Is a senior residential assisted living or group home a great investment?

The answer is “Yes” but nothing is easy…. If you are a real estate investor, investing in a Group home gives you more yield than a residential or commercial rental property, but it requires more management and operating costs and time. For example, the average rent for a housing value of 1M USD might be around 5.5-6% but with a group home you can earn a much higher yield in a great month but expect 8-10% in an average normal month. 

 

But…. That’s the result of hard work, there is no  free meal.  A Group home is like real estate rental plus service, just like a hotel can ask more for rent than an apartment can ask for rent.

A Group home is accommodation plus a full list of service; it is hard to say    what the ratio of the rent to service would be but a Group home provides meals, laundry, housekeeping, medication management ….. and much more; therefore, the owner or manager has a lot to do and much more than money to invest.

 

How????? Many group home owners run the house by themselves, probably the most profitable way is to live there and work there as the major cost is  labor cost. However, many investors or owners choose to hire an experienced manager and just manage their managers or they hire group of professionals to manage their homes.

 

Group home owners need to prepare  operating expenses of between 15k-25k per month depending on the food and service that the house provides. There are a lot of rules and regulations, license fees, protocols and a lot of work for that extra yield…..but it is always worthwhile. There are various types of licenses for group homes and the option to obtain Medicaid (WEARC) program approval too.

 

In conclusion, if you have money and love the health care service job, don’t mind working with a  service mind, are ready to care for the elderly  and ready for any emergency excitement, a group home is a very good option for investment. If you have money and like real estate investment and expect higher yield than normal real estate investment but are not ready to manage the business yourself, you can hire the manager or you can hire a company to help you run it. (of course the returns are depends on how much time you invest….if you run a business yourself, everything is  yours,but if you hire manager, you have to compensate the manager.  The last choice is to hire a management company… in most   cases, you would earn at least 10-20% more than a regular real estate investment.