There are few real estate niches that require as much creativity as the assisted living sector. While nursing homes are mostly the bastion of larger institutional players, assisted living is something that even smaller investors can get involved in if they use creative constructions
What can be converted?
One popular method to create an assisted living facility is to employ an existing single-family home and then convert it into a group home. This requires detailed discussions with planning and zoning to see if it’s allowed in the neighborhood and what ADA compliance and safety additions will be necessary. Most states have some degree of exclusions in the most onerous provisions based on the number of occupants, and you’ll have to know all those details. Another popular conversion is a smaller multi-family structure, which will once again need to pass city hall muster.
Considerations?
Remember that the conversion of any physical structure into an assisted living facility will take significant capital to meet all codes and considerations (such as ramps, etc.). What this means is that you will have to buy it at a reduced price. This means that you might want to focus on properties in good locations and with the right basics but in poor cosmetic condition. That allows you to buy it cheaply since you are going to have to do a total renovation anyway. As with all real estate “location, location, location” is key.
How to start?
If you know geographically where you want to invest (which it typically within about a 4 hour radius of your home for easy transportation) you should probably start off talking to the city zoning department and learning what the laws are what they would support. This is not a “forgiveness is easier than permission” moment. Once you learn what the requirements are, then you can look at properties and not vice versa. You should also take notice of websites such as www.Bestplaces.net and www.zillow.com that can help you assess the more attractive neighborhoods and learn about basic home values. Once you find a neighborhood that has attractive demographics, you can then go micro in looking at what’s available and meets your needs.
What to watch out for?
Remember that this is a residential dwelling and not a commercial building. You don’t want to be on a busy street or near a train track or anything else that omits noises or odors. The key is a nice, safe, quiet location that also meets your needs from a business perspective. If you would not live there, don’t expect anyone else to. Also remember that you will require significant staffing and make sure you have adequate room for the 24-hour care that is required.
Conclusion
Assisted Living is an interesting real estate niche that most investors overlook. It’s certainly not for everyone but it also can offer opportunity for those who are creative and really want to make a difference in the quality of life for the aging.