How to Buy an Existing Assisted Living Business: The Ultimate Guide

Transcript

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hey friend it's Brandon Gustafson with Assisted Living investing excited to have you here with me on the channel today uh at Assisted Living investing i h beginners like you launch their Assisted Living business in the next 12 months uh really excited to have you with me today today we're going to be talking about uh the process of purchasing an existing Assisted Living business and what that uh what that entails what that what that's going to take and help you um do that um I do have a cut off so this is going to be a

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little bit shorter than normal but if you have questions as we go through this make sure you are typing those in as we go so I can answer those questions for you and help you along uh just been really tight day with meetings and and recordings and and things like that so um yeah I want to make sure I get to your questions I just have a more limited time today than I H typically like to have so make sure that you are typing those in and uh as you as we're going through this um if you're new type

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in newbie would love to see uh you if you're if you're new and make sure you go and grab the free business plan checklist go to Assisted Living investing. netb checklist I'm going to have a ticker going down across the bottom here for you um and I can help you out with that and I'll throw it up here on the screen for you as well again that's Assisted Living investing. netb checklist that's going to help you out in uh you know launching that creating the business plan that you're going to

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need to help you uh launch your Assisted Living business so with that said um I want to kind of give you a little bit of background on who I am uh my name is Brandon gustofson for those who don't know me um I have been an assisted living now for um uh since 2020 I own two facilities out of state I live in Utah one of my facilities is in Colorado the other is in Idaho and uh so I operate those remotely and and work uh and do that I've secured over one and a half million dollars in SBA funding as

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well so I'm very familiar with that process and and what it takes to obtain the funding um for for the business and I I've been in healthcare for over a decade I have a masters in healthcare administration have worked in the industry for quite a long time now and and love giving back and and being able to serve and help people out um and and doing that through the healthcare industry so uh that's the quick version of of who I am and give you a little bit of an introduction uh on on who I am and

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how I can help people out so um with that said um let's let's talk about um how you go about buying an existing Assisted Living business uh and and help you understand what you need to do in order for you to make that progress and and reach that goal of of launching the Assisted Living uh business number one you have to build a foundation and I talk about this to people all the time the important of building that solid business Foundation as you're trying to to launch your Assisted Living business

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and and really make some progress and and obtain and and reach your your investment goals um building that that Foundation is absolutely crucial and is the thing that's really going to help you um move things forward and the things that are included in that Foundation are creating a solid business plan you have to have something that's why I give away the this checklist for free Assisted Living investing. netb checklist make sure you grab that because I I I know the importance like I've seen it firsthand uh the difference

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between having a conversation with a lender about uh an opportunity without a business plan and one where I have it ready to go and the difference is it's just incredible um it makes it go so much more smoothly when you have those things ready to go you can just hand it off to them and and everything just runs very smoothly um when you go that route um it allows you to understand the finances to see what you can and cannot afford underwriting is such an important part of what you're doing and that's I

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actually give you a calculator if you go to Assisted Living investing. net um just go to the website uh big blue BLX in the top right corner you can go grab the free underwriting calculator to really help you out and understand those finances and help you make the progress that you need to to determine if this deal is going to work for you or not um banks are going to want to see that you need to evaluate things from that perspective just jump in because somebody some Guru told you or I told you hey assisted living is a great

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opportunity each opportunity needs to be taken on a case-by Case basis and you have to understand if it's going to work for you or not so finances um and understanding those is extremely important you also needed to do some market research so you know exactly where you should be starting so you need to you know look at the landscape I have a video um if you just type in on my channel um a market you know top markets for assisted it'll pop up um but I I do a lot of that research for you and help

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you and guide you um with in some of my courses and can really provide you with some of that guidance to help you determine hey where is the the best um market for this you need to understand that you need to understand the market dynamics who who your population is are there enough people there that you can serve them you need to get a really good hold on on that so that you um can feel comfortable in working with those people so market research is another really key part to doing this um next is the the

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next step in all of this is finding the perfect property so you're going to have to find that that opportunity and when you're looking for an existing business and that that's what this video is about um I have found that the best way to do that is to find a broker that that I can work with that can help me find this so a broker is like an agent when you're trying to find a house you go and and you hire a real estate agent they go they look through the MLS they go find the properties they go walk the property

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with you they help you negotiate that's exactly what a broker is but they're doing this from a commercial standpoint um because these are commercial businesses that that you're purchasing even though in a lot of cases you're buying them from Mom and Pop opportunities mom and pop shops um it's still a commercial business and something that you want to you got to keep that in mind as as you're going through this and having those conversations really key for you to do that um but when you work with a broker

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specifically one that specializes in senior care it can really accelerate the the way that you are going about having those conversations and and making sure that your your needs are met there and and that you're getting things across the finish line and and you're not missing any deadlines and things are going the way that that you would like them to go so that's um that's one of the key people that you absolutely have to to work with if you want to find an existing business you can do some of

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this on your own though um and you can do that through online sources like uh loopnet or bis byell or corxy I have videos on the channel about Loop net and bis byell so you can go and look at those um and and they will help you and give you some extra guidance there about how to use those those different platforms um and inside of my coaching programs I teach you go pretty deep into how to use each of those but these are commercial spaces it's like looking at Zillow or red fin for a personal

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residence but these are for businesses that are for sale so loopnet bis byale kxy great resources for you if you're trying to find an opportunity that's actually going to work for you and make sense and Al Al hey if you don't have a broker this is a great space for you to develop a relationship with potential Brokers and and work with them and and get to know them and how to work with them how to communicate with them when you find somebody that you really like invite them to work with you and help

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you find it they will probably say yes because they are going to get a nice uh Commission on the back end of that deal if you're able to get things to to a close so a great opportunity for you to build relationships but also find Opportunities so this is where you go to find those you can find them off Market but getting with a broker is going to be your best bet in in working through that process um now when it comes to funding you've got to obtain the funding this is phase three of of my process that I walk

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people through and um obtaining the funding is is going to be crucial when you're buying an existing business it's going to be a little bit different and you have different options available than if you are buying an existing home or doing a conversion on a home so there you have to determine what type of funding you're going to use it could be a commercial Lo could be a conventional loan could be a an SBA loan could be hard money could there there's a lot of opportunities out there for the

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different types of funding that you can leverage to help you launch that business and obtain the funding that you need but you need to determine which one's going to work best for you the best way to do that is honestly working with that broker that we talked about in the finding phase of in finding that perfect property because Brokers are going to have relationships with lenders they can help introduce you and help navigate the conversations you're going to have those with those lenders so use

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them as as a leverage point to find and identify the right type of funding for you as you're trying to move this forward the next thing is once you find a lender regardless of the type of funding that you're going to look at you have to work with that lender and this is this is a relationship and you have to be really good at building this relationship or else they just will stop working with you or they'll say no we can't do it for whatever reason when in reality it's you're kind of a pain to

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work with you have to be be really good at answering questions you need to um you need to work closely with them you need to have all the paperwork um put together you need to have your business plan you're going to need to have your underwriting you're going to need to understand the finances you're going to need to answer a bunch of bunch of questions and when you do those types of things it really helps build trust with that lender and makes them want to work with you it's it's extremely important I

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cannot stress it enough um in my accelerator program I go through the importance of building a relationship there's an entire course that is specific to building relationships with lenders uh because it is such an important piece and I have had uh I I've had deals fall apart before because I wasn't fully invested in the relationship I was trying to create with those lenders so it's really important for you to to build good strong relationships with lenders um and then you're going to need to submit those

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documents like I talked about the business plan your underwriting personal business information um that's going to be your tax returns personal bank statements business information Ein letters um T just all kinds of stuff there there's going to be a ton of paperwork I can't rattle off all of them but I I give you checklists um inside of my programs to really help you along the path to help you understand hey what am I getting into as I as I go into this and there's a lot and so you need to know what

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you're get into and make the right decisions and not waste time as you're trying to launch your Assisted Living business and get the funding that you need um you want to make sure you're staying on top of these things because it is what is going to allow you to get across the finish line and and get the funding that you need I will say that when you are working on funding getting told no is common like it's it's normal to get told no I've been told no by lenders dozens of times like literally

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dozens of times probably 50 lenders have told me no in in the past four years that I've been working on this and starting businesses and trying to work through things you get told no a lot and that's that's totally fine um and it's very normal so I want you to go into this kind of with a expectation that this is going to be hard and I'm going to have to build a relationship I'm still probably going to get told no but hey at least I'm building a relationship so that the next time I need it I've got

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that relationship in place that's it's one of the key things of of doing this it's very much a relationship build business and is the thing that's going to allow you to really be successful in what you're trying to do to to launch your Assisted Living business so that's obtaining funding um the next phase of this and this is phase four in the process that I teach is getting the facility license so this is working with the state understanding who at the state you're supposed to work with and each state has

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a different department and I can't tell you hey hey it's the Department of Health um because it might not be um it could be any number of things I've seen I've seen it in four or five different departments at different state levels and so you have to figure out who at the state do I need to talk to that's number one and I need to figure out and the best way to do it is just do an internet search for you know how to obtain an assisted living license in my state um and that's going to allow you to to go

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down the right Rabbit Hole to to find that but you have to figure out who that person is and start building a relationship there again building relationships it's it's it is absolutely key to getting across the Finish Line to buying an existing business and it comes down to funding building relationships with the buyer or the seller um with with people at the state you have to build all of these relationships and you have to maintain them and it can be difficult so you have to learn how to do

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a lot of that okay find that person at the state build a relationship there the next thing is your license is going to be what's called a change of ownership or a chow license um it's a very similar process to obtaining a normal license you're just clicking a few different boxes maybe it's a different form depends on the state um but really pretty simple um but it does accelerate your ability to obtain the license because there's already an existing license the state knows there are

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residents there they want to make sure that there's good continuity of care um and so they will help and expedite things and push it through so you can get the license that you need but it's called a change of ownership is the process that you're going to be looking for you're going to have to be going through your policies and procedures as well you're going to have to build those you're going to have to write them something that I I give you a a really solid base to start from in my courses

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um so that's something that can really help you out or you can go out and hire somebody that that does that for you I I don't offer that service um but there are companies that do and they're pretty affordable when it comes when you consider how much time it's going to take you to write those by yourself because it has taken me in the past hours and hours of time whereas I could have spent uh you know $1,500 and had it done next day um and that would have been saved me a ton of time so you have

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to gauge hey is this worth it for me to do it or not um but policies and procedures absolutely crucial and possibly one of the things that's going to take you the longest once you have obtained the funding so you can move and get to the close because another part of closing on a deal to obtain that funding is you have to have this license in place so um things all kind of come together uh when it comes down to it and then you have to determine hey do I want to serve a Medicaid population or not um

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to serve that population very similar application process but it's going to be a different department of the state um and you are going to have to have your facility license in place in hand uh because it's one of the requirements to serve a Medicaid population uh so if you want to do that you're going to have to have that but that's another thing that hey do I want to do this or not and if you're serving already you're buying it existing facility that serves a Medicaid population you're going to have to fill

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out the paperwork to get that done you have to kind of go through the sequence of okay I got my change of ownership now I got the license and and now I've closed on it now I own the business now I have to wait for Medicaid to approve the process approve everything so that I can then get reimbursed for that so you're probably going to have a gap if you're working with this and depending on how good you are at getting the application together in the way that the state asks you for that Medicaid

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application is how quickly you're going to get certified and then be able to get reimbursed with Medicaid can be really tricky and there's a lot of Hoops to jump through there and something that I I love coaching people through and helping them through that process because I I learned a ton um in in my personal situation uh where one facility took me four months four and a half months the other one took me two or three weeks so um I learned a lot um through that and can can really help you

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and coach you through the process of getting um certified with Medicaid so you can work through that and serve that population if that's something you're going to be working with um as you get into this uh let's see the next thing is you got over operations so when you're taking over those operations you're running the business you've got to hire the right people you got to find the right people and hire them You' got to implement the processes uh with the the group of people that that you're working

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with you have to use software um there's so much that goes into it and when you are taking over this existing business there's going to be a lot of people that hey why are you doing this different um why you know wh why why are you making that change what this thing what about that people are going to ask you for raises we when we bought one of our facilities had one of the the staff members run out of the house and like hey can you give me a raise it's like I don't know we haven't we don't even own

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the business yet you know we haven't even started um looking at things yet I I can't give that to you right now so you're going to get those questions and it's going to take you a little bit of time but you have to figure out how you're going to take over those operations how you're going to smooth and run things smooth it over and make people um feel confident that you're able to serve them and meet their needs really important part of what you're doing is you're trying to to buy this

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existing business and move things along the the path to where you can become profitable the the chances of you being profitable immediately I would say are are zero but the chances of you being profitable within the first year as long as it's a really good financial decision you've done underwriting you understand what you're getting into I would say it's pretty likely I I was able to do that with both of my facilities and and turn a profit in in less than a year with both of them so um in independent

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of each other so you can do this but you have to understand that hey one day you're going to close you're going to get to the end you're going to celebrate and you're going to wake up the next morning and you're GNA be like crap now I got to pay all these people and I got to buy all the food and I've gotta make the payment and and there's so much that that really goes into that as you're trying to to move things forward uh can be can be a little bit stressful but you

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can do it so what I just walked you through really quickly there is my uh five-phase process that I teach in of my accelerator course so if you go check it out at Assisted Living investing. netal um this is a course it's over 23 hours of of content 300 videos there's a ton of lessons everything I know about how to start an assisted living business is inside of this course and I answer questions like I get questions and as people go through the course all the time I'm giving you really detailed

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answers and things to really help you make some good good progress and understand what you're getting into um so if you feel like you need that step-by-step process then go check out the accelerator again it's Assisted Living investing. Neta for assisted living accelerator would love to help you out and take you through that five-phase process to help you launch your Assisted Living business that's how you go about um launching or buying an existing Assisted Living business you follow that five-phase process you go

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through all those you build really good solid relationships it's going to allow you to get where you want to go so if you found this video to be helpful like the video subscribe and ring the bell as well so you get notified every time we put out content like this we go live on Tuesdays we put out content on Thursdays as well um and for those of you that are here live I do have like two minutes to answer questions I apologize for uh the the for just like the the super time um you know timing of of questions and

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things like that but uh it's yeah got a lot going on today uh Victor uh you're late uh how's it how's it going coach I'm doing great man good to see you thanks for being here um any any questions though go ahead and and ask those um and just want to remind people that hey you can do this stuff like you can you can make it through all this you can you can make the progress you can buy those existing businesses you can reach your your investment goals you really can do that instead of assisted

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living but it really I always come back to it goes back to that found Foundation Building that Foundation Building the business plan feeling really comfortable in that understanding the finances doing the underwriting knowing what you're getting into and making a a sound financial decision because when you do those things then um it's going to allow you to make good decisions going forward and you're not going to stress about it because you build this Foundation you understand what you're getting into um I

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I don't want you to make bad decisions I really don't like as much as I believe in assisted living and I know that it's something that can be profitable and you can have an incredible impact on the communities that that you are that you live in that you serve you still have to make the right good financial decisions or else you you won't be able to serve those people so you have to do right by yourself so that you can serve that population it's it's such an important piece and something

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that people Overlook all the time don't rush into this make good financial decisions before you run into this and you're going to be rewarded for it um and it's such a rewarding uh thing to in in this Assisted Living World this Assisted Living industry the impact that you going to have on people's lives it is man it's so rewarding I I love it um and I know you will too and you can do this I love buying existing businesses I think it's a great way to get into I hope you found this video to be helpful

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uh and can really help you along um all right Victor a quick question how many uh beds filled do you think it takes to get to the break even point after Staffing and everything else this being a business for Staffing is literally 24 hours and it's expensive yeah I I was just recording a video that'll come out here in a few weeks um I go through the five the five main expenses they are wages food um Insurance Debt Service and insurance those five um things cover 80 to 90 80 to 90% of your expenses and

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wages is 50 to 60% so it it is huge now to answer your question about how many beds it it takes it really does depend on every every single opportunity like for me in a 16 bed facility where I serve a Medicaid population our break even point is usually about 10 to 11 beds um so that's that's where our break even point is but that's pretty specific to us because it's based on our de service and and our unique situation I was talking with somebody earlier that's looking to do this as like a high-end uh

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very luxury type of a facility that will only have six bedrooms in it six beds um and but looking at their number and where they're at I bet they would be profitable their Break Even is probably three um just because of the way they're going to set it up so it really depends on every specific situation so it's hard for me to give you a blanket number generally I would say you know hey 50% occupied is probably going to get you there but I could tell you that and you're doing a six bed facility and

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you're only making $4,000 a bed and and you're losing $110,000 a month even when you're all the way full so each situation needs to be taken on a case-by Case basis and you have to figure out exactly what it's going to work like for you so um yeah and absolutely Victor thanks for being here and uh helping you out and yeah let's get to that Mill million Subs that'd be great man um well I want to thank everybody for watching I do have my my other thing I got to jump to so uh I've just been back to back all

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day uh but thanks for those that that jumped on uh we'll be doing this again next week we do it every week so uh thanks for watching make sure you go grab that free resource Assisted Living investing. netb checklist and you know does residential Assisted Living sound interesting to you but you don't know how to get started Assisted Living investing I'm here to help beginners like you launch their Assisted Living business in the next 12 months I love helping encing people and answering your

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questions and helping you along that path and I want to remind you it doesn't take a lot just just a little bit um just keep going step by step by step and I promise you if you do and you're consistent and persistent you're going to be successful thanks for watching and we'll chat with you next week thanks guys I want for