Why You Should Stop Relying on Banks for Assisted Living Financing

Transcript

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hey friend it's Brandon Gustafson I help beginners like you launch their Assisted Living business in the next 12 months excited to have you here on our live today today we're going to be talking about how to leverage private money to launch your Assisted Living business is a question that I actually see quite often with people uh in the group and uh some of the the most popular posts that we have on the group are around private money and so I wanted to kind of give an overview of what that looks like how it

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works um and how you can leverage that as you're getting into starting your Assisted Living business so um while I am working on getting this thing posted to Facebook just want to remind you to go and grab the business plan checklist um you can get that uh down below we've got a a ticker going just go to Assisted Living investing. netb checklist and you can get access to that uh just a free resource to help you build a solid business plan that can help you on your journey to getting funding for your

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Assisted Living business so excited to share that with you there um one last thing right here oops okay and that is posted let's get over here and share screen all right so we're talking about leveraging private money for your Assisted Living business uh today again get over to Assisted Living investing. netp checklist get access to your free business plan checklist also want to remind people um if you're watching this we're doing a promotion right now on The Mastermind program so you want to apply

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to that go to Alim mastermind.com application you can do that we are uh it's about you save about $ 4600 so um it's it's the most affordable way for you to get like a full year of support uh from somebody that's actually done all of this and I know I've talked with people about other programs and things that are out there that cost 354 $50,000 um I am much more affordable than that and and can really help you out you get a lot of my time and attention there uh to give you some

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guidance to help you along your journey to launching your Assisted Living business so if you'd like to check that out go to Alim mastermind.com application uh fill out the application it's free um and if I feel like you're a good fit I'll send you all the details so go check that out uh all right for those of you that don't know me who who are new here and why I'm qualified to teach you all of this stuff about us assisted living and uh The Mastermind program and talk about leveraging

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private money uh my name is Brandon Guston I own and operate two Assisted Living businesses um I started that in 2020 uh I've secured over one and a half million in SBA funding uh so very familiar with that process I operate my facilities out of state I live in Utah and one of my facilities is in Colorado and the other one is in Idaho so can kind of coach you through the process of how to remotely um or remotely operate or delegate a lot of the the work that you need to do so other people are doing

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it for you and and you can make this more passive uh I also have a MERS in healthcare administration so I've worked in the healthcare industry for over a decade um spent a lot of money to get education on that as well um and just very familiar with with the industry um with uh government programs Medicare Medicaid uh and just kind of the process and rules and regulations that exist in the industry so I've got a lot of experience there so let's get into the topic today again we're talking about

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private money and for those of you that are new here I'd love for you to type in newbie down below uh just helps me see how many people are new here um and if you are interested in in learning a little bit more about private money then type that in as well just type in private money um and that will let me know that you know you're interested in this topic and uh you know maybe I can find some people that can really help out in securing private money um you know possibly bringing somebody onto the

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channel or something like that to to give you some guidance so let's start off here what is private money um so private money is is money that comes from individuals that that have individuals or um could also be like entities that have funds available to to them that they are willing to lend out to other people they're willing to give it to other people um so that you can use those funds to to do things it it's different from traditional loans um largely because you're dealing with a private

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person they're not going to be they're going through a vetting process but it's probably not going to be quite as in-depth as you might see with like going through the SBA or going through a traditional or conventional mortgage um because of the amount of information they want to see private money lenders in my experience they're they're very interested in the ability of a deal to cash flow uh and and how it's going to work um and that they are they have some security in it so they want to make sure

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that they they are like in first position on the home in case something defaults that's that's kind of their collateral those are the big things that they want to see they might want to look get some of your other details and things like that but it is a little more streamlined and and simplified process because you're working personto person um which is always helpful as you're trying to move things along there uh as far as your loan terms you could you could potentially find a a a private

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money lender that's going to give you money for a longer Lo loan term but oftentimes your loan terms are going to be for a short period of time when you're working with private money one to three years and the purpose with that is if you can't get the money from the SBA or from somewhere else for whatever reason you can go to a private money lender and and they will help you out for that one to three year period um typically you're going to have something like interest only payments or maybe are

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are paying something beyond that you just kind of negotiate that and and come to an agreement and then you are going to refinance that into more stable or more traditional um type of of funding whether that's you know a traditional mortgage uh SBA loan some other type of uh loan that's out there um that's kind of the purpose of private money it lets you get there you can even piggyback private money into a bridge loan into something like a Hud loan um or an SBA loan or something like that especially

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when you're in the Assisted Living World there's a lot of ways to get creative with the the finances and private money is a really nice way for you to quickly acquire these businesses the other thing is because their underwriting process is so much more streamlined you can acquire you can you can get access to those funds a little bit more quickly than you could otherwise um so you might be able to to accelerate your ability to acquire facilities acquire your businesses uh as you're moving through that process you

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just want to keep in the back of your mind this isn't a permanent Funding Solution is something that I I need to make sure I'm very comfortable with the the underwriting and the the finances there because if if it doesn't go well I've got to figure out a way to refinance that and figure something else out pretty quick um so that something you want to just keep in mind uh especially because sometimes these businesses while Assisted Living can get up and and be running and be profitable

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quickly U my facilities were profitable they were gen generating um generating profit definitely within the first year uh typically I would say for mine they were in about six six months maybe even faster um for one of them uh so you can do this quickly but you want to make sure that you're comfortable that it can do it quickly um before you jump in because of the nature of this you're probably going to need to refinance it into something else um relatively quickly so that's what private money is

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let's talk a little bit about some of the details here with private money your interest rates are going to be subject to that private money lender um and what they want to do I've seen between eight and 12% but um you know that that's been a little bit of time since I was talking with private money lenders um so it just kind of depends on on what they are what type of returns trying to get uh what they're able to do and and making things work on their side so it is it's kind of

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up to negotiation but the oftentimes the private money lender will say our rates are x amount and and they won't budge on it so you just need to have those conversations figure out what it is and then adjust that in your underwriting so on my calculator if you go to Assisted Living investing. net there's actually a spot in there that is specific to private money and I'll do once you figure out the loan amount and your interest and the terms on it you can plug that in and it will tell you what

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your expected payment would be um so it's really helpful for that the loan terms like I mentioned um is is going to likely be something that's like a one to threeyear period it's all again subject to the private money lender and how they want to handle that but my conversations with them are typically one to three years and then you're going to refinance that into something else your loan of value your LTV that you're looking with I have seen um I I have seen depending on the project I've seen like even 0%

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down where they can fully collateralize at home often times you're probably looking at a very similar to to a bank um 80 85% you might be able to get something that's a little bit better than that it just kind of depends on the lender what their requirements are what they're comfortable with um and then the value that that real estate has the more Equity that exists in that in that property the more confident they're going to feel in in shrinking down that that loan of value um they're also

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likely not going to be collateralizing other um pieces of real estate they private money lenders they want to collateralize they want to have that backup but they're not necessarily looking like a bank is at doing like all of your properties and your your retirement and the other thing um they're they want to just make sure that they are covered in the event that something happens but they typically aren't that interested in like having their paws on every single thing which can be beneficial um as well so uh

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that that's kind of how that process works as far as the securing the funds you are going to need to do down payment um and then the funds will get deposited to you just like they would um with a with a lender uh sometimes you may be able to get them to pay directly to the the seller um but oftentimes it will be money that comes to you that then you are pass through handing it off to um the person that you're purchasing from uh just kind of depends on the structure of that but that's those are kind of the

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details that you can um just so you have an idea of exactly what the private money looks like and and how that works now let's talk about finding private money lenders so um there's a lot of different types of private money lenders that are out there um so it's kind of hard to to know exactly which one you're looking for you really want somebody that is going to deal in real estate that is okay with it being real estate with a business attached to it um whether or not you're buying an existing

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facility with a business or you're buying a home to renovate to turn into a business you want to find a private money lender that is comfortable with that U that that's something that that's really key um and there from that point there's also a bunch of different kinds of private money lenders I I don't want to kind of go through a list because I will probably forget them but hard money lenders is definitely one that comes um to mind uh and I'm blanking on other ones right now but uh there's there's a

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few different types of private money lenders that can get in there and help you out now as far as finding them you got to do networking um you got to go out there and you got to build uh relationships with people go to Real Estate meetups um is a really good spot to do this at um because the type of private money lender you're looking at is somebody that is interested in real estate and and willing to lend in that space so you want to get out there you want to have your elevator pitch you want to be able to say who you are what

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you're trying to do um how much money you need you want to be able to answer that in or actually you want to state that not answer you want to state that in a 30 to 45 second elevator pitch practice it get really good at it so that when you go to these meetups and you're introducing yourself you you know oh yeah my name is Brandon I yeah I really like real estate I think it's cool that that's like that's not gonna go anywhere but if you say hey my name is Brandon I'm actually looking at

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getting into assisted living I need a million dollars for it um do you know anybody that could help me acquire a business that would help me do that like that's that's a much different conversation and then um you you might be talking to just like a general you know somebody that does multif family or single family homes and they say oh I can't help you out but uh bill over there he's he's got he's he's great at it or you could be talking to Bill directly and he's like yeah actually you

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know that's what I do um let's let's chat about this and let's see if we can make a deal and if not then I've got relationships so it's the way that you can go into those scenarios it can feel a little bit uncomfortable that's why I say practice it but go in with this elevator pitch I am you know say your name um say what you do what your trying to get into I'm I'm interested in Assisted Living I found this property uh you know say a little bit about that I'm

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looking for and then State what you're looking for I I need a million dollars for this property um you want to say that you want to practice it and get to the point where it just become second nature for you and when you're in those networking situations um it it just makes things go go a lot more smoothly okay so you want to introduce yourself that way um you don't have to talk about that the entire time uh but if you introduce yourself that way and and people see who you are it's going to

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just make it a little bit easier and then you can just chat about whatever um there's a really good book about this and I'm blinking on what it is um it's by Donald Miller I think it is how to grow your small business by Donald Miller um but he chats about this and he uses an example of a caterer going to parties um and like going in and and saying you know I make I make food it's like building this story about who you are and it it will probably not matter to most of the people that you talk to

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and that's totally fine you can still have a conversation and network with them but for the 10% that it resonates with that's what you want to do so hopefully that makes sense um how to grow your small business by Donald Miller I will try to link that um in the YouTube down below so you can go purchase that book really good book uh and just like how to grow a small business but has some really good um insight there and to like how to do these elevator pitches and how to do the networking um he does it through story

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it's not like a specific example um but I think it's very applicable to what you would be trying to do here you also find private money lenders through online platforms there there's a bunch out there if you just like search for private money lending platform you'll find a dozen of them or more there's just a ton of them um but what you really need to do here whether you're doing it through networking or online platforms is build relationships this is what I mean the entire process of

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assisted living is about building relationships whether it's working with lenders working with the state working with the city the fire department whoever you're working with it is all about building Rapport building relationships and being somebody that they enjoy talking to and not the person that's a jerk that they don't want to talk to um so you want to be nice you want to build those relationships because it might not turn into anything today but in two five 10 years from now

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it could turn into something huge so build those relationships and and and have conversations um if it's somebody that you're really interested in building a relationship with see what you can do to help them to serve them that's what's going to make them make you really stick out in their mind uh and make them want to continue working with you so have a very have a service mindset um is is what I would say um the there's a book called The go-giver by Bob ber um and I'll link that one as

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well on YouTube um but just an Incredible Book about giving to people um and it's it like it will make a huge difference um in in the way that you're interacting with people you could give gifts to people and stuff like that really endear people to you um there's there's a book I can't remember the guy just passed away and I can't remember his name but gifology I think is is what he talked about I'll try to link that one as well um but uh it's uh you could do gifts uh for sure but if you're

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strapped for cash and and don't have the ability to do that there are other ways to do this that doesn't cost you a ton of money um but it's all about building relationships and and showing people that they matter to you uh so that you can you know it sound it sounds bad but so you can get what you want but you're doing that in a way that is giving back to people so that they want to give back to you I hope that makes sense it doesn't sound like you know too sticky of a of a situation um but building

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relationships absolutely key is it's what's going to bring you success in everything that you're going to do here in this industry um I also suggest that you vet people um so as you're going to you can find um online things that do background checks on people name based background checks and get a feel for who they are uh go look at their social media profiles and and get a feel for who they are look for reviews if you can find them online um so you want to find all all that stuff do the do a vetting

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process and then trust your gut if your gut says uh this it just doesn't feel right and I've had that happen to me before when I've worked with lenders or it's just like it just feel a little bit queasy when I work with this person just makes me feel uneasy um trust trust your gut and don't get too caught up in the yeah but they're the only one they're the only one that will work with me it's not true I have actually worked with people like that that I felt queasy

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about I worked with them I gave them oh go I don't know 5 10 15 I can't remember between five and $20,000 to help me um help me out with funding uh with what I thought was a guarantee and it wasn't and it was just money that I lost and I felt uncomfortable when I was starting and I just moveed forward with it anyways because it was the only way I could do it that was my thought but it wasn't and I wasted a bunch of money so you got to be really really careful with that trust your gut on who you're who

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you're working with and and just make sure that you feel confident um before you start working with them and I I like I say that for me as well don't just like you know oh Brandon knows what he's doing I'm going to join his Mastermind um apply to the program if you want to have questions talk with me but my hope is that I make you feel comfortable enough that you know you could ask me questions uh that I would help you out and give you guidance and that's what I try to do in my Mastermind program is

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give you that support um okay that's said let's get into pitching to a private money lender a lot of what you're going to do here is a lot of the same things that you are going to do with a traditional lender so you everything that I teach about how to build a business Foundation the core that so if you want that grab the business plan checklist you know what's going down on the ticker um go get the business planning guide as well um it's Assisted Living investing. net BPG for

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business planning guide will give you everything you need to build that Foundation um as you're trying to move things forward so you need to have a business plan you want to have underwriting um those are are two really key things if you have those private money lenders may not vet you quite as much as as others but they'll probably want to see your underwriting um they may want to see of your business plan uh and it's good to have that just in case they ask for it as you build that

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Foundation it really everything once you build that Foundation Foundation everything else that you do gets streamlined it really does because of the conversations that you're having um and what you're trying to do people will ask you questions that are answered in your business plan so you can reference it or you can just hand it to them and it will answer their questions so that's why you want to this helps you get things out of your head put it on paper be consistent with it and give gives you

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a level of confidence that you wouldn't otherwise have uh so it's really important for you to build out this this business Foundation you also have to like I was just saying no when to walk away when it just doesn't feel right um or things they they keep making there's empty promises or we'll do this but you know it's going to take this long and then the deadline keeps getting pushed back you it's okay to walk away you there will be even if you lose that deal there will be another deal that is just

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as good the next day um one of a piece of Education that I took um there was a lesson in there it was called the dill of the decade comes around every day or something along those lines you will find amazing deals and amazing lenders to work with every single day don't get caught up in like this is the only opportunity this is the only thing that's going to work don't get yourself stuck in that hole because it will put you in a really bad spot um so no when to walk away and don't get too committed

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to something if it just doesn't feel right right both on the deal and with the lender and that goes not just for private money but that goes for um Banks you know SBA lenders whoever you're working with it's okay to walk away everything will be fine I promise it really will um as far as legal considerations everything that you do get in writing uh if there's a contract that you're doing with a private money lender terms rates all that stuff make sure it's in writing um preferably in a

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signed document not just in an email um you want to be sure that you are aware of the risks if you have an attorney um have them review anything that you are doing with a private money lender or any lender for that matter um you want to make sure that you are understanding of everything that's going into this be aware what risks are there what happens if I default what can they go after uh what if I you know had to file for bankruptcy what does that look like what what is this whole process here and also

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you want to get familiar with the laws if if you're working with private money lenders what are the laws in your state because they can vary from state to state so you want to make sure you understand exactly what that looks like um so that you don't get yourself in a bad situation I as as painful and annoying as it is to work with an attorney and have to pay $500 an hour or whatever their fee is um it will save you so much headache on the back end if you do that gives you a level of confidence as you're going into it and

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can also help you avoid making big mistake that's something I highly suggest that you work with attorneys um and I think it's worth um paying them to to help you make some progress along your journey to to you know starting your Assisted Living business all right so that is private money what it is how to work with it uh and everything there um let's get into Q&A session so if there are any questions please go ahead and type them in could be about priv private money or could be about anything

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um just go ahead and type those I see we've got a few people here and while you're typing those up I want to remind people to like the video subscribe and ring the bell as well so you get notified every time we do these lives we go live on Tuesdays uh put out content on Thursdays as well um to really help you out along your investment Journey um also make sure you grab the business plan checklist uh Assisted Living investing. netb checklist and uh check out The Mastermind program again we're

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doing a promotion on it right now you can apply uh no obligation to apply Alim mastermind.com application I will review that and if I feel like you're a good bit I'll send you all the details and if you feel like you need some extra coaching or guidance or questions before joining um I'm happy to to answer any of those questions whether it's via email or jumping on a quick call um and we can chat about that but would love to see if if you're good fit and if I can help you out in launching your Assisted Living

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business so um with that said I'm not seeing any questions getting chatted in here we do have a few people so thanks for being here um uh but I want to thank everybody for watching uh thanks again for being here go grab that free business plan checklist at Assisted Living investing. net BP checklist um oh wait oh I was on the wrong thing there is a comment Ernest says hi Brandon hey how's it going uh if you have any questions just type them in um uh is this about starting a raw yeah so I keep saying investment is this

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about starting a raw so yeah um this is so I I really like to I mean the brand that I have here is Assisted Living investing I really like to think that um this is an investment uh it is is something that you're putting in it's a business uh goes but I I really like to think that it's like real estate investing with a business attached and you get to have an impact on on people's lives so you get to make money um and you get to have a positive impact on people this is all about residential

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Assisted Living um I mean everything that I talk about through the entire process the Assisted Living investing process could go from small Care Homes to residential homes to Big Box facilities the process itself is actually pretty similar um throughout um and it's there's slight variations there's slight variations from state to state but overall um the core concept is very similar and it works across the board and and so yes we're talking about residential assisted living but could be

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any of those other um kind of buckets that that falls into and if I can't help you out like there's there's stuff like Sober Living homes that I'm just not super familiar with I will I will point you to the right person uh people in my network that I know can really help you out in that space I I'm happy to make those types of connections but if I know I can help you out um then I will tell you and you know I'd love to see if I can help people out so hopefully that answers your question there

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um I'll give you a second just in case you have anything that's a followup um but yeah just a reminder go grab your assist your your business plan checklist uh Assisted Living investing. netb checklist and uh that will give you something to help you build that foundation and and really uh make things um just one more streamline for you yeah no problem thanks Ernest thanks for being here um all right with that said I think we are done um thanks everybody for watching does residential Assisted

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Living sound interesting to you but you don't know how to get started at assisted living investing. here assisted Liv investing. net I'm here to help beginners like you launch their Assisted Living business in the next 12 months I love helping coaching people um and would love to see if I can help you out so go check out Mastermind program Alim mastermind.com application I would love to see your application and uh see if I can help you out uh in your journey uh and apart from that thanks for watching

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and remember it doesn't take a lot just a little bit keep going step by step by step and I promise you that if you do and you're consistent and persistent you're going to be successful thanks for watching and have a great day yeah Ernest go ahead and you can do that application um or go to Assisted Living investing. net contact UM on my website you can contact me there so just reach out in one of those two spots and we can chat I'll put that here in the comment investing. Conta so if you just go there

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um there's a form you can fill it out and uh send it to me and then we can chat there so yeah thanks everybody and we will talk to you next week okay