Senior Housing – What to Watch for When Buying During the Novel Coronavirus Pandemic
I’m contacted by senior housing investors during the Coronavirus Pandemic. They want to buy. In Corona times, it’s hard to get operator attention. It doesn’t matter the type; the priority is taking care of their residents. Independent living (IL) and continuing care retirement communities (CCRC) focus on social distancing. Assisted living (ALF) and skilled nursing facilities (SNF) are in lockdown.
Many facilities stopped visitations in February and March. Similarly, the owners sent sick staff home and room quarantined the residents. New residents are few. Recent admissions require one or two COVID tests. In these grave times, senior housing is the 1st line of defense for the elderly. This is a war and with every loss of life, we all lose. Right now, nursing homes are the focus of the Corona enemy.
At the time of this writing, skilled nursing requires COVID tests on residents and staff periodically. Nursing homes don’t have the capital, resources, staff or time. In some states, the national guard or local public safety are helping. With this purpose in mind, everyone has the same goal – Protect Our Seniors. Senior housing owners are busy.
This is a tough time to get their attention. With that said, use these tips to prepare before you buy. There are a few areas you want to concern yourself with to avoid drawbacks. In fact, follow these points so you don’t waste their time or yours. Some owners will sell after the coronavirus. You need to be in the right place at the right time.
Three Points Before Buying Senior Housing
1st Point: Government Regulations
Senior housing regulations are the first thing you should worry about. Senior housing includes unique types of long-term care for the elderly. Fortunately, independent living communities don’t have many regulations. Besides zoning, and ordinances, American Disability Act requirements need to observed. Indeed, the first place to look would be your state. In Texas, you can find IL regulations here.
On the other hand, CCRCs pose complications. They comprise IL, ALFs, and SNFs. CCRCs follow regulations for all three senior housing types. Previously, we covered independent living regulations. Next, we’ll discuss assisted living and skilled nursing requirements.
Assisted living regulations aren’t bad. They follow the same requirements as ILs. In addition, there’re senior housing regulations specific for ALFs. Each state is different and similar at the same time. The goal is to protect the residents in the areas of life, safety, and health. To become a Texas provider, review the Texas Department of Health and Human Service ALF web portal.
Governments regulate nursing homes a lot. With that said, they have fewer resources than hospitals. SNFs offer 24/7 care without the hospital clout. Of all senior housing types, nursing homes get the most scrutiny. Without delay, learn skilled nursing regulations before you buy. To explain, Texas tells you How to Become a Nursing Facility Provider.
2nd Point: Demographics
The second point is demographics. According to Merriam-Webster, demographics are the statistical characteristics of human populations (such as age or income) used especially to identify markets. Obviously, you need seniors where you want to invest. ESRI offers an article on senior housing demographics. Senior housing demographics change. Today’s demographic differs from 30 years ago.
3rd Point: Ownership Strategy
The third point is your strategy. So, you want to lease to an operator? Maybe find a partner? Conversely, want to run it yourself? Your answer determines your next step. Also, it’ll decide how complicated your experience will be.
First off, leasing’s the easiest. For the most part, you find an operator and they pay you rent. Most leases are Net-Net-Net (NNN). NNN means the tenant pays the property bills directly or indirectly. In this situation, you are the landlord.
Second case, finding a partner is good too. Your partner is the expert. They’ll operate the facility. You’re the silent partner. Your partner will staff and operate. They’ll share your success while you look for your next investment.
Lastly, we have the most complicated. Indeed, you can operate the property. Point often overlooked, this is the most profitable situation. Do you know what you are doing? High rewards come from high risk. Own your own facility and never look back.
Quicken your success in Seniors Housing
Whether an investor or operator, senior housing has complex needs. Laurex Advisors understands. We represent owners that want to sell to the right buyer at the right price.