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Action Academy | Millionaire Mentorship For Your Life & Business
How They Turned ONE House Into a $13.4M Business Model (by Helping Retirees Live Better) w/ Aaron Ameen & Charlie Cameron
00:37:48
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- [00:00]
A
It's the only asset class that I know of that you can cash flow six figures on one home. It's not just an easy sell. People are paying five years ahead deposits to reserve assisted living rooms.
- [00:10]
B
Crazy.
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C
The data is pretty shocking. There are 77 million baby boomers, all of whom are entering their mid-60s. And at the higher end, they're already in their 80s. Not only is there already a huge supply demand mismatch, but it's going to become an enormous problem. And the industry, senior care industry as a whole is expected to be about $140 billion.
- [00:28]
A
It's one of the best opportunities in the next couple decades.
- [00:32]
B
All right, all right. Welcome back to another episode of the Action Academy podcast. Today we are talking all things residential assisted living. What the heck is residential assisted living, you may ask? Well, I've got two gentlemen on here that will answer that question and walk us through a really, really interesting story about how we got to this asset class and where we're taking it in the future. So let's start with Mr. Charlie Cameron here and then my boy, Aaron Amin.
- [00:58]
A
What's up, Brian? Great to be here, man. Long time coming. Big fan of your podcast. So thanks for that. And yeah, I'm Charlie Cameron. I'm an Air Force veteran. Myself and my two partners, Alex Schlo, who's in the academy, and Luke Frizzell, couldn't be here today, but we run a assisted living portfolio company, Open Range Capital, as well as a mastermind, kind of, kind of similar to your model, Brian Ral Room.
- [01:24]
B
That's Ral Room for people. It's an awesome name. Yeah.
- [01:29]
A
And dude, like a year ago, if you'd asked me what we'd be doing now, I wouldn't have said growing a mastermind and building out a portfolio like we are. But it's been an absolute blast. I think we're getting the same excitement. I understand now your podcast how much excitement you've gotten out of having a mastermind and just having like minded folks all the time. But Aaron was one of our first joinees and he really has helped us build this community and really, you know, with the goal of launching as many residential style assist living homes as possible. It's the only asset class that I know of that you can cash flow six figures on one home, that you can make a massive impact and build wealth at the same time like that. It's just kind of unbelievable. All the things that come together. We've got this massive tailwind that's pushing more demand and there's not enough supply. And it just seems like everything's kind of coming together at once to make this one of the best opportunities in the next couple decades. So still stoked to get into it.
- [02:27]
B
Excited to talk about it. So, Aaron, introduce yourself to the audience and how did you get into the RAL space?
- [02:34]
C
Yeah, absolutely. Well, thanks again for having me, Brian and Charlie, we're grateful to be here. I'm Aaron Amin. I live in Houston, Texas with my wife Andrea and we have three young children, all ages three and under. I started in real estate as single family boring long term rentals. I still believe in those. However, over time what happened is something that happens to most people, which is you end up running out of your own money and whatever path you took to get to wherever your ceiling was at the time, you got to figure something else out. So I did what a lot of people listening to the show either have done or will do. And I rung up Brian Lubin for one of his signature 15 minute phone calls. And I said, hey, how am I going to get to the next level here? I remember having a great chat with you as the summer of 2023. And I don't know why this doesn't sound like a great idea on paper, but we were about to have twins and we were about to move across the country and I said, why don't I go ahead and join this very intense sprinters mastermind group with Brian and 200 other people. And I remember sitting on the driveway of the house we were moving out of as the movers were loading the truck and binging through all the onboarding modules for Action Academy. But the net of it is that what got us to where we were then was not going to get us to the next level. And so I joined Action Academy with the intention of discovering partnerships, exploring different asset classes and just building relationships, leading with value as much as I can and trying to figure out what my next step was going to be. As we record this, I'm entering year three of Action Academy. So we two full years in the group, hundreds of people met. We were actually the project we're working on now. Four of the GPs are all action Academy members. We've hired consultants from Action Academy and have about, I think, eight investors so far from Action Academy in this project. So this has been a huge part of the DNA for this next chapter of life for my wife, Andrea and I. And now we are going all in on Rhel. So I'm happy to unpack any of that that you'd like to Beautiful, man.
- [04:37]
B
Yeah, this is a really cool story. So I want to give a quick shout out to Alex Schlo again, friend of the pod. He's been on the pod. If you gu guys want, will link his show in the description of this episode. He came to me and he was like, hey, man, you know, I see what you're doing with Action Academy. Like, I want to do something like this. He said, I want to start a podcast. Do you have any advice? And out of maybe three to 400 people that I've given advice to, the only person I've ever seen actually take it and run with it is Alex Schlo. And so now he's a friend. I wish he was here. I'll probably still see him over here in Europe while he's traveling with his family right now over in, I believe, Germany.
- [05:13]
C
And.
- [05:13]
B
And so it's. It's a really cool full circle moment, man. I'm honored to be able to share your guys story and the freaking awesome deal that you've got going on right now. So, Charlie, let's start with you. Talk about residential assisted living in the macro, and then let's go to Aaron afterwards about maybe a comparison between RAL and different asset classes that people are perhaps familiar with.
- [05:37]
A
Yeah, a lot of people, when they. They think residential assisted living or just assisted living, they're thinking of nursing homes. And that's not what we're doing at all. Um, what we're doing is kind of a niche, newer model, and it has been around for a couple decades. But really, in the way that we're presenting it, it's. It's quite different. We're building luxury homes with individual bedrooms for assisted living or memory care. The definition of assisted living is just needing help with three or more daily tasks of living. So that can be bathrooming, that can be, you know, mobility, that can be food. Right. These are folks that, you know, they don't necessarily need a bunch of medical care. Of course they all have meds and they all have things at that age. But we can kind of bring those services in as well as our caregivers can support those services. So really, this is an assisted living care opportunity in a home that feels like home. So families love this because they can come in and it feels like a house. I mean, they're literally houses or mansions in this case, that are anywhere from 3,000 to 10,000 square feet. Individual bedrooms, ensuite baths and then big common living areas. A commercial kitchen that feels like a regular kitchen. Outdoor spaces, activity spaces, because we Want, we want folks to be as comfortable as they can be, to live out kind of their golden years with us. And the really wild thing about it is it, it generally tends to be less expensive than those big gross nursing facilities that smell like pee. And there's one caregiver to 30 people on a floor in, in these homes, we're talking 1 to 5, 1 to 4 in some cases, depending on the acuity of the patients if they happen to be, or residents if they happen to be. Memory care, that's a little bit higher. But this is a really beautiful model that, that we're just stoked to be a part of. And it's getting better and better. Like they're, we're tweaking these homes, we're making them even better. And it's just continuing to improve and continue to be a. And I mean, it's, it's not just an easy sell. People are paying five years ahead deposits to reserve assisted living room.
- [07:38]
B
Crazy.
- [07:38]
A
The demand is so high. Yeah. And, yeah. And oftentimes those big facilities, it's like, oh, should I open a Taco Bell here? Well, there's a McDonald's. Right. The big facilities is just an indicator that there's a need for assisted living in this area. And your residential style luxury home is perfect to have there because those big facilities are going to be a feeder of residents that don't want to be in that spot or families that don't want their, their parents in that, that home. They're going to come to the assist, the assisted living home, and come be a resident for you. So that's it in a nutshell.
- [08:12]
B
Yeah. Aaron, do you have any data on the kind of baby boomer and the wave that we're going to see here? Because the wave that we talk about on business, buying about that being one of the greatest economic waves that we're going to see in our generation? I think on the tail end of that, on the flip side of that coin, we have baby boomers that are retiring. The largest generation that's ever existed in the, in the history of the earth is now going to be going into retirement and they need somewhere to live. And they all are capitalized. They all have equity. Do you have any data on this, about this migration and this kind of economic wave for us to take advantage of? Not in a bad way, but from an investment perspective?
- [08:51]
C
Yeah, absolutely. I mean, the data is pretty shocking. Right. So you mentioned a lot of people are going to be selling off their businesses as they retire. Well, those same people are going to continue to age over the coming couple decades. And there are 77 million baby boomers, all of whom are entering at the low end their mid-60s, and at the higher end, they're already in their 80s. There's 10,000 people in America that turn 65 every day, and there's over 4,000 that turn 80. And those are national stats. Right. But if you zoom in on any local area, the stats are largely similar. So the place we targeted for our project, which we can get into a little bit more, you know, it's a suburb of Houston. And even just when we look at a localized area, there's already a shortage for, for assisted living and memory care beds. So it's not that you can rely completely on those national stats, but they do tell a story that not only is there already a huge supply demand mismatch, but it's going to become an enormous problem. There's a projected 1 million bed shortage, and the industry, senior care industry as a whole is expected to be about $140 billion. So this is not a small pie that we're trying to get a small slice of. It's also solving an enormous problem that's coming up. It already exists, but that problem is going to switch from a problem to a crisis here pretty soon.
- [10:07]
B
100% agree. I like the Jeff Bezos analogy where he says you don't create the wave. You position your surfboard in front of the wave that's already created and approaching shore. And so that's what I like about this. From a macro perspective. I love the residential assisted living class overall. And that's why I'm excited to have you guys on here, because I think that there's a few people that can pull out to the front of the pack here and really claim some market share. Because when we think of it sound, it sucks. But when you think of residential assisted living, you think of like nursing homes, which I know is different, but you think of retirement as like almost like Happy Gilmore, like the movie where it's like he's, he's literally fighting to make sure that is, his grandmother is like being able to be taken care of and get out of that nursing home and move back in with him. And we see a lot of abuse. We see a lot of like, decrepit rundown over, over leverage, understaffed facilities. And so anytime that we can be a premium position in a comfortable position in a premium offering in a macro wave, it's just like, it's a, it's a double whammy. So, Aaron, Tell me what we're doing here, because we're building what you guys are calling a memory care mansion. I love the sound of it. It's. It's super, super snappy off the tongue. So what's a memory care mansion, man?
- [11:26]
C
Yeah. So this model, in its current form was patented by our mentor and friend, Brett Shot Cavis. He and his wife Laura have built two of these mansions in Georgetown, Texas, just north of Austin. And they're also partnering with several other operators, such as myself and Andrea and Charlie and team all across the country to build the same building. And essentially, it's a 10,000 square foot, 16 bedroom, 16 private bathroom, luxury assisted living mansion. And it's purpose built for memory care. So everything from the colors that we use on the walls to the materials that we're using is built to create a soothing, dignified environment. You know, memory care is a very specific people dealing with Alzheimer's and dementia. There are very specific considerations to make sure you're not triggering certain behaviors or causing any more distress than is needed. And so being able to build from the ground up, you could control all the variables that go into the project. So Brett and Laura and their team, they already blazed the path and have built these exact buildings. They're absolutely gorgeous. I'd love to share photos of their buildings with anybody who wants to check them out, but they're beautiful. And the idea is I want to, I guess rewind one second and share a bit of why we're doing this. So my wife, Andrea, her father had early onset dementia, diagnosed when she was 19, was in a really crappy nursing home. Like you said, Brian, understaffed, overworked, just bad environment. And he was there for seven years until he passed away. And it haunts Andrea to this day that there couldn't have been a better experience for him. And she also had two grandparents that were in these nursing homes. And just the quality of their life towards the final years, it was really sad. It was really hard for her to see. And so this idea of this memory care mansion, that's this beautiful building, not only is it a more personalized style of care, but it's just a place where if you're a family member going to visit someone, you're not going to be crying in your car when you go to leave because you're so sad about the conditions they're in. You might actually even be happy because you see that the people that are running this home are taking care of them. They're actually programming activities. It's built to Serve their current condition and give them a place to age with dignity. And so that's a little bit of the why. And so the building is going to be beautiful. It's going to be, you know, worth a lot. We can talk about, you know, even got some numbers back on what the business and the real estate's going to be worth. But it's all centered in that quality of care and providing the best possible experience we can for seniors as they age.
- [13:53]
B
Beautiful. Charlie, can you talk a little bit about your guys partnership on this? So give us some of the numbers behind what this looks like. How many bedrooms is this? And it's a new development. Ground up build. Correct.
- [14:05]
A
So two phases. Essentially the first phase is what we're raising for now and what we're focused on now is to build two 16 bed homes. Right. So 32 beds total. Get all of that filled up, do the refinance and then at some point build two additional because you already have the free land and you've already prepped it, you've done the utility work and you're ready to go. So as the demand continues to rise, which, you know, it's kind of the hungry crowd analogy, it'll be quite easy to then build two more and expand from there. So it's about a nine million dollar project. It's, it's, it's hefty but you know, I'll, I'll let Aaron talk to the appraisal. I mean it's already coming back and looking pretty darn good from a numbers perspective.
- [14:44]
C
Yeah. So you know, it's going to be total development costs, including the land acquisition, the construction, the startup costs, everything is around $9.4 million total. We just got an appraisal back that as complete, meaning just the real estate, the land and the buildings will be worth $11.6 million and once stabilized. So once we fill up all 32 beds and get them to the market, bed rates that we know we can get, the total valuation of the business and the real estate will be $13.4 million. So essentially within three years we'll have created $4 million of equity, you know, as a spread on top of what it costs to start up the project. It's a very heavy.
- [15:24]
B
That's the stabilized value. That's just the, that's the baseline value.
- [15:28]
C
Based on today's conditions. Yeah, exactly. So there's, we hope there's a lot of room for improvement. You know, our plan, which again we can dig into a little deeper, but our plan is based on a Refi at the end of year six. So we believe there's also plenty of room to improve upon that number as we grow the business. And then of course, market conditions could improve as well over that time.
- [15:50]
B
Beautiful. Aaron, quickly talk about, somebody's listening to this and Maybe they've got five doors or two doors or 20 doors and they've been a single family guy or girl and they couldn't fathom the idea of going for their like one of their first commercial deals, doing a frickin $9.4 million ground up new development in this brand new asset class, assembling this dream team of mentors and board advisors and different operating partners and then raising capital for it like you guys are right now. So like what is some advice you could give to somebody that's in that position and they're like, how the hell can you mentally do this and like make that shift.
- [16:31]
C
Absolutely one of my favorite topics. So as I mentioned at the top, you know, I, I own, my wife and I bought a portfolio of eight rental properties across three states while working full time and bring in three children into the world. That was, that was not an easy sprint, but it was very.
- [16:47]
B
Twins was one of them, right?
- [16:49]
C
Yes, we're very efficient with our children producing. We had, we had three kids in three years, two of which were, two of which were twins. So all the credit there goes to my wife for everything that she went through there. But you know, it was a busy stretch. But ultimately we kind of came to the end of what we could provide from our own resources, our own time, our own money kind of ran out of both. And so we had to seek, you know, an alternative. Right. The math changed. We went from dual income, no kids in a low cost of living market to three kids living in a high cost of living market with one income, temporarily at least. And so the math changed for us, which means we had to solve a different problem. Brian talks about this all the time, right? Like people, if you want to build a, you know, slowly build a cash flow stream of rental income while you work for 25 years, that's a different path than if you want to replace or supplement $100,000 income stream, right? There's different ways to solve both problems. So I think we did a lot of reevaluation. This is one benefit of joining Action Academy where you have to really cast your vision, think ahead. What do we want life to look like? Well, we had to basically reinvent our life, right? Our circumstances completely changed. And what it led to is actually another framework That I learned from Brian, that I really think about quite often, which is your CVC framework. Clarity, volume, consistency, a lot of people, you know, for anyone who hasn't heard that. Right. The idea is that the very first thing you should focus on is getting clear on what your goals are and what vehicle can get you there. And a lot of. And the volume is. Once you know that, you can start figuring out what are the KPIs and metrics that are going to get me there. And then consistency is just doing that for a really long time. Um, and if, if you're clear and if you're putting in the right type of reps, like, you will get to the goal. And so the first time I heard you.
- [18:35]
B
So funny. Yeah. What's so funny about that is, I mean it's just like from an engineering perspective, it's just a three part diagnosis. Right. Because it's just in like. And Charlie, you're from the Air Force, so you're from military. So it's just you're trying to just sequentially go through problem solving. And so what I found to be true is you're either unclear of what you're supposed to do, you're unclear of the amount of volume required of said thing, or you just haven't been doing it long enough. So it's just like, I think most of it is caught in the volume. Can you talk a little bit about the volume because. And then we'll throw the same question to Charlie because people come in, they're like, oh yeah, I know that I want to underwrite deals and I want to do something like Aaron and Charlie and Alex are doing. I'm going to go underwrite a deal and maybe submit an LOI a month and see what happens. And they're just unclear the amount of volume that it takes. Can you perhaps talk a little bit about that?
- [19:24]
A
Yeah.
- [19:24]
C
I mean, again, it's very situational. It depends where you want to go and how fast you want to get there. Right. Pretty much everybody in Action Academy has made a commitment to a very lofty goal, usually a high financial goal. And also everyone's driven and motivated. So you're in a room full of people who are action takers, literally by the name of the group and just the DNA that these people have. So for the most part, like putting in the reps is actually not too hard when you're in an environment where everyone's doing that. But yeah, if you have a ton of top of funnel KPIs, but you don't have Any bottom of funnel. The classic one being people love to look at deals. People don't love to send offers because it's uncomfortable. You can analyze a hundred deals. If you only send one offer, you wasted a lot of that effort. Right. So I think there's creating the funnel of your activity and then making sure that you're not avoiding the uncomfortable one at the bottom. I think that's, you know, that's probably the most common pitfall. And so for us, in this instance, like, we have a lot of different work streams with residential assisted living. There's. Finding the deal itself was difficult. We're finding land and developing it from scratch. But we're also building different relationships across all these different verticals. Construction, marketing, capital raising. So it was really a lot of networking and relationships, which. That was the key bucket of activity. And so the submitting offers and the actual acquisition. We've been under contract since the end of January. There's still plenty of volume left. Going under contract is the beginning of the sprint, not the end. So, I mean, those are my quick thoughts. But what do you think, Charlie?
- [21:02]
B
Yeah. And then, Charlie, you helped with the underwriting a lot, correct?
- [21:05]
A
Yeah, yeah, I did.
- [21:06]
B
Well, yeah. So what I've found to be true is in particular with, like, commercial assets, what we see is a lot of people will either have a kink in their funnel, each part. So what. What I want to do here is both, like, help. Help the listener that's listening to this episode right now not only understand the transition to where you guys are today, but then also the asset class itself. So the kink is always either in, they don't have enough deals coming in, or they do have enough deals coming in. And now they're getting caught on underwriting. And then when they're caught in underwriting, they're now not sending enough offers. And because they're not sending enough offers, they're not even getting enough, like water running through the machine to figure out what's broken or not. So can you talk a little bit about, like, what. What the underwriting look like on this deal? Kind of. How do you think about underwriting when it comes to properties like this and maybe in this specific asset class and any advice that you can give to somebody following the same journey?
- [22:00]
A
Yeah, I think. Well, to address your earlier question, hey, maybe I'm not. I don't know enough about underwriting, or I don't know how to underwrite deals. You know, you have two options. You can either do the reps, you can partner up, and it's it's that simple. Always.
- [22:13]
B
Yeah.
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A
And what we found, I mean, through, you know, of course, Alex and Luke and now Aaron and other partnerships, we've just found that we can always go much further as a bunch of partners than we can on our own. Right. Aaron needed help with the underwriting, and I said, well, I'm, you know, an Air Force engineer. I did weapons development. I think I can help. Right. And so. And so that. So I did. Right. Just stepped in and helped with that piece because I could.
- [22:37]
C
Right.
- [22:37]
A
And. But that's not. Not everybody's naturally not drawn to that. Like Alex and Luke. Definitely not. That's not their thing. That is my thing. And that's why they brought me into what was originally their partnership. Right. Hey, I brought a different skill set. I also brought availability during the day. That was like my pitch, hey, guys, I. I have availability during the day. I'm out of the Air Force. Can you bring me in? Right. And that. That works. So grateful for that. They're great dudes and. And so that. But it all comes down, I think, to networking and, like you said, consistency and reps. Right. You have either option. If you don't want to put in the work for that specific task, bring somebody on. Like, we just brought in Ryan from the Action Academy to help us with acquisitions because we're time tapped. Right? So just bring. Bring more folks in because you can always do more together than you can on your own when it comes to the underwriting for this. Yeah, it's definitely a very complex deal. You know, syndications are always quite a bit complex, but the end of the day, it's really kind of a cool structure that Aaron built. What Aaron did is, you know, a typical syndication. You're looking at, like a five to seven year hold, and then you get your money back roughly 2x20 IRR. Those are kind of all the target goals that everybody looks for in a passive syndication as an LP position. But, you know, this is a development. So there's going to be essentially two years without returns to investors. So what Aaron did is, hey, we. We already know that it's gonna. If everything goes as planned, conservative underwriting, hey, we're gonna get that return for folks. We're gonna get them a 2x multiple by year 6 with that refinance at the new value, the new future value, which we expect will be even higher than the current appraised value. So we're gonna give everybody's money back at year six and double their money year six. And then we're gonna leave them in the deal and split 5050 on revenue with them for four more years. We're gonna give them free cash flow. They've gotten their money back 2x and they're gonna get free cash flow as a thank you for investing in a development deal where they essentially get zero returns in the first two years. So I just think that that's so cool and so unique. You know most operators would be like nah, we, you know we paid and we paid our investors back and they're out now. And Aaron's like no, you know what, they're committing to this opportunity with us. They are our partners in the deal literally. And so we're going to pay them 50, 50 split extra through for another four years.
- [25:03]
B
Yeah, I absolutely love that. I think that that's a, that's a great thing. And then that's also kind of what we're doing with the hotel. Same, same dig because we're doing a new development. It'll be ready 20, 27. And so it's just like kind of. Yeah. Afterwards in perpetuity you get to participate in the cash flow afterwards. I think it's a wonderful strategy. Aaron, can you talk a little bit about like let's get into the specifics of this deal in particular. So what, what are maybe the top areas that you're most excited about and then what are some of the top challenges that you're going to be facing as you're going through this process?
- [25:35]
C
This is a very personal journey for Andrea and I in that we can really especially her pour our hearts into providing the quality of care that we would want for our loved ones. So the impact component really is front and center for us and what is going to propel us through all the challenges that we will inevitably face in a, in a deal of this magnitude. But the part of the reasons that I'm excited from the business opportunity standpoint, we're building into an extreme existing demand. So even within six miles of this lot there are, there's a current 150 bed shortage for assisted living and memory care. We're building 32 beds and there are zero other comparable projects in the development pipeline. So that 150 will likely increase over the coming year and a half that it takes for us to get fully online. So we're building into very strong demand. The rates we're able to charge have been validated by third party market research and by our appraisal. And so we feel very strong about our plan and our ability to absorb the demand in the market. The location is right in the heart of what's called a medical complex drive in Tomball, which is a northwest suburb of Houston. Tomball is a beautiful town that's really preserved its small town feel even though it's within a metro of 8 million people. So you got the small town feel, but you have access to a large population center and medical complex Drive is two minutes to the closest hospital and specialty doctors. So for people that are dealing with difficult conditions and trying to live the highest quality of life possible, we also believe it's one of the most convenient locations. Charlie mentioned this earlier, but actually one of the biggest feeders into homes like this are people that are disaffected consumers of big box products that hate the experience like how my wife did. And so we are positioned well also to be around places that might feed into our business. So we're just excited to build all these connections within the community, both healthcare and non healthcare. Meet the moment. Right. This is, we're meeting an existing demand. We didn't go seeking a solution or, you know, seeking a problem and trying to wedge our solution onto it. Like this is actually in response to real demand out in the market that we've validated 10 different ways.
- [27:48]
B
Beautiful. And then what are the challenges that we're anticipating with this?
- [27:53]
C
Yeah, so you know, two primary buckets, right? It's a development project. So construction is always on people's mind. We are very lucky to have a great team. It's kind of three pronged. So in addition to us as the core sponsors, we actually hired Bailey Fate and his partner Blake from Bailey's an Action Academy member. He started a construction consulting company. So they're acting as our owner's rep and they're coming in and doing very granular project management. They have a ton of experience with commercial development. Billions of dollars of projects that they've managed collectively. We also have Brett and Laura and their team that I mentioned earlier. They're our mentors. They built these exact buildings in Georgetown. And so their construction consultant is working with Bailey, working with us. And then we have our local GC who has been building. He is a family run business. They've been in Tomball with decades of experience with commercial projects. They have a very great reputation. And so between those three, we feel we have the right people in the right seats to execute the construction plan that we're working on. People are always asking about tariffs, people are asking about supplies. These guys have a handle on how they're going to source when they're going to source how they're going to store all these details. And we've also made that available to potential investors that want to look behind the hood there. The second one that is probably the biggest ongoing challenge will be staffing. So this is an industry notorious for high churn. Like we mentioned, the culture in big box facilities is not a good one. People enter those jobs, they're relatively thankless. So oftentimes they're not treated that well. So there's a lot of jaded people in this industry. They're willing to do the work, but they don't like the environment that they're in. So we're going to counter that by creating an incredible culture. Again, Andrea, this is like her life's calling. There's so much passion behind making sure we solve that problem so that we can hire and retain good staff. Joseph Raspberry is another Action Academy member. We brought him on. He's got, you know, a decade plus of clinical ops and bedside facing care experience. And so he's going to work with Andrea to help create the policies and make sure that we're hiring and retaining the best staff we possibly can. We know there's going to be churn. We've budgeted for that. But we also know that that's an area that we can make a market improvement on. What is now a pretty poor standard across the industry.
- [30:13]
B
Beautiful, man. Yeah. You can tell that you guys are in the pitch circuit. Like, you're polished, you cut everything down, man. No, it's amazing, truly. Charlie, I'm curious, like, for this project in particular, how does this compare kind of in differences to your current, already established RAL portfolio?
- [30:33]
A
Yeah. So most of our assisted living homes, we kind of have two different asset classes. We have, we have a handful of homes that are leased operator. So for those, they're either built or renovated to suit for assisted living. But we're, we're commercially leasing them out. You know, we're not involved in the actual operations. So for one, we're going to be, you know, on the GP of an actual operation with Aaron. And we do, we are partners on a few operations on some homes in the Wisconsin area. However, those were not new developments. Those were kind of repositions, renovation style repositions. So this is a new development project for us, which is great because we're now under contract to do something very similar in Winchester, Virginia. And so we're going to be hopefully developing from the ground up as well. So we're kind of getting building out experience together with Aaron and helping that out with our own project. So yeah, we're very excited to be a part of this and to help Aaron's team bring our especially real estate experience and network in assisted living to the project and then they kind of leverage what we learned for our own project. So it's very exciting.
- [31:41]
B
Beautiful. So Aaron, what's, what's next? You know, walk us through a little bit about where the raise is right now. Like is this still available? I'm assuming this is a 506C now if I'm correct, walk us through a little bit of the details.
- [31:55]
C
Yeah. So without getting too nerdy on the SEC stuff, basically we did this in two rounds. We did one round of 506B which is an offering only available to friends, family and people we had a pre existing relationship with. We were able to raise over a million dollars in that round and we just a couple weeks ago opened it up to a 506C which means we can now accept any accredited investor must be a US citizen. But we, that round has been going really well. We've, we've, this is part of where partnering with Charlie, Alex and Luke has been incredible because they've built for the last several years a network of people who are interested in either starting or investing in their own residential assisted living deal. So we've been able to open this up to a broad network. We're really grateful for the opportunity to share about this Brian, to your network. As you know, largely I run in these circles now with Action Academy and other other folks that are drawn to the show. But yeah, we're still raising. We have currently our Deadline is Friday, August 8th for funding and signatures. We're hosting office hours pretty much weekly. Also very available for one on one calls. We created a cool landing page where you can actually key in what your investment amount would be and it'll project year by year based on our underwriting, what your returns would be and it explains very granularly what you can expect. So we put together a ton of assets and resources. It's been a wild ride. This is our first capital raise of this magnitude. It's been so fun to connect with people. Honestly one of the other big benefits that we found from the people that have invested so far is that there are a lot of people that are really intrigued by this industry. They don't know if they are interested in doing it themselves but this is a front row seat. Right. By investing you're going to see real decisions being made. You're going to see the full business plan run End to end from development to operations and get the benefit of essentially asking any questions along the way. So there's a lot of people that have joined that are doing it for that reason and I would be elated to talk to anybody who's interested.
- [33:53]
B
Beautiful. And so what's kind of the return profile? Walk us through. If somebody's listening to this right now they are accredited, which as a reminder is going to be somebody that has personal net worth of a million dollars or more excluding their primary residence and or you've made $200,000 take home over the last two years with reasonable expectation of doing that the same this year. So what would be the return profiles like what are they expecting?
- [34:18]
C
Yeah, so it's a development project. So the first year is dedicated to construction. Our GC estimated 10 months, we're budgeting 12. The second year is dedicated towards lease up. So there's some licensing stuff you got to work through. At first you can open with a limited capacity, then you have to ramp up to full capacity. We budgeted an entire year for that. We hope we can improve upon that but we wanted to be conservative. So essentially those first two years we actually started accruing preferred return as soon as we start generating revenue. So even though distributions don't start until year three, investors are accruing a preferred return that we owe to them before the GPS take any split. Heavy cash flow starts in years three and run through year six. When we do our refi average cash on cash return will be around 18.5% during that period. So even though you don't get distributions for the first two years it kicks in pretty heavy there. Then we aim for a refi at the end of year six at which point, as Charlie mentioned, we will have already doubled our money so it'll be over a 2x multiple by the end of year six. The unique structure that we added at the end was four additional years of residual distributions at a 50% profit share and that gets us to our target return of over 20% IRR. With it being a development project we want to honor the risk that people are taking and make sure that they're getting a return that is commensurate with that risk. And getting over a 20% time value adjusted return was an important metric to us. So that's how we built our model.
- [35:50]
B
Beautiful. So if people are wanting to learn more about this, if they want to check this out, where can they go to find out more?
- [35:55]
C
So the project is called Everwood Reserve. You can go and check out that Landing page with the calculator@everwoodreserve.com we also have our webinar and a link to book one on one call with myself or our partner Joseph. And happy to talk to anybody run through line by line. No question is too big, no question is too small. This is, you know, this is where we're at and happy to have the conversation.
- [36:21]
B
Beautiful. Anything in closing Charlie?
- [36:23]
A
No, just excited to be here, excited for this project. It's, it really is the, the most beautiful model I think in like combining real estate and business right now and really one of the biggest opportunities in, in business. So really excited to be a part of this and yeah have folks are more than welcome to reach out. We we'd love to have you join our team.
- [36:43]
B
So guys with that we'll have Everwood Reserve in the show description. We'll have the link there for everybody to that is interested to click. And man it's been awesome watching you Aaron over the last three years. I remember the first time we met you and your pregnant wife with twins showed up to Costa Rica back at our first event where we thought hey, it's a pretty normal thing for us to just have like two big houses and then of course people just share beds. Why wouldn't you share beds? Like we had two dudes to the same bed because we didn't know anything. Thankfully you guys had your own room so you're okay. But man it's been cool to watch from that to, to where we are today. Man it's, it's been fun to watch your journey and honored to be a small, small part of it. So guys, thank you so much for coming on. Guys, if you want to invest 506c, you must be an accredited investor to go and check out Aaron and Charlie's offering. Find it in the link and then talk very soon. So guys, thanks so much for coming.
- [37:41]
C
Thanks so much Brian.
- [37:42]
A
Cheers Brian. Thanks.
- [37:44]
B
It's been Brian, Charlie and Aaron with the Action Academy podcast signing off.