How To Start An Elderly Home Care Assisted Living Business - (Clint Coons Podcast)
Welcome everyone to the Anderson business advisors podcast. That's Clint Kunz here from Anderson business advisors and today. We. Have Jean jareno. Of residential. Assisted living economies. Jean is a good friend of mine and we've spoken together on multiple, stages and a lot of our students have found success with him I thought you know what I want, to get this information out to people because so many people when I run into them at an event we're talking about asset, protection and, real estate investing, and I'll throw out the word arielle I get, so many puzzled, looks on people's faces I, mean they've kind of heard of it they don't know what those initials stand for so. I figure you know what I'm gonna do is I'm gonna bring out the nation's premier, expert. In residential. Assisted living so, everyone listening on this podcast, can. Hear, from the expert about what this means to them and what they can do with it so Jean thanks for coming on basically. And great to be here excellent. So um you, know you just got back from a cruise where did you just go oh we're. In the Southern Caribbean cruising. For about. Nine nights and Robert, Kiyosaki, G Edward Griffin, Tommy, Hopkins, and a 200, other people we had a great time for a week floating around in the ocean it was great wow you're rolling with some power players, in the industry some, real makers there how, did you get involved in that you. Know it's interesting I had russ, Gray who's one, of the real estate guys Russ and Robert Russ came out and saw me speak in Dallas and he we sat down and he said you know what I want to start working with you and he, had me out to one of his events and next thing you know I'm on the cruise the next thing you know it's five years later I've done it five years in a row it's a fantastic, event you, don't get bored, going to the same islands all the time well, you, know this one was a little bit different we did kuroh sound we did Bonaire and we did some other places I hadn't done before but, it's the people and that's what's great it's just like hanging out with you a few times in different. Locations. We get a chance to catch up and it's great hanging out with real people well, that's awesome. Now, let's just talk about your business so how did you get started you. Know I started in real estate when I was 18 years old which is a lot younger than a lot of people and it, was because I was in business already, I was a teenager, a professional, musician small, record. Label recording. Studio music school and we were renting a building for two years the, lease was coming up the house was bad and the landlord was worse we, said that's it, shutting, this thing down or we gotta go buy a house and we did so, we bought the first house no money down no credit no clue bought.
It And I haven't stopped since but, it was about 20 years ago so that, I first heard about what we do now which is residential. Assisted living and I heard about it from the business perspective but. He didn't become real to me until my mom needed help and that's, when I got into this business in earnest and I've been teaching others how to do the same for the past six years Wow it sounds a lot like my life story, getting. Started in real estate so you start, on your own you didn't have a father that made you go out there and work every Saturday and Sunday or where you weren't in sports or something well, you know I was being. I had a choice you know you will have either, way and see their music or sports and music was a lot more fun so, did. Some sports but I knew I wasn't gonna be a pro so forget that dad, was a college professor so, it wasn't a lot of go home weekend's, I was, off playing at the clubs by the time I was a teenager, it's nice great, place to get chicks, I bet. He. Saw that so so Arielle so it's residential assisted living so, he maybe explain, that to people what that actually means and. How that could benefit them you know whenever somebody, here's assisted, living they think old folks and they think of a big institutional. Building so, when I say residential. Assisted living facility. It's a single-family home it's, been converted, and we can talk about that and it's, being used specifically. For housing. Seniors, where their care is taken care of 24, hours a day seven. Days a week so, there might be 8 10 12 seniors, in that home 24-hour. Care it's, not independent living they're not out playing golf and tennis and pickleball, but, it's not a hospital it's not it's not a skilled, nursing facility it's, not a nursing home they, don't need that medical care but they can't stay at home alone it's right in between and, that's, what we do is we provide the housing the care and the, ability. To help these people as tremendous and they have money, that you can make is great as well all. Right so if, I'm in real estate and I have you know single, family rentals it sounds like then do I have to go out and maybe buy a an, apartment, building or a hotel to set something like this up. So. The answer is you can but that's not the model we take a single-family, home in the conversion, talk about might be grab bars in the bathrooms, maybe smoke detectors, fire suppression. May be wider doors take out carpets, a little bit of conversion, and if, you just want to be the real estate investor, and lease it to an operator, that's one play it's a great play because, if you do that you can charge higher rent because the business the assisted. Living business, itself is gonna be making significant. Money they, can pay a higher rent and they're gonna want a longer lease so, a long term low impact, tenant, in that home maybe a five-year, lease with somebody paying twice the market rent so, a real estate investor. Can really use this for. That exact, purpose your. Question, probably is well you said apartment, building could it be that it could be but, think of a home where, there's one kitchen one family, room, individual. Bedrooms or shared bedrooms, but it's a home not, a hotel, everybody. Doesn't have their own kitchen, or maybe even own bathroom, but they're living together kind, of like a family, in this shared housing setting, and the, caregivers, are taking care of their needs on a daily basis, all. Right so then. Really I wouldn't have to buy if I already own real estate i wouldnt have to go out and buy a new type. Of property, i could take what it sounds like as my existing, property, and this. Repurpose. It to -, to, an RAL as i heard what i'm hearing yeah, the answer is yes but let me expand on that a little bit the look is, critically, important, it's not the house a lot of times clinton, people will come up to me and say I've got the perfect house and I look at the house and I'm like you're, right the house is perfect it's just in the wrong location so. When I say location is important, what I mean is you want it to be near people that, have parents, or 89, years old they, have upper income not, lower income, so they had the ability to pay for the care for mom and dad so. The best place to have these homes would be where, people like me live 50, 60 so parents, are 8090, not, low-end, not the top of the top cream of the crop of that upper middle income because.
That Individual, might be paying 4,000, or 6,000. Or 8,000. Per month to take care of mom and dad so, we don't do Medicare, and Medicaid if, somebody, has long term care insurance that's, terrific, but, very few people have that we, do private pay. So the homes are typically going to be larger, the average rental property that somebody listing watching right now is probably 3-bedroom. 2bath, home it's, probably two thousand square feet or less we. Do bigger homes with more bedrooms more bathrooms, so my homes are four or five six thousand, square feet they, may have started with four bedrooms but now we've converted space, and there might be eight or ten bedrooms in that home maybe, it started with three or four bathrooms, but now it may have six eight or ten bathrooms so, we do, some conversions, to make it nicer, in a nicer area because. The nicer the home the nicer the area we're gonna be in the right demographic area. The more they pan a monthly, basis yeah. So this isn't about you, know warehousing, people and, putting bunk beds or something in a room, it's. About providing a nice facility, for. Individuals, because I mean you wouldn't want to take your parents, to. A home and think re they're just going to be thrown into this place and treated, like orphans we want to actually give them a home. Where they you know I would want to live it sounds like yeah. You know that's actually how I get started when I said that my mom needed help we then went out to look to see what are these solutions, the options, for us and they, were pretty bad they were pretty depressing, the good, homes were very, few and far between they, were full with a waiting list and even the bad homes had waiting, lists so, there was a real, need for the beds but also the caregivers it's, not just the real estate the bricks mistakes is the the people that are there taking care of mom and dad that's, where you really can, provide a tremendous service, and we can make some great money and. I keep, going to that because I know that there's a lot of people listening that are about protecting, assets, but generating, income but. We have, a motto it's called do good and do, well so, we want to help people do good do well financially, and we, do it with a real estate play, right home right location, right size right whatever, it is and then on the business, side this, operation. Of that residential, assisted living is where, we can charge that four six eight thousand, dollars per month per person to, live there so. You so you it, can be for real estate investors, who already have properties, are looking to buy but you come. Keep coming back to this that if, I don't have a house it sounds. Like I could still get into this biz business and start making a play here, if I, find property, I guess you would just lease it is that we Howard.
Work If you, want to be the real estate investor. In that side of things this is a key point I'm glad you asked I want you to find the tenant, first the person you're gonna lease it to first, the, house is easy what, you really need is that operator. Now I've used the word a couple of times here a business, it's actually, a residential, home in a residential, setting we're not operating a business it's, a group home for the elderly we're, protected, by the Federal, Fair Housing Act we, can do it even with HOAs, and so on we, can have that conversation but. That that, house itself, that we were gonna buy to. Rent out most, people just buy a house then they look for a tenant I want you to do a completely opposite, find, that tenant, well Jean where do I find that tenant you, come to my training and they're sitting right in that room or find, an existing one one that is operating, in your area now ask them do you want to another home would you like to expand, a lot of them would and then, you can say if I buy the house would you be interested in leasing it from me or maybe partnering, with me so, that's the way to take that angle, that play find. That operator, then, let, them tell you where the house should be how big it should be what it should look like and feel like then, go buy it and lease it to them for that five years with five year renewals, or twice the market rent yeah, because it sounds like you know now you're you're putting it into a niche and you, have, something, that people. Need in that area because, they don't want to spend the money to buy their own homes you, know I want you know the money you keep talking about sounds. Really attractive to too many individuals, and then that's why they I've seen so many people at your trainings, so, let's say what we're gonna take a quick break and then when we come back let's talk about the money hey, if you like what you're seeing here on my youtube channel and you want to go deeper you want to learn more just let you know we teach three-day. Asset. Protection workshops, all over, the country in these workshops we go really deep into all these topics and show you how to set this up and more importantly, we, meet with everyone one, on one to help them design a plan this is your opportunity if you're interested in attending one, of our workshops go, right into the show notes now and you can see a link, there where you can register for one of my upcoming three-day. Tax and asset protection workshop, for real estate investors. Hey. It's Clint Coons here with Anderson business advisors podcast, and we're back with Jean jareno from residential, assisted living a caddy me and you know right before the break we started, talking, about how, much money you can make with. An RA L and Jean I mean the numbers are there I've, worked with your clients, on the asset protection side, and I know that, they're making really good money at this but how, about the listeners once you tell them what they can actually expect, to earn by, putting together one of these deals all, right I'm gonna give it to you a fire hose so here we go the, average person in the u.s. today is spending, $4,000. Per month per person to, live in an assisted, living home now. If you take out Medicare, and Medicaid and even the long-term. Care insurance what, we focus on is a level, three or level four we break it down into five levels, so not at the bottom which is level one at the top which is level five but level three four so four, to eight thousand, dollars per month is really what we're focused, on but I'm going to use the four thousand, since that's the average take, an average home in the u.s. today some of those homes have six or eight people some, have ten or twelve people some.
Have 16, or 20 people in them you're not warehousing grandma these are big homes that are well appointed but, let's use 10 is the average so, 4,000 per month per person times, 10 residents. That's potential, gross income of 40-thousand. Per month now you're not going to be full all the times you need to factor in vacancy, and so on but, your expenses, to pay for the caregivers, the food the insurance, the real estate and everything is going to be around. $25,000. So, that leaves you 40,000. - 25,000. Brings us down to, 15,000. 10,000. So that 10 to 15,000. Net per month there's a real number that's, what we look at I'm gonna give it to you in a different form if you're gross than 40,000. You can expect 20, to 30 percent netting. Out of that gross income of 40-thousand. On a monthly basis, yeah. So when I was doing the numbers when you're talking about it sounds like you get about a thousand. To fifteen hundred dollars per person net, that you put into your home alright so then the flipside you were talking about if, I had a property, and I don't want to run this but. I want to bring someone else in that's already running these homes and let and lease my house to them so if. I have a house and I'm currently say. Renting out at. $1,800. A month it's, a four bedroom home a three. Or four bedroom home I can turn around and then lease that to someone else and what do you think I could get, off of something like that 2500, 3 here no I'm gonna it it all depends, right yeah yet, if you ask and it's so interesting, to me playing. Cuz you and I speak at a lot of events and I'm in front of people and every once in a while somebody just raises their hand and they're like I've been leasing a home to people that have been operating that business, for years and I didn't know I could charge them twice the market rent and the, answer is you can charge them anything you want if you didn't ask you're never gonna get exactly. 4:18. I would start at 3,600. Twice the market rent but that, four-bedroom, home two back home the key is the location, if it's in the right location it's. Worth paying twice, the market rent so, again, want to go back you own a home that was the scenario find, an operator, then say hey I have a home here is this a good area for you what, would you need me or want me to do to this house for you to lease it for five years with that twice the market rent and then they say something like well I need you to put in smoke detectors, or fire suppression. Or grab, bars well. Gene am I gonna do all that work it's all negotiable right, if I'm the tenant I'm going to negotiate that the landlord, do it if I'm the landlord, I'm gonna go she ate to have the tenant to do it but pause how, many of you listening, would be willing to invest twenty thousand dollars into your own property, to get twice the market rent with a five-year lease no. Vacancies, no hassles, I'm, guessing, everybody's raising their hand in front of their computer right now or listening on this podcast so don't. Be pinching, pennies if the home is in the right area if it's an appropriate home, you, can certainly lease it for more the key is finding the right tenant, first well. I mean you brought up two things they're not only finding the right tenant but also finding the operator, and you.
Know In the show notes we have a link, where they where the anybody's. Gonna be able to go to and they're gonna be able to get a book that you've written I probably, explains that I would imagine on, how to go out there and find, these people because. I wouldn't know where to begin to, find an operator, that I could lease my home to and especially how do you fund how do you know if your homes in the right area, as well and I mean we don't have time to go into that on this, podcast since, I know you teach a great class on that but. That's. All important, right I mean you've got links you know how to find those people and you educate people on that absolutely. And just to clarify when, I say tenant. And you said operator, they're kind of one in the same and, then the operator, is gonna be the one that's renting. That property, from you you're not renting it out to Grandma, or that individual, underneath, that's their job they're the ones who are gonna find those people living in the home and so on you're, just gonna find the operator, of the ral who's, gonna lease her for that five years so, they can operate this business in that location and, it's a great real estate play, we also have a lot of people claim that are building brand-new and you know that because they're kind of yours as well they're, like we've had the right location, and we want to have the perfect home so they're building it from scratch and, that's a great investment as well when. I gave you those rates of twenty thirty percent of the gross income that. Converts, to a twenty percent cap, rate at thirty percent cap rate those are huge, enormous, numbers, because, this is not just an apartment building if you're, operating, that business making that twenty thirty percent that's because all the moving parts that you're involved in of owning and operating that, business, just want to do the real estate twice the market rent long-term, tenant you want to be involved in the business twenty thirty percent cap rates are certainly possible Wow. All right so when. You think working, with elderly people because I'm the attorney the first thing that comes to mind is, liability. Right it's. Not if I'm gonna get sued it's when I'm gonna get sued so what are some of the you know make me three things that I'm, listening in on this what do I need to be aware of from, a liability standpoint, would you say yeah, and I love talking about this with somebody who's so knowledgeable, like yourself because you understand, that a lot of people have no idea what the risks are what their potential, liabilities, are we, do we, know when somebody moves in it's not if it's when and we, know that they're gonna pass away in that house ninety eight percent of the time they're, moving in and it's the last place they'll ever live so, think.
That Through if you have a rental property two, kids a mom a dad two, dogs the, five-year-old jumps, the fence two doors away drowns, in a pool tragic. They're ticked off they're, upset the your fence wasn't big enough and strong enough and so on if they don't have the right insurance and, if they're not ready for it that can be a big problem with. Us, we're in a house could be the same house grandma's, not scaling, the fence right but, at some point she is gonna pass, away inside, that home but, the family, is an expecting, mom to live forever, as a matter of fact they, may and don't take this wrong get. To the point where they thought mom was gonna be there for a year or two and she's been there for five or six and they're like well. That is tragic, but glad. She's gone they never say it out loud but I can see by the smile on their face that now. They are gonna be concerned was there any problem issues. Was there any and, you need to be a good actor nobody getting into this business should be somebody who's looking to take advantage of people or just gouge people, financially I want you to have the right heart as well as the financial, incentive, but, if you're doing a good job if, you do it right the, bottom line is you really should not be getting sued because, people know that when they move in grandma is gonna pass away the, question is do you operate properly or you're doing it the right way the insurance, policy it's, a professional, liability insurance, policies. Specifically, for this industry the, cost is less than a dollar a day per, resident per, model so. 10 people 30 days that's $300. A month it's a line item it's. Not that expensive it's not medical, malpractice for, an out of medical institution. But, it protects you $1,000,000, per occurrence three million dollars for the policy, I've, been in business for six years we've never had a lawsuit in. A home because, of these issues it's, a question that people have all the time but it's not really. Something that comes up very often if you're a good actor and do your job right yes. I think you know some people may be discouraged. From looking, at RALs as an opportunity, as investing. Because there's been I mean, you just go on the news and you'll see it there's a lot of bad actors, unfortunately. Out there I think give the industry, a bit of a taint and it, people, then shy away from it and so, you really have to fight through that yeah, and you. Know when you think about that those stories that we hear usually what I call a big box facility. 200, beds where there's 200. Residents and there's 10 caregivers, there during the day and two caregivers, at night very. Little oversight very little care very little. Interpersonal. Relationship, now, switch it to a home it's a house there's ten seniors, in there, to caregivers, during the day and one at night the, caregivers, know those residents, by name the residents, and their families have eaten at the table together they know each other they love each other those, caregivers are just, as upset as the family members when they pass away because. There's a bond there's a love and that's one of the reasons why I got into this not just the money or the lawsuits, and this and that it's you, know if you have, a mom or dad you understand. Somebody's, gonna need, to take care of them and it's either me or somebody, else and I want to bring them to a home or they're gonna love them and take care of them you're, providing, a tremendous, service and a peace of mind for those people those, families, those residents. And it's something you can be very proud of when I started mine my whole, goal was to have it be a home that I'd be proud to have my own mother my own father moved into that.
Was The benchmark and that's where we started, Wow, all, right we gotta take another quick break here and we'll come back and I got a question for you about the myths, surrounding. Ral, that are out there hey. Guys get a lot of great questions in my youtube comments and some. Of them but oftentimes, get a little a little deeper a little heavy let me tell you this if you want a strategy, session, go right into the notes below the video here and there's a link where you can click on that link and you can get a strategy session, with one of the advisors, at Andersen right now when you set it up you have you talking with somebody within. A day about your individual, situation to, get all of your questions answered it's the best way to know what, you should be doing going, forwards, with your structures, it's free take advantage of it right now it's, Quentin Kunz here with Andersen business advisors podcast, and I'm speaking with James arena of residential, assisted living economies, and right. Before break we were talking about, lawsuits. I mean here I am an attorney and of course I'm going to ask them some questions about, that but. There's also some things that we just I asked them right before the break about the myths, that, surround, residential. Assisted living because. I know people have preconceived notions. About this about what they can do I mean I've listened, to people before that. Throw out these crazy numbers of what you can make in, this in this space and so you, know what, are some of the - you know maybe two myths or three myths would you say gene that are. Out there that we'd like to dispel you, know there's so. Many and let me hit you with a whole bunch it doesn't, need to be in a commercial setting you don't need to do multifamily, it's a single-family home you, can do residential, financing. You can do commercial, financing, SBA USDA, and so, on. How. Do I find caregivers, and, implants. And, so on you, know there's people that are attracted to this industry where they don't want to be a barista or a waitress or something else they want to take care of the elderly well. Gene everybody's gonna move in and Sue me no we just went through that listen to the last section so you've got it there but, I think one of the biggest myths is that there's. Maybe. I'm too late to the game or I didn't, know that I could do this or I'm competing with these big box facilities, how. Many of you listening, have seen a big box facility, open up Birkdale son writes Altria, they. Didn't open it up there by accident they did the market research for it they know that there's hundreds, and hundreds of seniors that need, the help can afford it and they're gonna be there for decades your, location is simple do it at the end of their driveway and if, you're wondering well how am I gonna fill the house Marketing the the, house and filling the house itself that's a big part of what we teach you how to do and what to do and what not to do but referral, based marketing, is your absolute, best way so you need to prime the pump get that first resident, that's the hardest one then the second third fourth by. The time you're half full it's like it, goes like a hockey stick because people don't want to be locked, out the home is full I can't even get in so. There's somebody that I could do but there's a half dozen for you right there perfect. Alright so if we're listening to this and no one's ever been exposed, to it before now they've got this, understanding.
Of What arielle is I mean. You've got to be thinking you know how easy, is. It to. Get started in the REO you, know I always love to answer that by saying it's, simple, but not easy right. And if everybody, could do it it was just simple then I'd have too much competition so I'm good with having, some hoops to jump through and some some, barriers to entry so here's, the deal in order for you to do this you need three things you need a house that is senior safe we, need to have policies, and procedures or. Standard. Operating procedures, the state's gonna want to see the coach you're doing and the, third is you need a qualified, manager, every States a little different and what that qualification, is but, those three things you fill in an application the. Application could be one page or in Texas it is 17 pages long don't, let it bother you six of those are just redundant, in case you have 48 partners, it's, simpler, than people may think but. If you know what you're doing and learning from somebody who's done it before it can walk you through my goodness things give a whole lot easier but. Do it with the right attitude it's a three-legged, stool we've, got residents, you've got you've, got the caregivers. The staff and it's a business so if you do this right three-legged stool in the right location, you absolutely, can do this simple, but not easy but we'll make it as easy for you as possible you. Know just one other point on that so if I, lived, in say, New York and I'm listening this podcast, right now and you said you're from Arizona, it. Sounds, like you know you you've got this dialed in so it, doesn't matter where I live, I can, do this if I have the right training to. Find out you know what New York just gonna requires. Versus Arizona because you just brought up Texas and you said there's a different form that you fill out is that is that something that people would. Need that type of training I imagine absolutely. And every state calls it something different so I say residential, assisted living but, 20 states call it an assisted, living facility you. Know other states called a personal care home or assisted living, residence, there's different. Names in different states, there's different paperwork, qualifications. Short, answer it definitely, can be done in any state certain, states are better or easier, if you will to do it in but, backing up for a minute livery want to live but invest where the numbers make sense there's. Some areas where I'm gonna say yeah you can do it there but I wouldn't suggest it or recommend it some, areas are easier to do business in than others and you know that so well Clint be it's, one thing I love about you, know Anderson advisors, since you guys not only know the legal and the tax but your business guys and you understand, business. And how it works together I really like working with you guys and I appreciate you very much yeah. I mean that's just what we teach to me you don't know what you don't know and you, don't want to make that mistake what you talked about just the terminology. Because. If you start using the wrong terminology you're, gonna hit roadblocks right, away and so it's I mean, education this space especially I think it's so much more important because there, very few people that offer it and it's. Not like buying a single-family home and just putting it up for rent you have to know what. Rules are and regulations. In your location, so once you've found that location like you talked about then, it's going to let another level deeper which we don't have time to go into on this podcast and, maybe we'll get you back and we'll do another one to. Go deeper on it but you've, written a book and it's called insider's, guide to investing, in senior, housing the, link is in the show notes but if people want to learn more as we, talked about they. Can go to Andersen. Advisors. Dot-com. /r. Al. Okay. So Andersen, advisors come /r. Al, and you've, given us a copy of your book that they can download and there's. A video as well that they're gonna get is that my understanding there's, a webinar there and they can download, a copy of the book which is you, can buy it in the amazon happy, to sell it to you there but, get it free right here it's just for you and, if you just want to call and have a conversation, what we call a discovery, session feel free to do that as well perfect. So, everyone make sure you take advantage of that if you're looking at getting, into residential. Assisted living or even if you're not I would still go download, the information because you don't know what you don't know and there are opportunities, out there and you, know being an avid real estate investor myself, I'm always looking for ways to get a higher return, on my investment, properties, and what, we just presented today through, what gene teaches, people is how to do that anything else you want to say in passing gene before we sign, off yeah, just one last thought is you're all gonna get involved in assisted living one way or the other you're.
Gonna In the real estate the business, or you or a loved one is gonna be living in a home writing a check to somebody who does right, now you've got a choice and leave, the blessing, to your kids not a burden imagine. Moving into the master bedroom living, for free with nine, or ten other people writing you a check for five six thousand, instead. Of leading your kids the burden of deciding, what do we do to take care of dad or mom you're. Gonna get involved one way or the other make a good choice that's. Great all right gene thanks for coming on they, talk to you soon thank, you.