others. Addressing this issue requires thoughtful preparation. The better you are in this area, the more your brand and property will stand out. If you are using the “Golden Girls” model (see definitions at left), having sufficient parking space is a factor, as it is at any multifamily property. If your tenants won’t be driving (and often even if they are), however, then access to public transportation will be essential. Ask yourself: • How far are you from the bus line or train? • How are taxi and rideshare services between the property and these points? • Is your neighborhood walkable? If you are using the RAL home model, parking is not an issue. Seniors that are in an RAL home typically do not drive themselves any longer. For these residents and their guests in the same age group, the more important issue will be how easy it is to access and navigate within and around the property itself. An Oxford University study shows that single-story construction can be especially beneficial to senior residents and enables residents to function more independently. RAL SUCCESS FACTOR #3 CHOOSING THE RIGHT STAFF Your staff will be the single most important feature of your RAL business. Even when simply renting homes to seniors, having great staff is important. This is true whether your residents see the staff daily or only a few times a week. Your residents will want to be heard and feel heard, making communication vitally important. Everyone you bring in, from on-site care and customer service staff to the handyman, needs excellent people skills.
RAL SUCCESS FACTOR #4 MARKETING “MAGIC”
property taxes, tax breaks, maintenance vendor rates, construction costs, etc. Un- derstand how these numbers differ in the areas you are looking at, and which offers the best net now, and long-term gains. RAL SUCCESS FACTOR #2 MAKING MOBILITY A PRIORITY Mobility is of paramount importance to seniors. It poses a bigger challenge to this segment of the population than to necessary operating expenses from your property’s revenue, excluding principal and interest on loans. For example: If your property generates $24,000 a year and costs $6,000 a year, then your NOI is $18,000 per year or $1500 a month. PARATRANSIT: Services often provided as a supplement to fixed-route bus and rail systems by public transit agencies to serve individuals who cannot access traditional bus stops. Some agencies also offer senior-specific services and even scheduled pickups on request. RESIDENTIALASSISTED LIVING (RAL): A residential home that is used for the housing and care of elderly residents. The RAL provides room, board, housekeeping, supervision, and personal care and assistance with Activities of Daily Living (ADLs). Additionally, there is the ‘Golden Girls’ model, which provides housing, but does not provide care. NET OPERATING INCOME (NOI): The cash flow left when you subtract all reasonable and
Marketing is the key to the success of all businesses. It doesn’t matter how fantastic your product is, you still have to have good marketing to direct people to it. Customer service and satisfaction may now be the number one form of marketing. Do a great job with each client, resident, and contact, and they’ll send you more. No matter how good your marketing is, however, at the beginning, you still must get noticed, build trust, maintain an attractive brand, and win enough residents to make the numbers work. Investors who truly want to make money in this growing real estate sector can’t afford to leave “being found” to chance. Find your audience by using the right channels! For example, Snapchat and other mobile phone apps are probably not the best tool for connecting with seniors. Instead, access lists of seniors in your area and reach out via more conventional means, such as the U.S. Postal Service or a friendly phone call. Even if they are not immediately ready to move in tomorrow, you can bet these contacts know others who are looking. RAL SUCCESS FACTOR #5 INVESTING IN A GREAT LIVING ENVIRONMENT Group homes for the elderly should provide more than just a shelter to sleep. The best homes take a holistic approach.
5 Important Factors for Success in Residential Assisted Living Investments EFFECTIVE MANAGEMENT IS JUST THE BEGINNING.
by Gene Guarino
ccording to the 2010 U.S. Census, approximately 10,000 Americans turn 65 every day while another 4,000 turn 85 every day. That is a huge oppor- tunity for savvy real estate investors and entrepreneurs. It is truly a “Silver Tsunami of Seniors” that is unstoppable. Today’s seniors are living far longer and are far more active than previous generations, and their housing needs are different than previous generations as well. With those changes come opportuni- ty for real estate investors and entre- preneurs who provide a solution. The senior living sector has expanded to include a new housing opportunity for real estate investors with Residential As- A
RAL SUCCESS FACTOR #1 CHOOSING THE RIGHT LOCATION Location is the number one factor in any type of real estate investment, regardless of sector. When investing in senior housing, location isn’t just about long-term property value, rental prices, or even demand for units and occupancy. Those are critical considerations, but there is more. For example, you need to evaluate your property’s proximity to the amenities and services seniors need and want. Think of dining, healthcare, postal services, golf, tennis, and shopping. From an asset management perspective, location is also about costs and net oper- ating income (NOI). Location will impact
sisted Living (RAL). Timing will be key to success in this market sector, and this is a chance to bring efficiency and value to an inefficient market by offering attractive solutions. RAL is a growing and unstoppable segment of the real estate investment space. Of course, as with any other op- portunity, the real returns come down to the details and execution. Whether renting homes to seniors or creating RAL homes or developing big-box assisted living facilities, there are 10 pillars that are pivotal for the success of your short-term results and your long- term sustainability and net returns. Here are the first five:
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Gene Guarino is the president and CEO of RALAcademy and has more than 30 years’ experience in real estate investing and business. He also is the creator of RAL
NAT CON, the industry’s annual national conven- tion on residential assisted living. Reach Gene and learn more about investing in this exciting sector at RALAcademy.com.
56 | think realty magazine :: march 2018
thinkrealty . com | 57
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