Effective Management is Just the Beginning. Part 2 of a 2-part Series.
What does it take to successfully and profitably participate in today’s largest and fastest-growing real estate sector, Residential Assisted Living?
In the first portion of this report, we covered the first five of 10 pillars to successfully managing Residential Assisted Living (RAL) homes. However, management is only part of the equation for a successful RAL investment.
Now, discover the second five (numbers 6-10) important factors for surviving and thriving in this space:
Success Factor #6: Know Your Competition
One of the biggest and most prevalent mistakes in business startups and real estate investment today is failing to conduct real market research. Real market research deals not only with what your customer wants and needs but also with what your competition is offering. Knowing your competition will enable you to stand out. Don’t just copy them, because you don’t really know if what they are doing is working. Instead, look for the gaps.
Ask yourself: What do seniors want that others are not offering or are failing at delivering?
Pro Tip: “Secret shop” those homes and see for yourself.
Success Factor #7: Establish Clean Admission and Retention Policies
To attract the best residents, minimize legal risk and liability, and ensure optimization of overall operations, senior housing operators need clear and written admission and retention policies. Here’s why:
Some seniors have been disappointed when they have moved into communities that do not ultimately deliver the promised environment. For example, a resident expecting peace and quiet might end up in a loud one where the visiting hours are not stated clearly, or a resident who dislikes animals could end up in a pet-friendly community unintentionally. More and more prospective residents are savvy about this and will want to see your policies in black and white, and you need these policies written down so that your expectations and those of your residents are the same.
Obviously, the level of care the resident needs will evolve over time, too. You need to establish up front the point at which they may need a higher level of care and if your home will provide it. If not, your policy should establish what the exit procedure will look like. Such guidelines will also help you prevent future issues that can easily be avoided.
Success Factor #8: Make Payment Options Clear as Day
The Oxford Academic Journals of Gerontology remind us that while Medicaid offers some form of reimbursement to assisted living facilities (ALFs), the actual number of individuals served is still very low. This is key to keep in mind when making acquisitions, designing your business model and investment approach.
Ask Yourself: Will your income come direct from private pay residents or be government subsidized?
Pro Tip: We highly recommend that you focus on the “private pay” residents and not the government-assisted ones.
Once you identify the source of the payments, consider what the best method of payment will be. If the payer is the resident, then you will likely need to accept checks. Making payments convenient is important. In this instance it may mean having a staff member make rounds to collect the rent each month. Other options might include helping residents or their family members set up automatic withdrawals from their bank accounts each month or enabling online payments in case out-of-area family members are paying the bills.
Assisted Living has many different names and operates on many different scales across the country, ranging from super-sized complexes with high levels of nursing and medical care to single family homes in residential neighborhoods. The single-family home model is referred to as “Residential Assisted Living” (RAL).
Success Factor #9: Keep Up with Preventative Maintenance
Most real estate investors know that it does not usually end well to put off repairs no matter what, but you absolutely cannot afford to wait when you have elderly people in your facility. Many times, residents will know how to spot issues early and will let you know. It is imperative to deal with these concerns immediately, as your residents are probably sharing the information with family and friends as well.
How to do it: If you don’t have a full time, on-site maintenance team, then schedule a monthly maintenance run and facility inspection. Consider upgrading your appliances to the most efficient models possible, since utilities will nearly always be one of your biggest expenses in senior housing.
Success Factor #10: Offer Value-Add Services and Programs
Value-add extras can serve as revenue producers, increase demand and speed of leasing, and contribute to tenant retention. They can be bundled with your basic service, offered as add-ons, or simply made available through third-party service providers. Value-adds may include food delivery, beauty services, outings for entertainment, exercise and fitness solutions, laundry, internet and connectivity solutions, furniture packages, and more.
Gene Guarino is the founder and CEO of The Residential Assisted Living Academy. Get a free seven-part training and learn more about residential assisted living and the proven RAL Formula at www.RAL101.com.