This "Boring" Business Pays $20K/Month PER HOUSE with Mitch Conrad

Summary

Podcast Summary: The BetterLife Podcast

Episode: "This 'Boring' Business Pays $20K/Month PER HOUSE with Mitch Conrad"

Host(s): Brandon Turner & Cam Cathcart
Guest: Mitch Conrad
Date: March 10, 2026

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Episode Overview

This episode of the BetterLife Podcast dives into the profitable and mission-driven world of residential assisted living (RAL). Brandon Turner and Cam Cathcart interview Mitch Conrad, a former teacher turned highly successful RAL operator, who reveals how a single home can net $20,000 per month, the nuts and bolts of managing senior care properties, and the realities (business and ethical) behind the “silver tsunami” of America’s aging population. The conversation is rich with practical advice for real estate investors interested in combining real estate wealth-building with meaningful service – and why this “boring” business might be a path to a BetterLife.

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Key Discussion Points & Insights

1. What is Residential Assisted Living?

• Definition: RAL is housing for seniors who need daily living assistance but do not require 24/7 skilled nursing care. It blends real estate ownership with an operating business focused on care.
• Services Provided: Includes medication management, daily meals, activities, companionship, and overseeing residents’ well-being ([04:50]).
• Property Types: Mitch targets homes with 14–16 bedrooms, often large ranch homes remodeled for this use ([04:26], [16:19]).

2. Income Potential & Business Model

• Profits: Top homes net about $20,000/month after expenses ([04:16]).
• Revenue Drivers: Average rent per room is $6,500–$7,000; high-end services and private bathrooms command more ([15:23]).
• Expenses: Biggest costs are staffing (>50% of revenue), plus mortgage, insurance (liability, employee practices, cybersecurity), utilities, and maintenance ([31:31]).
• Dual Value Creation: RAL is both a real estate play (appreciation, tax advantages) and a high-margin operating business ([07:47], [48:21]).

3. Barriers to Entry

• Regulation: Highly-regulated at the state level; homes and administrators must be licensed ([11:22]).
• Required Experience: Not strictly necessary, but deep operational knowledge and a strong heart for senior care is vital ([07:21], [66:20]).
• Neighborhood Resistance: Zoning and neighbor backlash are common obstacles to starting new homes—easier to take over existing, licensed properties ([36:50]).

4. How to Find and Acquire Properties

• Two Main Strategies:
  • Buy/renovate large homes to conform to RAL requirements (wider doors, many bathrooms, fire suppression, ramps).
  • Purchase or take over existing failing or shuttered facilities—the “easier” route, as these properties are already up to code ([16:19], [16:38]).
• Sourcing Tools: MLS keyword searches, leveraging agent relationships, and tapping into beleaguered operators ready to exit ([17:38], [17:59]).

5. Filling and Operating Homes

• Occupancy: Success depends on quality of care. Reputation can make or break occupancy rates ([59:33]).
• Filling Units: SEO-optimized websites, placement agents (where legal), and family referrals are primary marketing tools ([56:55]).
• Competition: High in sunbelt states (e.g., Arizona, Florida), but demand still massively outstrips supply due to the aging population ([36:15], [24:49]).

6. The Silver Tsunami & Market Timing

• Macro Trends: America is on the edge of an eldercare wave as baby boomers age (average RAL resident is 85); largest demand is still ahead ([23:51]).
• Explosion in Demand: By 2035, demand for beds will outstrip supply by 7:1 ([24:36]).
• AI and Longevity: Advancements in healthcare and AI may extend lifespans, potentially deepening the care shortage ([25:47]).

7. Financing Structures

• Small-Scale Financing: Hard money loans, private lenders for conversions, often followed by SBA refinance (up to 90% LTV, [46:08]).
• Scaling Up: Regional banks become accessible as you grow; the “Holy Grail” is HUD lending (for large portfolios, 40-year amortization, low down payment) ([51:53]).
• Creative Acquisitions: Lease options with “zero-down” if you can prove value creation through operations, sometimes turning around failed properties and acquiring them at a discount ([54:07]).

8. Ethical Dilemmas & Operator Reputation

• Heart Required: Operating RAL is not for pure-profit seekers. Poor care, underpaying staff, and “cutting corners” can yield high profits but devastate lives and reputation ([63:39]).
• Moral Philosophy: “Anybody can do this, but you need the right heart,” says Mitch. The “spend down” policy (allowing private pay residents who run out of funds to stay on Medicaid rates) illustrates this commitment ([66:20]).

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Notable Quotes & Memorable Moments

• On Profits:
  “Our best residential homes make about $20,000 a month.”
  — Mitch Conrad ([04:16])

• On Challenges:
  “If your heart’s not in it, you really should not do this business because you’re dealing with people’s lives.”
  — Mitch Conrad ([05:46])

• On Regulation:
  “The state health department is always in charge. So you have to license your facility or your home and the person running it has to also be licensed.”
  — Mitch Conrad ([11:22])

• On Demand:
  “The Silver Tsunami… baby boomers entering this age group, average age is 85 for assisted living… We’re right on the front of this wave.”
  — Mitch Conrad ([23:51])

• On Challenges with Zoning:
  “The neighbors come out in droves… We thought everybody’s gonna love this, but they were so upset. Their biggest gripes were: we’re gonna kill their property values and bring in all this riff raff…”
  — Mitch Conrad ([37:02])

• On Ethical Pitfalls:
  “You can be a terrible operator, like a terrible person, and still make a lot of money… It’s more of a moral, like, are you willing to sacrifice your morals to make a little bit more money by serving crappy food and hiring not great employees?”
  — Cam Cathcart’s friend, paraphrased ([62:24])

• On Family Impact:
  “…We have high standards. …Our staff with the residents are sometimes closer than the residents with their families because they see them every day and they know everything about them.”
  — Mitch Conrad ([64:26])

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Practical Takeaways

• Start with Heart: Profit is real and substantial, but care quality must be central for long-term success.
• Easiest Entry: Buy existing, licensed, or shuttered RAL homes to avoid zoning and regulatory headaches.
• Team Building: Over half of revenue goes to well-selected and well-trained staff; they are the backbone of the operation.
• Financing Evolves: Small-scale investors can start with hard money, but scale brings in better terms via SBA, regional banks, and even HUD.
• Reputation Matters: In the age of Nextdoor and online reviews, a single incident can tank your occupancy – operate with integrity.
• Markets: Sunbelt states have high demand, but also more competition. Secondary markets near affluent areas offer opportunities ([41:54]).
• Don’t Overlook Management: Scaling up requires serious systems to check your systems ([23:20]).

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Timestamps for Key Segments

• Introduction & Host Banter/Jokes: [00:00–02:24]
• What is Residential Assisted Living? [04:33]
• Profitability & Business Model Explained: [04:16–05:23], [15:23]
• Regulatory Overview: [11:03–12:18]
• Finding Deals & Acquisition Stories: [16:01–18:24]
• Mitch’s Journey from Teacher to RAL Operator: [18:39–23:04]
• The Silver Tsunami Explained: [23:51–24:49]
• Managing Homes & Staffing Realities: [31:31, 61:05]
• Neighborhood & Zoning Challenges: [36:50–40:51]
• Financing Deep Dive: [42:33–48:21], [51:53–55:28]
• Filling Homes & Management: [56:39–58:18]
• Risks and Ethics: [62:24–63:39]
• Final Thoughts & Advice: [66:20]

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Final Thoughts

Mitch Conrad demystifies the myth that residential assisted living is out of reach for small investors or only for healthcare professionals. The opportunity, especially as the population ages, is profound—if approached with genuine care for seniors and a rigorous business approach. RAL offers a wealth-building path that actually improves lives, but operators must respect the responsibility, build robust systems, and protect their reputations.

"Anybody can do this, but you have to have the right heart."
– Mitch Conrad ([66:20])

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For more, visit:

• CashflowIsntDead.com for Brandon’s ebook and strategy survey.
• Look out for Mitch Conrad’s content and future appearances for aspiring RAL operators.

Transcript

[A]

This is the Better Life podcast. I'm your host, Mr. Brandon Turner, here

[B]

with my co host, Cam Cathcart.

[A]

Cam Cathcart. Buddy, what's up? Not much, man.

[B]

How are you doing, dude?

[A]

I am phenomenal. I spent two hours preparing for this podcast, setting everything up, and my office has never looked cleaner.

[B]

You did a great job.

[A]

It's pretty good, right? Look at how good we look in this camera. Dang. We look good. If you're watching this or if you're listening on Spotify right now or Apple, you're missing out on how good looking cameras.

[B]

I chipped one of my teeth. Did you see that one? It's like half as big.

[A]

Yeah. What happened?

[B]

I had a veneer in. The veneer, like, cracked off. And then so I went to try and get this replaced. Like, we probably should just do all of your veneers because I messed up my teeth playing basketball in high school and. But you know how much veneers are these days?

[A]

No, I have no idea.

[B]

$12,000.

[A]

No.

[B]

Yes.

[A]

No.

[C]

Yeah.

[B]

So I'm just going to write it out, but I'm self conscious about it.

[A]

I did not notice anything. Yeah, you look fine. You also down like 20 pounds, according to you.

[B]

I'm losing weight.

[A]

That's great. How are you losing weight?

[B]

So I. I can tell you exactly how I'm.

[A]

Yeah. What are you doing?

[B]

I am eating chili three times a day.

[A]

Chili.

[B]

Chili, but like 96 for ground beef, so no fat in it. Beans, onions, some bell peppers, a couple cans of tomato sauce. So it's super healthy. I. I literally eat that three times a day.

[C]

At night.

[B]

I'll put it over rice so I can get some carbs in me. Um, but I. If I. If I like, give myself any leeway, it just turns into eating Oreo cookies and drinking beer. And so it's like I just. I have to do that.

[A]

Do you ever put Cheez Whiz on your. On your chili?

[B]

No.

[C]

No.

[B]

I mean, yes, it's. Yes, I have in the past and usually load it up with sour cream and then grind some Fritos over that.

[A]

I do. I do have a question about cheese whiz. What do you call an empty can of Cheez Whiz? Empty can of Cheese Whiz.

[B]

I didn't realize you were trying to

[A]

lead it into a joke. Oh, I'm a podcaster. I can lead us in wherever I need to. What do you call an empty can of Cheez Whiz?

[B]

What do you call an empty can of Cheese Whiz?

[A]

Cheese Was.

[B]

That's actually a good one.

[A]

It's pretty good.

[B]

The one that you told last week was.

[A]

I don't remember that one.

[B]

It was like something about your wife

[A]

and you're like, now, oh, yeah, you didn't get that?

[B]

Broke up or now we didn't work out or something.

[A]

Yeah, we were going to go to the gym together, but we didn't. She didn't show up, so we guess we didn't work out. Something like that. That's a good one, too. You didn't like that one.

[B]

I know I didn't not like it. I just did not get it. It went right over my head.

[A]

Well, speaking of over your head, today's topic is on assisted living. Residential assisted living or senior care? That is something that's over both Cam and I's head. Do you see the transition there?

[B]

Pret, You're a podcast. You've done this for.

[A]

So we are going to dive deep into that. And we brought in a special guest today, somebody that I have been learning from in this topic slightly, like, over the last few years whenever he comes to town. And today I said, well, this week I was like, dude, you're here. We're going to sit down. Cam and I are going to drill you for an hour at least on how do we get into residential assisted living. So without further ado, I'd like to welcome to the podcast Mitch Conrad.

[C]

Hi there. It's great to be here. Thanks for having me.

[A]

What's up, man? So, Mitch, where did we first meet? Do you remember? You were jogging, weren't you?

[C]

Oh, yeah.

[A]

Was that our first meeting?

[C]

I feel like it might have been.

[A]

You were like, jogging, and you were like, hey, that's Brandon. And so we started talking, and I

[C]

found I had my headphones on. I was listening.

[A]

Oh, there were you.

[C]

Really? Yeah. And there you were up there ahead getting in the car.

[A]

Well, we've had some good times since we've met, and we played some pickleball, and you destroyed me every time. And it happens. But I've always just been super impressed with your business and your business model and how you run it and what you've done. And every time we have a conversation, I walk away going, dana sounds so cool. I want to get into that. It reminds me of how I was, like, eight years ago with mobile home parks, where, like, I just kept talking to guys who did it. And I was like, man, that sounds so cool. It still is cool. I love mobile home parks. But now I'm like, man, I would like to add on to my open door capital portfolio with some senior care.

[B]

Yeah, I kind of don't want to do this podcast because I feel like,

[A]

yeah, I destroyed it for mobile home park. I really did. Like, exactly. I started talking, but this podcast is nowhere near as big as Bigger Pocket it was, so we're less worried about that. All right, Mitch, let's get into residential assisted living. I want to start with the big question, then we'll fill in all the. All the gaps. How much money is there to be made on assisted living?

[C]

I'd say our best residential homes make about 20,000amonth.

[A]

That's on a house?

[C]

Yes.

[A]

That's wild. How many bedrooms is a house like that?

[C]

Most of ours are 14 to 16. So they're large ranges, but, yeah, those are. That's kind of our target for each one.

[A]

Okay, so walk us through. Just for those who are brand new to the concept, what is residential assisted living or senior care? Am I even using the right terminology? Like, what is this thing? And then I want to make sure people have a firm understanding. Then we'll go and go all through, how do you find it, how do you finance it, how do you manage it, all that. But what is it?

[C]

Well, it's just caring for seniors and giving them a place to stay. So we do everything from managing their medications, because a lot of times they struggle with medications. That's one of the biggest issues. A lot of it's the loneliness of being home. So obviously, we give them camaraderie with our staff and with the other residents. We do a lot of activities. Of course, we feed them, and we got a good nutrition package. So we just take care of them every day as if we were their, you know, their parents.

[B]

It's amazing. And can anybody do residential assisted living? I feel like there's so much profit involved. And I was just looking the other day on a website that was selling homes, and they were all trading at like, a 16 to 20 cap and thought was, why is everybody not doing this? And so there. There must be some reason.

[A]

Sounds almost too good to be true. To make 10, $20,000 on a house like that. Sounds too good to be true.

[C]

Well, there's a lot of regulation and there's a lot. There's. There is quite a few that fail, mostly because they don't have good systems and don't take good care of seniors. If you. If your heart's not in it, you really should not do this business because you're. You're dealing with people's lives. And so that's the thing that I think separates it for us is we know we're doing good for people, and then our specialty is kind of turned into finding the properties that are struggling and about to get shut down, or sometimes they already have been shut down, and we go in and revive them.

[A]

Interesting. Yeah. I bought a failed residential assisted living house in outside of Atlanta, and I bought it, and I use it as a pad split. So I rented out by the bedroom. We have 10 bedrooms in there. But I'm wondering now, like, say that's.

[B]

That's a terrible idea to.

[A]

Yeah, but I mean, that thing's like printing money. But it's printing money at, like, you know, fifteen hundred dollars a month in cash flow. I'm, like, profiting about fifteen hundred bucks. But now I'm like, dang, could I get fifteen thousand if I turned it back into a residential. Now I don't have the systems for that, which is why I want to talk with you about that. And I think you bring up, like, such a great point. And it's not just assisted living. It's almost anybody who starts a business, and that was the set. 90% of businesses fail. It's not because businesses don't work. It's because 90% of people don't know how to run a business. They don't have systems, and they don't have processes. They don't understand what an SOP or how to hire or how to fire, and they don't know any of that. So if I think I'm pretty decent at it, I think, Cam, you're decent at it. So I like. I'm asking your thoughts here, Mitch. Will we be okay in assisted living if we get into this?

[C]

Absolutely. I think we've seen a lot of success stories out there, so we're just one of them. And we make mistakes, we hire the wrong people, but we're always watching and taking care of it as soon as we see something. So, you know, there is no perfect business out there. And that's the biggest difference in that it can make money because it's not just real estate. It's real estate and a business attached to it.

[A]

Yeah.

[C]

So. But that's a big advantage, too, because with the real estate, you get all the tax deductions and everything, but yet you've got a business that is creating extra cash flow.

[A]

So residential assisted living is one of the 20 fringe strategies that I have. I have an ebook I wrote called Cash Flow Isn't Dead, and I think about 20 strategies that work better than traditional rentals traditional rentals like buy a house 20% down, put a tenant in there. Doesn't really work in today's market. It very well maybe at all. Like right, like I know you struggle with it. I struggle. It's hard to find when you're paying 7% interest and you're paying twice what a house was two years ago and rents haven't gone up that much. Hard to make it work. But I've identified like 20 of these fringe strategies, obviously assisted livings being one of them. Co living is one of them, midterm rental is one of them and there's 17 more. Anyway, hey, this is for everybody listening or watching. If you go to Cashflow isn't Dead Dot com. I actually built a like five question survey. Asks you about you, what you're interested in, how much time you have, where you're at in your investing and it'll actually help you identify which of those 20 might be good for you to look into. Totally free. Go check it out and when you're done with the survey you can then download the book which has a good couple pages on each one of them including some stories and all that. So all that for free. Just go to Cash Flow isn't Dead Dot com. Anyway, Cam, you were to say.

[B]

I was going to say with this. So I take it back to flipping. I started flipping houses for financial freedom. Love it. But have just kind of built myself a really well paying job. Is that the same for assisted residential assisted living or is there a way where it's like, hey, I can be pretty hands off in it?

[C]

I would say it can move to that. But if you're small then you kind of have to chip in and do the work. But as you get larger, I think you're able to take yourself out.

[B]

Gotcha.

[A]

Yeah. So you can systematize a lot of things and hire. Are we talking, by the way, are we hiring doctors, nurses, like who are working at these things? How hard is it to find people? I know we'll get into management maybe a little bit later, but I'm just wondering the setup, like who works at these things and is it 24 7?

[C]

Yeah, it is 24 7, but we don't hire doctors and nurses. Now we have some doctors that round and go around the houses on staff or you just. No, not on staff. They'll come around and it's just a setup that we do to kind of keep an extra eye on them. Now we do have two nurses on our staff, but that's unusual for residential assisted living. It's just because of the scale that we have. We have 22 residential assisted living homes and then four larger communities. So because of our size, we have a rounding nurse and another nurse that just checks all the medications and just make sure everything's buttoned up so that we don't get into trouble with the state. We know everything's being done right.

[B]

And are you primarily located in one region or are you all over the place?

[C]

Well, we started out in Colorado, So we were 100% in Colorado, but now we have branched out. About a year and a half ago we got 120 bed facility in Scottsdale, Arizona and then last fall we got about an 80 bed memory care facility in Las Vegas.

[A]

Oh, wow, that's huge. I want to go through a little bit of the legal side just for a minute. I mean, obviously we're not lawyers and you're not a lawyer, but what does it look like to run one of these facilities from a legal standpoint? Do I have to be licensed in some way? Are there multiple licenses? Is this federal? Is it state? Who governs all this stuff? And what do I need to know if I want to open up one? Let's say here in Hawaii.

[C]

Yeah, it's. The state health department is always in charge. So you have to license your facility or your home and the person run it has to also be licensed.

[A]

Other classes have to take them or something like this. Yeah.

[C]

So it varies from state to state what those requirements are.

[B]

When you say the person running it, like the house manager or.

[C]

Okay, it. Well, it could be like in our situation, my wife is the administrator of all of our properties in Colorado.

[A]

Okay.

[C]

Now she is not the administrator for our two out of state ones. Now they usually have. Well, it's not a written rule, but they start looking at you a little sideways if you have six or seven homes under one administrator. But I think because our record is so clean with the state, as long as we stay clean, then my wife is the administrator for all of them.

[A]

That makes sense. So can an administrator be an employee or does it have to be like an owner? Does it have to be me?

[C]

My wife, it can be an employee.

[A]

So I could hire someone, have them go get the license for the administrator. Yes, they build out the, the management side of this and we can maybe talk, you know, more about that later about how you guys manage. And then they. We could open up a, a facility here on. I want to, I want to pitch an idea to you. Not from like a. I want you to invest in it, but I want you to help me think through this. Is this a good idea or not? And I don't, I don't mind. Like, I, I'm usually pretty open on publicly talking about my ideas because most people never do. Nobody's going to steal my idea. So I bought the domain name send mom to Maui.com and I have this idea. Okay, yes, I had this idea around. There's a place for mom.com, which is a popular website. So I kind of on the same idea is you're, you're a 45 year old, you know, executive, you live in Texas, you grew up in Ohio, though Mom's still in Ohio. You're down in Texas making, you know, six, seven figures at your job, doing just fine. You're like, man, my mom is stuck in Ohio in the winter. She doesn't have a lot of family left. You don't really want mom to move in with you, so instead you send mom to Maui. Right. And I have, I have a theory and I would, I would love to test it as I want to open up a facility here, just one to start with. Run ads to that demographic of wealthier people between like 40 and 50. Have them send their mom to Maui and then include a condo stay twice a year. Like, I'll buy. I have a condo here. Include a condo stay for anybody who has their parent at the thing. So they get to come out and visit their mom twice a year. Free trip to, you know, free quote, unquote, trip to Maui. That's my idea. Tear it apart, tell me where I'm right, where I'm wrong. You think it's a good idea? Bad idea?

[C]

I think it's a good idea. I don't know how many people would be able to do that. But if you find the right demographic, the people that have the money, I mean, I don't know what you'd have to charge here. I don't know what your labor costs are for the staff to run it and things like that. And then the property itself would be pretty expensive here, I'm sure as well.

[A]

Maybe we can dig into the numbers a little bit here. You mentioned you could potentially make $20,000 off of a house. That's great. How does that work? Who's paying $20,000? What's a per bedro? Bedrooms are normal. Can you walk through some of the money side of this?

[C]

Sure. It really depends on the care level. So there's independent living, assisted living, and then our highest level is memory care. So now there's another level above that. It's skilled nursing, and that's a whole different regulation level. So we don't go there. There's actually a level before that called active adult. So there's all different levels. They all cost or charge different amounts. And of course, for us, it's also based on location. It's based on the amenities in the home. Do they have their own private bathroom? Is it a half bathroom? Is it a full bathroom? How large is the room? All those things affect the price that we charge them. But I would say, on average, we're probably 6,500 to 7,000 per month for a bedroom. Yes.

[A]

Wow. So that's where, if you get, let's say you had 10 rooms in a house and you're getting 7,000 a piece, you might bring in 70,000 in top line revenue.

[C]

Correct.

[A]

And then you got to pay your staff, though, and that's what you've got to pay. The mortgage and insurance taxes. Are there ongoing. Like, there's probably a lot of insurance costs, I'm assuming a lot.

[C]

Yes.

[A]

Yeah.

[C]

Yeah, That's a big one. Liability insurance. And as we've gotten larger, we've actually piled on more insurance on top of things. Like when we were small, we didn't have employee practices insurance or cybersecurity insurance, all these things. As we've gotten larger, we've got more expenses.

[B]

And with, like, how are you finding these deals? Are you buying just a house and renovating it into what you want, or are you buying existing? I know you said that earlier, residential assisted living that might have failed or not be operationally sound. How are you. How are you finding these?

[C]

Well, originally we were doing the first model, you said we were finding just large ranch homes, and we go in and remodel them, you know, widen all the doorways. We would put in a fire suppression system. So if there's a fire every. Sprinkles everywhere.

[A]

That's inexpensive.

[C]

It is, yeah. It's. I mean, when we first started doing it 10 years ago, it was probably 24,000. I don't even know now, because we've gotten away from that model. Two of our first three, we did it that way. And then I was actually looking for another one, and I was on the MLS and I found this large ranch not too far from the first one we did. And so I was like, okay, well, that'd be good. It'd be easy to share the staff there. And then I looked in the description and it said that it's operating as an assisted living home. I had no idea. I'VE driven by it many times and I didn't know it was an assisted living home. And so we ended up buying that one and it was so much easier. They already had the fire suppression system. All the doorways were already 36 inches wide. There were no, you know, you didn't have to add any ramps or, you know, all the things were taken care of. We just cleaned it up and made it nicer.

[A]

I wonder if there's a way to use an AI bot of some kind like, you know, OpenClaw or one of those new things that's coming out to scan the MLS continually in a market and just look for those little keywords of things. Like to find out if it is it being run as an assisted living and just not marketing. That way you can get in quicker. I bet there's a way to do that. Somebody's smart with that stuff. Figure it out and tell me.

[C]

Well, and I, I was a real estate agent. Well, I still am. And I help people get started with residential assisted living, especially in Colorado. Yeah. But I put in keywords that IT searches and so I do get updates. Anytime one of them comes up, if the word assisted living is in there or senior living or I just independent living, anything, I get notified.

[A]

Yeah, that's smart, setting up those keywords. That's cool. Well, I'd love to. Before we go into deep in finding financing all the specifics, let's talk through your story for a minute. I'm assuming you didn't grow up doing assisted living. So what were you doing earlier in your career before real estate? And then how did you get into the real estate game?

[C]

Okay, well, I started right out of college. I was a teacher. So like at a school?

[A]

Like high school?

[C]

Yep, I did high school. I was a teacher and a Coach. Taught for 30 years.

[A]

What subjects?

[C]

Math and computer science.

[A]

Okay.

[C]

Yeah. And then I coach basketball.

[A]

Did I ever tell you that I want to be a math teacher?

[C]

Oh, is that right?

[A]

Yeah, that was my plan throughout high school was be a math teacher. Anyway, didn't work out.

[C]

I enjoyed it. It was, it was great. But then during that I started doing real estate because as a teacher, a lot of teachers in the summer would go out and get a summer job and. But I was coaching all the. I out coach in three sports. So my summers were packed because we'd have in football, we'd have weightlifting and then basketball, you'd have your summer leagues and your camps. And I also coached track, but in the summer we didn't do a whole lot there. But I couldn't go out and get another job. So my great idea was to get into real estate. And so I started doing multifamily. I bought a triplex, was my first one. Went in and fixed it up. I wasn't super handy, but I like to learn and I just jumped in and did what I could. I had a buddy that was good so he'd come out and help me anytime I got stuck. And I actually had a contractor finish the basements. It was a triplex that was a ranch style, side by side and he finished the basements for me and I updated everything upstairs.

[A]

Oh, cool.

[C]

And so then that just kind of launched it from there, started getting in. Then I started doing larger multifamily stuff. In fact, I had a 26 unit apartment complex in Phoenix. At one point I did another complex in Houston because I thought Denver prices were going a little bit crazy. So that's when I ventured out. And then we hit a rough patch with our one in Houston. It actually caught on fire and somebody was cooking late at night and burnt it. And my first thought was, well, you know, we'll sue them and, but they don't, they don't have anything. And quickly I realized that was just going to be back on my insurance. So anyway, we got through that and then my wife's father had a stroke and I just happened to go to a real estate meetup group and they talked about residential assisted living. And my first thought was, I don't, I almost didn't go because I was like, I wanted to hear about old folks homes, you know, and, and, but I went ahead and just thought, well, I'll check it out network. Anyway, so. And it was the first meeting I had gone to, in fact, because it was. My basketball season had just ended. So this was. They had monthly meetings and I went in March and, and so I was, okay, let's see what this is about. And by the end of that meeting I was like, this might be perfect for us, for her dad. He might need that down the road. We don't know his situation, what it's going to be months down the road. And I didn't want to do all the care and getting licensed, being the administrator. So I took it home to my wife and I said, I got this great idea. It's got the real estate that I love. We can renovate homes. Would you be interested in being the administrator and doing the staffing and you know, running a home? And she's like, I would love to do that. Yeah, of Course now she doesn't say she'd love to.

[B]

Was her background in that She's a teacher also. Oh, she was a teacher also. Okay.

[C]

Yeah. So we were just educators that did real estate and then just got into senior living with. Our grand plan was to do three residential homes and get them fairly close together so we could share staff if somebody called off or. And it just exploded on us after. Actually, after I got my second one done, then a portfolio landed in our lap. So then we were off to the races after that.

[A]

Dude, that's wild. Like from teacher. Like high school teacher and a high school coach. How many beds do you have total now?

[C]

I think we have 650.

[A]

That's amazing. And you're out like 5,000 plus on average, like, each bet. I know. Obviously that's not all profit. Like, most of that's not profit, but, like, that's a crazy amount of money. That's millions and millions and millions of dollars.

[C]

It's kind of scary, but we just keep adding zeros, you know, it's still the same work as what we started day one.

[A]

Do you find it. This is a weird question, but, like, do you find it easier today than when you first started because now you have systems and processes or just get. As you get bigger, is it more challenging?

[C]

As it gets bigger, you just find new issues and your systems become so important because you can't watch everything.

[A]

So.

[C]

And then we create all these systems, and it's a great system, but who's checking that system? So the system's there, so now we got systems to check those systems.

[A]

So another reason I like not to take us on a tangent. Another reason I like residential assisted living. Two reasons. One, we call the Silver Tsunami. Can you explain what does that mean and why is that such a big thing right now?

[C]

Well, it's the concept that the baby boomers are coming into that age group for assisted living. Baby boomers have affected society and financial situations all their way through. And the average age for assisted living is 85 years old. And so the oldest baby boomers aren't even quite there yet. They're in their low 80s. So we're right on the front of this wave or the Silver Tsunami.

[A]

So it's. It's still. So we're not. We haven't missed it yet, I guess.

[B]

No, we haven't even hit it yet.

[A]

Yeah, we haven't really hit.

[C]

It's just starting. I mean, we get some that are, you know, being sure before 85, but that's the average age I saw by

[B]

2035 beds needed versus beds that there are will outnumber at 7 to 1.

[A]

That's.

[C]

I've heard similar numbers.

[A]

That's insane. Well, I think what people are not accounting for this is the second thing.

[B]

Well, can't you try $20,000 for a room at that point?

[A]

So what's fascinating, I guess what I don't think anybody's talking about and this is just prediction of the future. We don't know if it's going to happen. But when we talk about AI and how fast it's developing, there's that concept of the singularity when it just ramps up. So and we're in the next. It's in the next few years we're going to probably hit this moment of just exponential knowledge and growth that we can't see over that event horizon. However, unless if it doesn't destroy us all Terminator style, you know, and kill us all, there is a really good chance that the average age of life in America is about to extend significantly. And so all the data of the seven to one and all that is based on current death rates of Americans. I believe there is a good chance we're going to start seeing 10, 15, 20, 30 years added to our life, but not healthily. Like we're just going to keep people alive a lot longer. And if that happens, this gets real, real bad real quick in terms of like the need.

[B]

Brea on some podcast just the other day, which I know he's a little crazy, but he said that within. He said if you can make it past the next 10 years because there's going to be so much innovation over the next 10 years. He said you will live to be 130 years old.

[A]

Yeah, I believe it.

[B]

You have to live for the next 10 years. But he's like, we will find a cure for everything.

[C]

Yeah.

[B]

At that point.

[A]

And so. But we're going to have a bunch of really like maybe not large because those epics and all those are keeping people smaller in America now, which is wild. But the. We're just have so many people that are going to need help because I don't even think they're especially like the memory care stuff. Like I don't. Maybe we'll solve that. Maybe we'll solve Alzheimer's. They actually think they might with AI, but it just, it's going to be a massive problem.

[B]

They won't with AI. They will with nicotine.

[A]

Yeah, with nicotine. That's going to help.

[B]

Nicotine is what's going to solve Alzheimer's

[A]

but okay, so number one, I like it for that reason. The Silver Tsunami coming. I love that we can. Multiple reasons. One, I love that there's a. A massive demand. A metaphor I use all the time is, like, when we go whale watching out here on paddle boards, which we do every year. It's that season. In fact, I haven't been out this year. Well, I went once with Brody, but I haven't met again. You do?

[B]

Oh, yeah. I love that text.

[A]

You got invited to that one.

[B]

No, I didn't.

[A]

You did get invited that one.

[B]

I somehow I. I get a lot of texts that I don't get.

[A]

I know you. Did you respond to any of the texts I sent you earlier today? No, you didn't. Because you didn't send me. All right, so anyway, when a whale. When you're whale watching, you paddle. Not to wear whale is you paddle far ahead of the whale where it's going, and you see the whale on the horizon, it's moving, you get in front of it, then the whale gets to you. That's how you get to meet a whale. And you get up close. And every time we go whale hunting on a paddle board, we get the whale up close. The same thing applies to. We're getting in the way of the Silver Tsunami. We learn it today, and in five years from now, 10 years from now, we're going to be just cranking if you're good enough at it. So, like, now is the time, I believe, to get into it and learn it. That's one reason I like it. Two, I love the fact that you mentioned it earlier. We're taking care of people. Like, this is not like, no offense, like wholesaling, you know, which is like, like, I mean, there's value. I'm not saying not very you are taking care of people wholesaling, but you're taking care of grandma really well in this case. And I love that concept. Like, it's one reason I like mobile home parks is like, most mobile home parks are terribly run and we're really, really good with our residents. And, like, we can take care of people. Assisted living is even better. Like, we. We're taking care of the most vulnerable people in America. So I love that. Third reason I love it is AI is not going to take those jobs away for a long time just because of the red tape. Like, even though AI will be able to and the robots will be able to do surgery and do medicines better than humans, I mean, they already can. We won't allow that for decades because the red tape just moves too slow. And so anyway, I think it's a protected place. I think there's not enough of it. I think it's doing a lot of good and it makes a lot of money.

[B]

Yeah, dang.

[A]

We're getting into, we're getting into a cancer.

[B]

I'm. I am in it right now.

[C]

You're in it and there's not much building going on right now. That's why there's that shortage, because to build it is so expensive. I've looked at it a couple times and I can't get the numbers to pencil out by building now in a long run, yes, I will. But it's so much better right now to just take over properties, clean them up and then the numbers work much better for us.

[B]

Okay, so can you explain. That's something that I can't comprehend when you say I can't get the numbers to work out. Because there's a guy that I've been listening to and he's building 16 to 24 bed houses, like mini mansions, boutique, renting out for $12,000 a month. And his build cost is about $3 million. But then immediately he can go and get it appraised for 6 million or something like that. And then he'll refinance and just keep going and going and going. But then he always complains about how hard it is to find land that makes the numbers pencil out to build. But he's claiming that he's cash flowing 60 to $70,000 per house. And I'm like, it should pencil out. Yeah, it should pencil out. If you can cash flow 60 to $70,000 a house, you can pay a premium to build or to buy land. Right?

[A]

Or what?

[B]

Like what, what, what am I missing in that equation?

[C]

Yeah, well, I mean all of the extra things that you got to put into these houses, not just like building a regular house. So with those fire systems, alarm systems, extra wide doors, and then even your plumbing. Like we've gone into homes and we've had to increase plumbing lines and stuff because we've added so many bathrooms because they want their own private bathrooms. And a lot of that, that's where we are able to beat our competition a lot is, especially with bathrooms because we have bathrooms almost for all of our rooms, private bathrooms. And a lot of the smaller homes, they just. There's not enough space to do that. That's another example is just the plumbing and then the electricity is really. You're using a lot of electricity with this many people all the time in the house, meals being provided all the time.

[B]

Credit card probably has a lot of points on it.

[C]

It does, yes. It's scary how much goes. I mean, it's. Well, it's like I said before, we're just adding zeros to what we've done before. So I talk to my mom sometimes about it and she gets scared for me when she hears some of the numbers. She almost, almost doesn't want to hear it. And it is. I mean, if you started in that spot, I think it would be pretty scary. But. But you got to figure too, you're. It depends where you are because our largest expense is staffing. So it's over half of your revenue is going to staffing.

[A]

Oh, wow.

[C]

And then you got to figure your mortgage, your insurances. And I already mentioned some of the extra insurances we have and then. And our electric bills are pretty high. One thing we're looking at is putting in solar. Solar at our facilities and stuff just to help with that because it is so high. I'm pretty sure that would pencil out.

[A]

Yeah, yeah, that's cool, man. Can we talk about who's paying this much money for a room? Like, is this government? Is this Medicare? Medicare, Medicaid? Medicaid, is that Medicaid? Is that what you do? Is there insurance? Do people have insurance on this or.

[C]

Yeah, there's long term care insurance. That's probably our favorite really, because, you know, it's getting paid every time, whereas the private pay is our second favorite. And those are the people that can afford to pay those kinds of rates. But sometimes their money will run out depending on how long they live. So I guess this is what makes us a little different also because we do what's called a spend down program. So as long as. And it depends on the home and the amenities that it has. But different homes, we have different amounts of spend down. So at some of them, it might be that they have to prove that they can pay for two years of service versus maybe this house, it might be three years. And then once they do, they can drop to Medicaid and we'll still keep them. A lot of places can't afford to do that. That. And so that does hurt our bottom line a little bit. But I think that's the humane way to do it instead of saying, oh, you're not, your money's run dry.

[A]

Yeah.

[C]

Now go find a, go find a crappy house somewhere and see if you can get moved in with them. So maybe let them stay with us.

[A]

That's super cool. I did not know you did that. That's super honorable. Yeah. And it affects your bottom line. But taking care of people, I love that. So what does Medicaid like pay? Like is it just way less?

[C]

Yeah, it is.

[A]

So they have a standard, they pay no matter what. It's kind of like section like this

[C]

is what we pay and it varies from state to state. So like in Colorado right now, I believe well and my wife handles more of this, but it's probably 2 to 3,000 less. So most of the time now again, depending on the situation, we do have some rooms that we have them share and so they may have to move in with a roommate, but they get to stay in that house kind of to kind of help.

[A]

That makes sense.

[C]

So we don't shape too big a

[B]

hit then is, are you making more money on that room versus or is Medicaid paying the same amount whether it's a shared room or private room?

[C]

Yeah, they pay the same amount whether it's shared or private. So that's almost all of ours. And well, and it's a little tricky here, but we don't do straight Medicaid. We go through a Medicaid provider kind of it's called a PACE program. So I don't know if you. There's Innovage is a big one. They do all the work with being Medicaid. So we're still considered private pay because it's coming through them. Innovage actually pays us, but then Innovage charges them for charges Medicaid for like their dental, their doctor, They've got a whole list at the pt, all these other things. That's how they make the money. They just pass on the housing part of it to us.

[A]

Interesting. Yeah, wild. All right. If I wanted to buy a. Let me actually I have a house in Florida that I've been running as a rent by the room pad split kind of a thing. However, I just keep getting harassed by the city. They don't really want me to have it there and I could keep fighting it, but I don't really want to. So I'm thinking just the last couple days I'm like, okay, this is a 10 bedroom house as is right now, or 9 bedroom bedroom, 9 bedroom house right now. I'm thinking what if I turn this into a residential assisted living? Is this a terrible idea in that I don't have a presence in Florida? It's my only property in the entire state. I have one mobile home park somewhere. But like, like is that probably a stupid idea to try to Just one off this thing from that far away, knowing that's not my business right now. It's hard to say.

[C]

It could be bad. Yeah, it. But it could work out just fine. It really depends who you got running your property. If they know what they're doing, you're fine. It's like if you have a good manage for your multifamily, if you got the right one. Yeah, things go much more smooth.

[A]

Do you think states where people move to retire and get old, grow old, like Arizona or Florida or Texas, do you think those are better, therefore, for this assisted living, or does it not really matter?

[C]

There's definitely more people there, but there's more competition there as well. So I think it's all relative because we're in Scottsdale, Arizona, very popular place for people to retire. But there's a lot, lot of competition. So it's, you know, same anywhere.

[B]

And is it tough when you're doing, especially the smaller ones, where it's like we're just buying a house and renovating it to match what we need. Is it tough to get through zoning and regulations and the neighbors getting upset about it? What does that look like?

[C]

Yeah. And that's one of the reasons the neighbors and the zoning and all of that is another big reason why it's so much easier to take over one that's already been licensed.

[A]

Yeah.

[B]

Yeah.

[C]

Then you don't have that fight because the neighbors come out in droves. And this shop.

[A]

Yeah. Why don't they like.

[C]

Oh, they hate it.

[A]

It doesn't make any sense.

[C]

They're like, I mean, and everybody wants it.

[A]

Yeah.

[C]

They. They know that it's important, but not in my backyard. You know, we bought. I mean, we, we had people show up. You have to go through these zoning things to get a variance, and so you have to publish it. And they come out in droves, which we were. When we did this first time, we were so naive. We just walked in things thinking, everybody's gonna love this because we're doing this great God's work thing, you know, and bring your parents and they can live close to you, you know, and all that. And they were so upset with it. And their biggest gripes were, we're gonna kill their property values and we're gonna bring in all this riff raff coming into work and coming to visit all the time, and their street's gonna be busy. And this was a nice quiet street. And now you're going to change that. So those are the two things. And they are. They're pissed.

[A]

Yeah.

[C]

I mean, they're. They're. They're loaded for bear.

[A]

The goal is the first go find a bunch of dirt on all of them and then just go and blackmail them into not giving a problem. That's easy. Easy solution.

[C]

We went around and actually introduced ourselves to the people in the neighborhood on our first one and even took them some pastries.

[A]

It didn't work.

[C]

And as soon as they found out what we were doing, it just switched.

[A]

Wild. That's wild now.

[C]

It's pretty good now. But, I mean, we've been there for years, and it's not as bad as they thought. And our house, we fix them up so nicely that it's the nicest house on the block, so it's not hurting their values. But there is more traffic. And every once in a while the fire department shows up because the alarm goes off because the, you know, something got burned in the kitchen. And here comes the fire truck, just to make sure. Because it's connected straight to them.

[A]

Yeah. You know, Fascinating.

[C]

Yeah.

[A]

So do you. How does that work in terms of, like, do you have to get their permission? Is this just. They have a right to complain about it and a judge decides or somebody. Like, what does that even mean? You know, how do you get.

[C]

Yeah, I don't know exactly who decides? It's the. The planning department, I assume. But. But they give you a person who runs the meeting and takes the questions. And it was. Well, we did have one of our people who were going to move in. Their daughter and her husband came to that meeting. We invited them to come. We had already pre sold some of the rooms, but they were far outnumbered. But, you know, people are talking about, what's the riff raff? Everybody's coming in here. And finally she stood up and she goes, I guess I'm the riff raff. I'm a. I'm a police officer, and this is my mother, and I want her to live in a nice place like you guys do. This is exactly what I want for my mom. And it hushed them for a little bit, but then they're right back at, yeah, but. And they said, why don't you do it in your own neighborhood? And I'm like, yeah, so you just can't win with that. You can't. Yeah.

[A]

It reminds me, you ever watched that show Parks and Rec? Ever seen that show?

[C]

I haven't.

[A]

It's like the Office. Have you seen that one? Yeah, it's one of my favorite shows. Anyway, there's like this bit throughout all the seasons where they do, like, the community meetings and they're always just the most ridiculous people out in the. And it's kind of like just make poking fun at that. Just people are just weird about their neighborhoods. And. And well, yeah, so we had to

[C]

go through it twice because there's only two that we did and it's two of our first three and we won both times or I don't know if it's winning, but they said, I call

[A]

it a weird because the neighbors lost.

[C]

The city was like, we need this and we don't want people in our city moving out to get this care. So we want this in our city. But not all cities will do that. We were actually looking at one point there was another city to the north of us and we wanted to build there and they did not want us in there. Really. They said, we think we have enough. If we did approve it, you would have to pay every time the fire truck or your ambulance comes and makes a call. You're going to have to. Your company has to pay then if we approve this.

[B]

And did you guys like, were you that strict in the underwriting process of like how many beds are in this particular city versus this particular city versus this particular city or were you just like, we're looking for a big ranch that we can convert into this?

[C]

Yeah. Well, what I was looking for was not the super high end areas, but I wanted to be near the higher end areas.

[B]

Yeah.

[C]

So where we bought was we tried to be within about 15 minutes of those nicer areas. So just a little bit older neighborhood. And that made my numbers work. But I did not go through and really look at competition. And I think there's enough need out there that you can do this most anywhere. You know, I wouldn't do it in really low socioeconomic areas, but I think, you know, the houses that were built like in the 70s and 80s, kind of your C class B minus maybe are good options.

[B]

And how are you financing them when you find them? As were you guys self funding everything and have you since then or are you guys syndicating things or what's that look like?

[C]

Well, my first one we did a hard money loan because I had done a couple house flips.

[A]

Yeah.

[C]

And so I had a little relationship and. And we tried that. Of course, this is much more than a house flip. It took 11 months from purchase to license.

[A]

Oh wow.

[C]

It was. It should be done in like six, six or seven. But when you're working with the state, nothing moves them and they come out. And in your first one, you don't know and understand what they're looking for. So we try to do everything right. And of course, they come out and they came up with, like, five small things, and we had to wait. You put in when you're ready. And in the state of Colorado, they had 30 days then to come out. They came out on the 30th day, and in fact, I called them that last week. I'm like, are you guys coming? And they're like, well, when did you put it in? And they calculated. They're like, yeah, so we'll be there this week. Well, they come out and found, like I said, about four things. They were like, oh, your tile's too slippery in this bathroom. You need. And I'm like, oh, well, what do we need to do? And they're like, I don't know. That's not my job to tell you how to do it. But that's. That tile is too slippery. And they, they said our. In the backyard, we had some nice landscaping, and it was kind of a mounded up and. And kind of dropped down. So they said, well, that's a danger. And I was. I wasn't sure about that. And so they said, we have to put in a. Some kind of barrier, a fence or something. I'm like, oh, okay. You know, I'm not. Okay, that makes sense. Do you think I could put in a split rail fence so you can still see through it? Because it was a beautiful backyard? And they're like, no, I don't think that would be safe enough. They could fall through that. Like, okay, well, how high does the fence have to be? I don't know. You know, I was like. So they were no help at all. So they give us this list, and we had everything done in 48 hours. Put it back in, wait another 30 days. 30 days. And I'm paying hard money rates, so I'm dying. And then I had to pay hard money even longer because then I wanted to transition to an SBA loan, which is a great way to go. But even the SBA bankers are worried about if this is your first one, they can't take the bad ones or they won't get the SBA funding the government backing their loans, so they have to be very careful. So I got an SBA lender that said, once you get to the break even point after you opened, then we'll fund it. So I had to extend on my hard money loan even further. I thought I'd have all that done much before that.

[A]

So you basically are burring or you were burring into this. You're buying them short term money, renovating it, renting it out, refinancing it into SBA. So SBA gives you like, I've heard, like 90%. Is that still right? Is that what you.

[C]

Yeah, you can get up to 90.

[A]

90. And that. Now, normally SBA is not good for real estate, but in this case it is, I'm assuming because.

[C]

Yeah, because of the business tied with it. Yep.

[A]

Fascinating.

[B]

And so they're valuing the business at that point, not the real estate.

[C]

Well, it's both, actually.

[B]

It's both, okay.

[C]

Yeah. So they, It's a combination of the two. Yeah.

[B]

So like, you could, if you could buy a house, let's just say it's a million bucks. Typically, like I'm getting DSCR loan, so you. Whatever. I'm going to butcher these numbers. But it rents for 10,000 bucks a month. You're at a, you know, 1.02 or 1.2 debt service coverage ratio. They'll lend on it with this, I guess. Are Dave, are you able to buy that, rent it out for $50,000 a month, and all of a sudden your value of that house is now not a million, but it's $4 million. Are you able to do that?

[C]

Yeah, it's based on a cap rate. It is.

[B]

Okay.

[C]

Yeah. So what cap rate is it usually based around? You know, it's all by area. Anywhere from. Well, and the smaller homes are higher cap rates. Just when it's smaller, I think it's a little riskier than the larger communities that we have. So. So anywhere from your best ones are probably 8 and a half, 9 caps, and then your older ones are, you know, could be 12 to 14 cap.

[A]

Wow. Wild.

[B]

That is. I mean, what, what are you, what have you bought your multifamily at? 4,4 caviars.

[A]

Yeah.

[B]

That's why this is so fascinating to me is because.

[A]

But it's because it's a business and that's why it makes sense. That's why, you know, co living works. That's why midterm rentals work. That's why a lot of these work is kind of. Because they're, they're pseudo real estate. It's real estate plus business. And you combine the two together and you make a whole lot more than you would at either real estate or business. And I love that concept. And so that's what I've been, I mean, we've been harping at it at first deal. So like in our first deal program, that's Almost everything we teach is like these fringe strategies, like how to get your first of these. Because that's just where cash flow's at today is running a business. Which is also why I'm so obsessed with like just the idea of running businesses. I read more business books than I do real estate and I, I talk more about business than I do real estate. Because if you're good at business business, you'll be good at real estate and everything else.

[C]

Yeah, well, you want a good business that generates a lot of income and then you get your write offs. Yeah, the real estate side of it, your depreciation and all that.

[B]

Well, and a lot of people I talk to that are in this, they're finding and renovating the houses, but then they're leasing out the operations to some other company. You guys are not doing that at all. You guys are.

[C]

No. And honestly, that's where we sometimes get really good deals is because they rent it out to somebody that the fails and if they, their only piece to it is that business, so they can just shut down the business and they might not have that much in it versus if you had the real estate also now you've got a property sitting there, you got a mortgage, you've got a lot more weight on your shoulders. So I see that model some, but I see most of the successful ones are where you, you've, you're, you're the owner and the operator.

[A]

That, that's like, I mean like rental properties. I mean a lot of people have property managers and they can be fine. But like in the mobile home park space, for example, I don't know many people who own mobile home parks and don't manage their own that do well. Like if you don't manage, you don't do well because there's, there's just no great management companies out there. And we keep toying with the idea. Like I have a management company called Open and so we run about 5,000 of our own mobile homes and we're really, really freaking good. We're by far the best I've ever seen. And so then we always go, we', good, we should do it for other people. And then we look at the numbers. We're like, no, we should. It's just there's not enough money in it, which is why nobody is in it. That's good. And because the metrics don't work so you have to run it yourself. And it sounds like it's similar in the residential.

[C]

Especially in the residential, I would say. And it's not that it can't. If you get the right person, it should be great. But where it does work pretty well is in the larger communities. Then you see that a lot. You don't have as near as many owner operators. We're very unusual in that regard. But it's usually the REITs that own the property and then they rent out to somebody who manages all their properties.

[B]

Gotcha.

[A]

Very cool. Well, let's talk about financing a little bit more. I want, I want to know, like you, I guess, if somebody wanted to get into this and they don't have a lot of money, let's say they're fairly like less than $50,000 saved up. Is there any way to get into

[C]

residential assisted living that you can see with $50,000?

[A]

Like, how much money do we need to be able to pull this off?

[C]

Off? You know, I don't know the answer to that because I haven't. I kind of stopped playing in that.

[A]

Sure. The small.

[C]

Yeah, yeah. So I haven't done that for a while, but whatever. The least you could get in for would be is if you did the full conversion yourself and just bought a single family home. Then it's what, Whatever. You can get that for 20% down or something on that. But then you're going to have to fund all the. The improvements. So again, hard money. Are you going to use or do you have a private lender? I found a guy who actually does private lending for me, or has. We've used him two times. I'm actually talking to him now about maybe doing another one for us, but he just comes in, buys the property, or he doesn't buy it, he'll just loan on it to us. We have a private mortgage with him. He wants out usually in one to two years. We kind of talk about it, and then I'll take it to sba. Or now I've started going to a regional bank. Once you get a little, well, sba, you're capped.

[A]

Yeah. Okay.

[C]

You can't go over. Well, there's all kinds of rules, but generally it's 5 million in loan value, not property value. So you can probably get, you know, three loans, maybe four assisted livings with your sba, but then you're capped out of that. So. But then as you get larger, then the regional banks are a little more interested in you. If you're too small, then they typically don't want to loan to you. So now I'm using more of the regional banks. And then when you get even larger than that, the kind of. The holy Grail is HUD lending. So that's you can get 40 year amortization as little as 10% down. But they have minimums. I'm not sure what their minimum is. It might be 10 million is their smallest loan.

[A]

This is for big.

[B]

For big.

[C]

The large communities. Yeah. So that's where the REITs play in that field.

[B]

When you're buying $10 million home or I mean it sounds like you have a couple times, are you raising equity, are you raising debt for that? Like how are you doing that?

[C]

Well, we did very interesting strategy that we're using now. When we started, if I go back, we had two homes. I had just bought the third one for our trifecta that we thought we were going to do. And then I was introduced to this group who was renting out out to somebody else. They had four homes and this person basically ran them into the ground, didn't know what she was doing. The state was all over them and penalizing them and finally shut them down. And so they wanted to rent to us. But I wasn't too into. The properties were in pretty poor shape, but now they were shut down. So we actually negotiated a budget to clean them all up and we didn't pay any rent for, I think it was six months so that we'd have a chance to get them cleaned up. And then they gave me an option to buy it after three years.

[A]

Wow.

[C]

So that was my incentive to go in and do a good job of cleaning them up, make them nice and then I could purchase them after three years. Years.

[A]

That's cool.

[C]

So that's another thing that we did. So I've done the hard money, I've done a private lender, I've done sba, straight SBA right out of the gate. And now I'm doing lease options also. So they syndicate and buy the property and then they give us an option to buy. Depending on the size and situation, it might be that I can buy it after three years. Four years. I think one we did all the way out to five years. It was the first larger community that we did. They wanted five years and so we did that. So now. And that one, I think our five years comes up this summer. So I'll be looking to purchase it. But then the brrrr part of that is, well, first I'm doing opm, other people's money, you know, they're buying the property. We proved ourself to them with those first four. So usually you get charged an option fee when you do a lease option. You might have to pay them them 5 or 10% down is pretty common with us. We don't do an option fee because they want to keep working with us.

[B]

So you're getting that for $0 on your own pocket.

[C]

Correct.

[A]

That's awesome.

[C]

Yeah. So they buy the property. Now we're paying good rent to them. I mean they've got to make their money and their investors got to make their money. But then I'm increasing it. Usually we are are also getting a budget on almost all of them because we like the brrrr method where we build up the value and raise the, you know, use a cap rate and now it's gone from here to here and and so we can sometimes purchase with no money down. That's amazing because we've raised the value so much. I've got a regional bank and again I've had a relationship they will now that they treat it like a refinance instead of a purchase because we've been operating them for three years and we do own the business part of it. So we are the business owner. We're just renting the property but since we were controlling both, they treat it like a refi so we can potentially even get cash out.

[A]

Yeah, that's amazing.

[B]

It's incredible.

[A]

Yeah, super cool. Well, let's shift and talk a little bit about management before we get out of here. I know we've kind of interspersed first talked about it. Is that a word?

[B]

Interspersed intersperse.

[A]

Yeah, yeah, yeah. I think it's a word. We talked about it throughout the. But I want to like how do I attract. I got, I got my facility. I went and let's say I did the burr or I don't know, whatever, sba, whatever. Found it, I bought it, I've got it. How do I fill it up now is this put an ad on Facebook, Marketplace or what am I doing?

[C]

You know we've really been doing a lot of SEO work.

[A]

Okay.

[C]

So our website attracts quite a website's

[B]

great by the way. I was on it.

[C]

Oh, did you? Yeah. My wife did a great job with that. My son in law. So it's kind of a family business. A lot of our families got roles in it now, but that's kind of their thing and I agree. I think we have one of the best websites out there.

[A]

That's cool.

[C]

So that's one and that's probably our favorite. Now there's placement agencies, although some states it's illegal to have a placement agents.

[A]

Really?

[C]

I didn't realize that till we got our place. In Las Vegas, they don't have placement agents or they got people that'll help, but they, they can't be paid.

[A]

Wild.

[C]

I wonder why. So I don't know. Well, it's kind of like the wholesale thing. Some places they don't. They want to outlaw wholesaling and I think they think you're. Maybe that they take advantage of the seniors or. I'm guessing, I, I honestly don't know. But placement agents, especially when you first start.

[A]

Yeah.

[C]

They're really important. They're really expensive. You're usually giving away a full month's rent to get somebody in.

[A]

Yeah.

[C]

And, but, but sometimes that's worth it. Yeah.

[A]

It keeps it empty.

[C]

And especially you have no record. You know, it's like somebody comes in and they're like, yeah, I've never done this before, but we're good. We'll, we'll do great. Just trust us. We will. I'm a good person. I'll take care of your mom.

[A]

Yeah.

[C]

And they're like, yeah, Or I can go over here where I've heard great things about them. So that's another place that we picked up some deals because there you can go out and there's places that'll teach you how to do residential assisted living. And I think they're pretty good. I mean, we took some of their stuff. I didn't do their full blown courses or anything, but I looked at their materials and it was helpful. But some of them couldn't even get the first one launched. So here they did the renovations and they did all the work and they'd get two or three or four people in and they're losing money every month and they just can't fill it up. So then that's kind of where we've gotten to the point to where if somebody wants to sell, I'm one of the first calls because I'm also a real estate agent and so I've helped people sell their property to other people and I've also bought them myself. So they'll call us and say, hey, do you. Are you interested in buying ours?

[B]

But one of the things that's fascinating to me is like the demand is so strong. Why, why are there places that are sitting empty or at 50% occupancy?

[C]

Well, there, if they got a bad reputation and that passes, you know, it's like wildfire. If, if there's an event or something, especially now with next door and things like that, if something goes down in a neighborhood and there was somebody was mistreated or anything, Bad. Everybody's going to know about it. Can you buy.

[B]

Can you buy a property like that, or will that ruin your reputation forever?

[C]

I think that depends, too. We took over one. In fact, it was a larger community, and it was only the second larger community that we did had a bad reputation. It was occupied, maybe 60% occupied is all. And it was overstaffed. And. And we thought, well, perfect opportunity for us to go in and fix it. And I'd say two years later, we've finally gotten over the bad reputation, really.

[B]

So it took two years to get there.

[C]

There it did. Now, I think in a smaller home, we've been able to turn it much quicker. But in a larger community, I like calling them communities instead of facilities. A larger community. It takes. It takes a while. Yeah.

[A]

We call them mobile home communities, not mobile home. Oh, yeah, yeah. The same reason. Just sounds better. The trailer park. Yeah. Right. You want to go buy a trailer park?

[C]

Sure.

[A]

What is. What do you think is the hardest part of this whole model, like, residential assisted living? What's the most difficult thing?

[C]

Probably dealing with your staff and making sure that they are caring for the people the way they're supposed to.

[A]

Do you have any tips or tricks on that? You've learned to get better at that.

[C]

I mean, my wife does a lot of little things. We have a app that we use to communicate and she makes. Well, she started when we were smaller. Now she isn't the one monitoring it so much. But they would have to post pictures of the meals. They'd have to post pictures of the activities because they're supposed to do five. In our homes, we do five activities every day. And so they have to post to show who came and did the activities and if we're getting good participation or not. So just quick, easy things like that.

[A]

And again, that just back to like, being good at running a business that has staff. Like, I have a good friend who sent me a picture. Her mom is in a facility right now. And so this friend of mine sent me a picture of. I can't remember what I think it was like two fish sticks and a pile of peas on, like, a paper plate. And she said this was what they served my mom for dinner tonight. I need to learn how to do residential assisted living. I was like, yeah. She's like, I. I gotta get my mom out of. Like, this is ridiculous.

[C]

Like, it's the lazy way, it's the cheap way.

[B]

What's. I was talking to a buddy who's in this, and I asked him the question. I said, like, what is the. What's the biggest risk about assisted living right now? And he said he was like, for a guy like you who has already built businesses and is successful, he's like, I. The success is not like you. You will be successful in residential assisted living. He said, the biggest risk is you can be a terrible operator, like a terrible person and still make a lot of money. He's like. He's like. And there's a lot of people that do that. He's like, it's more of a moral. Like, are you willing to sacrifice your morals to make a little bit more money by serving crappy food and hiring not great employees? And so for him, he pays people higher than any of the hourly wages in the. In the area and has, you know, company parties and things like that to encourage the staff, but then also to be able to cast vision into them of like, what you're doing means something. But that, to me, was a fascinating thing that he told me was like, the biggest risk for someone like us is not that we can't be successful. It's that you can sacrifice your morals pretty quickly in this because you don't have to be great right now to do it.

[C]

I think there's a lot of truth in that. I don't know. I think what I talked about before, how we do the spend down and we'll put them on a Medicaid program and still keep them in our home, that hurts our bottom line. But our top homes, where the demand is, we don't always allow that. But in our more modest homes, it doesn't hurt us that much. But we have high standards. We pay at a higher rate as well. We're towards the top. I'm sure we're probably not the top, but we hold to a higher standard. We have a lot of staff that'll come to us, and they're like, whoa, you guys expect way too much. I'll go work down the street, and I don't have to.

[A]

I can sit and watch TV all

[C]

day, this and this. But then you get the right people who are proud of the work that they're doing, and. And it really. They become family. Our staff with the residents are sometimes closer than the residents with their families because they see them every day and they know everything about them. And I've had family members even say, you know, we're worried about mom bringing her because she didn't want to go at first, but we both work, so she can't come stay with us. The. The hospital wouldn't let her Go home on her own. So we had to do something. So she's kind of forced here. Now when we come pick her up, we're out with her. She's like, I'm ready to go home.

[B]

I'm ready to get back.

[A]

Yeah.

[B]

I mean, it's similar to daycare. Like when we were looking at daycare for our kids, like, you would go into one daycare and they don't have a TV on, and the. The teachers are interact with the kids and they're doing crafts and they're playing. Like there's just a different feel versus we would go into her, and it's like they've got Bluey on in the background and 10 kids watching Bluey, and the teachers are on their cell phones in the background. And like, it's. It's. I mean, obviously it's hard to find those. The right people, but once you do, man, it's magic because it just creates the culture of your entire company. If you can find the right people that love your residents, take care of your residents, and then that's going to take off. And I mean, it's. It's. I'm. I'm excited. I'm. Like I said, I'm in. I'm in on this.

[A]

I love it.

[B]

Cam, the assisted living.

[A]

Assisted living guy. Guy. Forget flipping.

[B]

Yep.

[A]

So, Mitch, this has been amazing. We got to get out of here. Is there anything maybe last final thoughts. You have people who are thinking, I want to get in. I want to buy my first residential assisted living. What's your kind of parting thoughts?

[C]

I guess I do believe anybody can do this, but I think you have to have the right heart. I've seen a lot of. Of real estate. People see the numbers, you know, the cap rates, the returns that you can get, and they're like, I want a piece of that. But if your heart's not in it, it's probably not going to work. Well, I mean, you've got to have the heart piece with it.

[A]

Yeah. Amazing. Well, thank you, Mitch, for being here today, and thank you for being a good guy that takes care of people. And thank you, Cam, for being here.

[B]

Thank you for letting me be here.

[A]

All right, everybody, if you enjoyed today's show, make sure you leave a rating review and all that where you listen to the podcast. If you're watching this on YouTube, make sure to subscribe to the YouTube channel here and leave a comment down below. I love you all. Have a great day and see you next week.