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Assisted Living is a GREAT Investment Opportunity

By Robin Avery Subscribe to RSS | November 29th 2011 | Views:

Assisted living is big business and about to get much bigger. In our home state of Colorado, where we have been successful owners and operators of large communities for seventeen years, there is a growing demand that will require 93 assisted living facilities in the next 10 years!

The industry currently has tens of thousands of residential facilities nationally, with combined annual revenue of many billions of dollars. Our experience has returned for our investors millions of dollars of gain on sale, and through refinance of original mortgages. Return on Investment, with the right size property and good management, is often in the 20% range. At an easily achievable 9% CAP rate, project valuations rise by a million dollars with an annual increase in the Net Operating Income (N.O.I.) of only $100,000 year. You will be shocked how easy it is to achieve this through good management. This is a “wave” industry because of the sheer number of “baby-boomer” people growing old today.

It starts with identifying a market. The absorption rate in any given market is historical, easily measurable, and most importantly, growing at a rapid rate. Over ten thousand people turn 65 years of age every day! Even in a crowded, overbuilt market, poorly managed facilities are targets for acquisition and turn around opportunities. Many markets have old stock and are ready for innovative, progressive, and proven models of both design and delivery of programs and services.

The design of new assisted living construction is another critical factor. Operators who have the experience to know what works and what doesn’t, and who understand the safety and comfort seniors and their families desire, and who understand the critical common area components that facilitate community, friendships, great dining experiences, and better health, are rare……and create great value. Seasoned operators can guide architects and engineers in building a community that meets all local, state and federal codes, but more importantly, can “close” the deal when executed properly.

The federal Department of Housing and Urban Development (HUD) provides a 40-year amortized financing package that is federally insured, assumable, non-recourse and at historically low interest rates. There are strong incentives to utilize these HUD-232 LEAN programs. We are experts in this arena, with HUD and HUD lender contacts nationwide. Our network includes HUD approved market analysts, and properly HUD formatted financial pro-forms.

The key to this business is the Operator. The Mission and Vision of the Operators, and their ability to deliver that Mission and Vision, will determine profitability and Return on Investment. This ability to deliver a high quality Community of Care is what will determine the acceptance and popularity in the market, ensure speedy lease-ups, and provide strong, high percentage occupancies.

We are both passionate and excited about the many benefits this type of opportunity provides. Its exceptional Return on Investment, and its important contribution to community health, makes this an extremely attractive endeavor.

Robin Avery - About Author:
Robin Avery is a Gerontologist and owner of A.L. Management Services, a privately held Colorado Limited Liability Company formed in 2009, with the specific purpose of building and operating assisted living communities in Colorado. He manages six assisted living sites with a combined total of 337 beds, with annual combined revenues in excess of of $7M. Please click the following link to learn more. Assisted Living Operator and Assisted Living Investment Opportunity.

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