Posted by LeonNC on January 17, 2006 at 19:59:06:
Hi Frank,
Might I ask what type of service you provide?
Leon
assisted living business in my RE property - Posted by Julie
Posted by Julie on January 11, 2006 at 16:23:44:
I’m thinking of creating an assisted living business in my sfh rental property, hiring someone to take care of the people-seniors with very minor needs-someone to cook for them, encourage them to bath, etc.
My question is about the legal liability of something like this. One person I’ve talked to tells me that, with our insurance, this should be no problem. Another tells me that this will open us up to lawsuits and is very risky from a potential liability viewpoint. We have other rental properties and a large amount of equity in each of them.
Any help is appreciated.
Re: assisted living business in my RE property - Posted by Mike-OH
Posted by Mike-OH on January 12, 2006 at 06:53:53:
Julie,
I don’t know the legal issues of starting and running an assisted living facility. However, I do know about asset protection. I would recommend putting different classes of risk into different entities. In other words, one LLC for a few SFHs; another LLC for an apartment building; and yet another LLC for your assisted living faciltiy. You don’t want an incident in one building to cause you to lose ALL your investments.
I would run the assisted living facility as a separate business and not intertwine it with your SFH business.
Good Luck,
Mike
Re: assisted living business in my RE property - Posted by Martin Greenberg
Posted by Martin Greenberg on January 11, 2006 at 16:40:55:
I owned an assisted living facility (ALF) in Ft lauderdale and was surprised to learn that there aren’t enough old people there for me to make a living. I in in chapter 13 due to this adventure.
First consider that this is a 24 hour a day, seven day a week, 365 day a year JOB. I am a RN and that turned out to be a good background. We had to find good nursing assistants and a cook. In Florida, the owner of an ALF is responsible to pay for the medications of the residents if the renter can’t pay for it. I recommend you talk to people in the business and the licensing agencies covering this business before you enter it.
Good Luck
Marty
Re: assisted living business in my RE property - Posted by Julie
Posted by Julie on January 11, 2006 at 17:26:00:
We want to hire out the work to someone who will live in the property and take care of the people, cooking & cleaning. A RN and nursing assistant would mean elderly with more needs than we want. We’re looking for elderly who just need someone to cook for them, lock the door & shut the windows at night, do their shopping, buy their food–light stuff like that, not people with big disablilities.
How is it possible that there weren’t enough old people in FL? Was there too much competition? We live in San Diego, CA.
First consider that this is a 24 hour a day, seven day a week, 365 day a year JOB. I am a RN and that turned out to be a good background. We had to find good nursing assistants and a cook. In Florida, the owner of an ALF is responsible to pay for the medications of the residents if the renter can’t pay for it. I recommend you talk to people in the business and the licensing agencies covering this business before you enter it.
Good Luck
Re: assisted living business in my RE property - Posted by Martin Greenberg
Posted by Martin Greenberg on January 12, 2006 at 05:04:14:
There is a market for older people who can’t live by themselves but are not medically compremised. You are talking more about a group home, which in the state of Wshington is called adult family living.
In the Ft Lauderdale area, Marriott and Radison have entered the assisted living business. They get the residents when they are healthy and require little or no assistance. The concept is age in place. As (and if) their health deteriorates, there are nursing services available on site. These facilities are run like a motel and are well funded. It was hard for a mom and pop operation to compete with these places. There are not as many places like this here.
In the Seattle area, they can be profitable if you purchase a large house out in the burbs. The real long term profit comes from owning the real estate. Several nurses in my hospital own some of these houses. I am burned out and want nothing to do with this business. I want to do straight ahead real estate investing.
Marty
Re: assisted living business in my RE property - Posted by Sailor
Posted by Sailor on January 11, 2006 at 18:03:09:
And then when their needs become greater do you just give them notice?
Tye
Re: assisted living business in my RE property - Posted by Julie
Posted by Julie on January 12, 2006 at 10:21:33:
In the Ft Lauderdale area, Marriott and Radison have entered the assisted living business. They get the residents when they are healthy and require little or no assistance. The concept is age in place. As (and if) their health deteriorates, there are nursing services available on site. These facilities are run like a motel and are well funded. It was hard for a mom and pop operation to compete with these places. There are not as many places like this here.
In the Seattle area, they can be profitable if you purchase a large house out in the burbs. The real long term profit comes from owning the real estate. Several nurses in my hospital own some of these houses. I am burned out and want nothing to do with this business. I want to do straight ahead real estate investing.
Is it possible to compete with Marriott and Raddison on price, perhaps as a lower cost alternative?
You mentioned burnout…Why did you not hire out the help? I met someone in the business who simply hires one or two people to take care of the people and he, the owner, does is buy groceries and stop by periodically to see that everything is going all right.
Re: assisted living business in my RE property - Posted by Julie
Posted by Julie on January 11, 2006 at 18:29:44:
Yes.
Re: assisted living business in my RE property - Posted by Martin Greenberg
Posted by Martin Greenberg on January 13, 2006 at 09:39:11:
We weren’t able to compete on price because of what we paid for the business. The bank wouldn’t lend us money to buy some fourplexes and transform their use so we could build instant equity. They did lend us over a million dollars to buy an existing ALF. Go figure. We had a big nut to meet each month.
Our place was 41 beds. We were supervising the staff and making purchases. We were networking and trying to replace and upgrade our residents. The fact we (the ALF) were clean, smelled good,had programs that took the resident outdoors, and was run by two RNs was not attractive enough for prospects to place their loved ones in our facility.
The burnout came from me working a full-time job at night and working at the place during the late morning and afternoon. My partner managed the place full-time. We had eight full-time staff working for us and we supervised them. This was a time intensive job. I never received a cent for all the time I put in because the business couldn’t afford it. It would have been great if this was a turnkey operation and I made piles of money.
Marty
Re: assisted living business in my RE property - Posted by Frank Chin
Posted by Frank Chin on January 12, 2006 at 13:46:19:
Julie:
Service businesses are not for everyone.
My dad owned one till he retired, and I currently own one. You have to deal with customers, and with the help, and you’re bound to have surly customers, lazy and indifferent help which could make your life miserable.
Even though I have eight employees at my business, and it would seem all I have to do is drop by and say “hello” several days a week, I find the more I’m around, the more productive and better the service. Then, last year, there’s been several occasions where I wanted to go on a short trip with the family, two or more people would be gone that same day, and I have to be around to help out. I even cancelled a weekend skiing trip once.
Another time, I lived in an area where there were no Chinese Restaurants, and my co-workers and neighbors asked why don’t I start one. Spoke to my dad who managed one for a number of years, and I basically said “I’ll invest, you’ll be the manager, and all you’ll do is watch the place, and run some errands”. He asked "how big is it, or putting it another way, how many waiters do you plan to have in the dining room. I said “two or three”.
His answer?? The problem is going to be that one or two waiters are going to be out on many occasions, either because of turnover, too much to drink last night etc. And if they don’t like their “raise”, all three are going to be out together. He says he’ll BURN OUT in no time.
So watching two or three people in theory sounds easy till you have to do it for real.
Frank Chin