilities remotely; I live in West Jordan, UT. Through operating the facilities, I have learned a great deal about running two separate businesses, have dealt with many issues at each facility with residents and staff, and have found ways to effectively and efficiently manage my time.
I hope this story is helpful and inspiring to you!
I’d love to hear from you, where you’re at on your journey, and how I can help you be successful on your journey of investing in assisted living.
Have a great day!
Brandon
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