How I Built My RAL Empire: Tips for Assisted Living Investing
Jan 30, 2025
Starting an assisted living business is a journey filled with rewards and challenges. While it’s exciting to help people and grow a thriving enterprise, it also requires smart planning and the right structures to succeed. When I first started my assisted living business, I had to learn many lessons about organization, compliance, and financial management. Now, I’m sharing these insights to help you build your own residential assisted living (RAL) empire!
Let’s dive into how you can set up a solid foundation for your assisted living business, whether it’s your first facility or you’re looking to grow.
Check out the video, too:
Why Your Business Structure Matters
Your business structure is the backbone of your assisted living facility. It affects everything—how you handle taxes, protect assets, and operate daily. With the right structure, you can:
- Safeguard your personal and business assets.
- Simplify compliance with state and local regulations.
- Set yourself up for future growth.
Every business is unique, so the key is finding the structure that fits your goals. For me, working with a CPA and attorney was essential to getting it right.
How I Structure My Assisted Living Business
Here’s a peek at how I organize my RAL facilities:
1. Operational Entities
Each facility has its own Limited Liability Company (LLC). This approach:
- Keeps operations clear and focused on the facility.
- Helps comply with state-specific rules.
- Makes managing income and expenses easier.
For example:
- My Colorado facility operates under an LLC registered in Colorado.
- My Idaho facility operates under an LLC registered in Idaho.
These operational LLCs are owned by a holding company my father and I share. This setup adds an extra layer of asset protection and organization.
2. Real Estate Entities
I separate property ownership from daily operations. Each facility property is placed into its own LLC. This LLC:
- Holds the property title.
- Manages loans, like SBA financing.
- Leases the property to the operational LLC under a formal agreement.
This distinction is critical for protecting assets. For example, if a resident sues over an operational issue, the real estate LLC isn’t directly affected.
Why Use a Multi-Entity Structure?
This structure might seem complex, but here’s why it works:
- Protection: Separating operations and real estate shields one from the risks of the other.
- Efficiency: Each facility runs independently, making compliance and operations easier to manage.
- Scalability: It’s easier to grow when each new facility has its own clear setup.
If you’re starting with just one facility, a single LLC might be enough. However, as you grow, separating entities becomes crucial. Always consult an attorney or CPA for personalized advice.
Tax Advantages of a Smart Structure
Setting up your business correctly can save you money on taxes. Here are two big benefits:
- Separate Income Streams: Keeping real estate and operations income separate may offer favorable tax treatment.
- Management Fees: If you manage properties under a real estate LLC, you can deduct management fees and related expenses.
These strategies are especially valuable as your business grows. A CPA can guide you through these options to maximize savings.
Tips for Starting Your RAL Business
- Start Simple: If this is your first facility, one LLC might be enough.
- Build Relationships: Work with professionals who understand assisted living, like CPAs and attorneys specializing in healthcare or real estate.
- Plan for Growth: Even if you’re starting small, think about how your structure will scale as you add more facilities.
Final Thoughts
Starting your assisted living business might feel overwhelming, but with the right plan and structure, you can build something meaningful and profitable.
- Begin by researching your local market and understanding the needs of seniors in your area.
- Create a strong business plan to guide your steps and attract investors or lenders.
- Work with professionals to set up a solid legal and financial framework.
Your journey in residential assisted living is about more than just business—it’s about improving lives and creating a lasting legacy. With careful planning and a clear vision, you can build an empire that makes a real difference.
Ready to Take the Next Steps?
If you need a solid business plan to secure funding, download our Business Plan Checklist. This tool will guide you in creating a compelling business plan that can help you secure the financing you need.
Need help figuring out where to start? Join the next Roadmap Challenge and build your launch plan with me.
Show full transcript 👇
Transcript
00:00:01
[Music] hey guys it's brandon gustafson welcome back to assisted living investing happy to have you on the channel today uh just a quick reminder uh to get on assistedlivinginvesting.net i'd love to see over on the website for some free resources and to subscribe to my newsletter for future content also make sure you uh like this video give it a big thumbs up uh make sure you comment down below uh make sure people can see those comments so we continue to continue having a conversation here as
00:00:42
as a group and people can continue to learn and things and make sure you subscribe make sure you hit the the bell so you can get notified of future content and and so that it helps other people find the channel and people can learn from this process i would also love to have you follow me on all my other social media platforms would love to see you over there and uh just continue the conversation so in our last video we talked about why do you need a legal structure for your assisted living facility um why it's important to do
00:01:10
that and give you a few resources there again i'm going to put the disclaimer out there that i'm not an attorney any advice that i provide to you should not be considered professional advice and you should engage a professional for your specific situation but i also wanted to get into how i structured my assisted living business uh with you today uh just so i can share with you how i got things started um and and how you know give you an example of what it might look like for you especially because i i
00:01:38
live in utah and i have facilities in colorado and in idaho so we're a little bit different we're structured a little bit different but something that i want to make sure that you understand something i pointed out a couple videos ago is the best place for you to set up your entity is the place where you are doing business at so keep that in mind as i get into into setting as i get into the structure of our entities and how we have things set up um so without further ado we'll jump into
00:02:04
that um here with the screen share okay so i'm going to get into our operational entities and how things are structured for the entities that actually run our business actually run the assisted living facilities and what those look like so each of my operating businesses is set up as an llc um which is then owned by a holding company which is then owned by um each of my father and i um and we so we're the business partners for each of those entities the business entity is registered and operates only in the
00:02:38
state where we are operating our respective facilities and this operating entity is the entity that runs the business and nearly all of the income of our assisted living facility all those income and expenses they flow through this entity and they go back eventually up to us now the entity this entity is the entity that leases the the building from our entity this entity right here leases the the building um for our entity that owns the real estate um so it's kind of structured that way so you can kind of
00:03:12
see here this is our colorado facility this is our idaho facility and those are actually owned by a holding company here and this one is set up in colorado it's registered in colorado that's where it operates this one is set up in idaho it operates in idaho this is a holding company in a different state and then my dad and i each own 50 of this holding company which then wholly owns each of these other entities here so this was a relatively complex structure that we went through the conversation
00:03:46
with our our attorneys to to get in place and to make sure that we have that structure the way that we want it to be um but yeah that's kind of how we have things set up for our operational entities love to have questions down below if you have questions or comments about the way that you have structured your entities uh maybe you're you're a sole proprietor maybe you're just an individual that has done this um you know in that case you probably would and you're only operating in one state then
00:04:13
you probably just need this one entity right here because we're operating in multiple states that's why we have um such a complex structure this is not required at all um for you to get started having something as simple as an entity that that owns the the business and operates the business in your one specific state that's going to be sufficient so again this is where having a conversation with a professional is going to help you learn how you need to get things structured in your specific
00:04:42
situation now i'm going to jump over to the real estate side and it's going to look extremely similar where this is just the real estate companies so we determined through our conversations that the real estate that we own is worth enough money that it's beneficial to us to have that separated out and have it be a part of its you know held in its own separate entity so our we have again our our holding real estate company that is owned 50 by my father and i and then we have a an entity in colorado that owns that real
00:05:17
estate we have a entity in idaho again each of these are just registered and operate in in their respective states and then this is in a separate state just as a holding company and then we have our individual our individuals up there so the entity these entities own the real estate and they accept the payments from the operating facilities the ones that we just looked at so that you can so that it then pays the debt service to the sba loan so in our case this entity these real estate entities are who did the sba loan that's who owns
00:05:51
the real estate that that's who has the debt service um with sba that's who's on title um for the loans there um and that's how it's structured and then the the operational entity has a lease agreement that is set up and it pays the real estate entity so that the real estate entity can then pay the debt service if as you get bigger as you grow your portfolio you get something larger it might benefit there might be some other tax advantages you can do we're small enough that there's really nothing like
00:06:21
there's no advent advantage for us to pay a little bit of extra money um as like a property manager into the real estate entity to then have a flow to us we just don't make enough money on it for it to make sense but as you continue to grow that might be a strategy that you would want to implement and again that's where you would have a conversation with your cpa to see is this somewhere where i could take advantage of some tax tax laws um and make it so that i can keep more of my money as i'm operating
00:06:52
my entity um again there's very limited financial activity that actually happens in this entity it's it's just there to hold the real estate that's really its only purpose and then to protect us you know in the event that something happens it just adds that extra layer of protection which is the purpose that we decided that's why we wanted to have this entity structure this way now as i mentioned we're operating in multiple states that's why it's so complex you know
00:07:21
that's why we have this entity in colorado this one in idaho we have a holding company and then we have our individual ourselves our individual entities that kind of own our our portions of those businesses because we're operating in multiple states we wanted to have things roll up this way and have separate entities that hold things in each of the states operating and the real estate we wanted to just keep things separate keep it clean um it just you know adds extra protection to us it is not necessary that you do
00:07:52
something like this you know if you're operating in the state where you currently live you don't need to have this weird um kind of structure here that looks like an insect you don't need to have anything crazy like that you can just have the one entity right here especially you know you're just owned by you you could just have something very very simple you don't need to get complex here at all but something that you would want to have a conversation with your attorney with your cpa how does it make sense as
00:08:21
far as tax purposes how does it make sense in terms of protection legal protection for you uh for your family um have a conversation with somebody to figure out what is best for your specific situation um that you know again that's gonna be my my big um push here is to just tell you have a conversation it's worth the money make sure you have it there this structure provides us with some additional asset protection and anonymity which is great for us your situation might be different i mean
00:08:55
it likely is different so make sure you have a conversation um to figure out what is going to work for you all right so i hope that tutorial that kind of example was helpful to you i'd love to see your comments down below make sure you reach down and and let me know you know your thoughts on on the structure i'd love to hear about it your your specific circumstance how you kind of structured your entity uh just a quick recap on on the video today this was how we start our assisted living business we went over the
00:09:23
business entities the real estate entities and how we operate in multiple states and how we have addressed that with the the structure of our entities now next time i'm going to start getting into how to register your business with the state and county and and city and why it's important again for this legal structure to exist so that you can then properly register your businesses with the appropriate state county city municipalities and how you can get things in place there i would love to
00:09:53
have you again just make sure you like the video give me a big thumbs up um comment down below let let me know how uh how you have your entity structure how your conversations are going with your turning with your cpf make sure you subscribe um to the channel and and ring that bell so that you get notified every time we put new content out here doing all those things really helps people find the channel really helps us grow and and you know help people on their journey to to find and and get into uh investing in assisted living
00:10:25
uh make sure you follow me on all my social media platforms and and visit me on assistedlivinginvesting.net would love to see you over there for the free resources and also to join my mailing list for future content uh and just make sure you remember that it doesn't take a lot just get started a little bit is okay you can do this just get started we'll see you next time [Music]
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