Investment Red Flags

The senior housing industry grows larger and larger each day. With more operators looking for an assisted living facility for sale, the marketplace grows a bit muddled. Less experienced sellers and buyers may get mixed up in bad business decisions.

If you are looking to buy assisted living facilities, cautiously investigate every facility you visit and every person you meet. Just by avoiding a few red flags, you can easily weed out faulty senior housing investments.

Search the Physical Plant

In most states, sellers are required to disclose any major issues with the physical plant prior to acquisition. However, JCH investments specialist will encourage you to conduct inspections yourself and hire experts to conduct inspections on your behalf. Some examples of what to look for are: major cracks or movement in the foundation, walls and roof. For now, it is best to overlook the cosmetic fixes such as peeling floors, paint or falling stucco. Deferred maintenance can be dealt with at another time. Read: What You Should Know About Assisted Living Developers

Keep Licensing in Order

Before acquiring an assisted living facility, familiarize yourself with the new rules and regulations required to obtain licenses. Because regulations change, what slid under the radar one year will be flagged the next. For example, the assisted living facility for sale may be a very old structure. The current owner has the licenses needed to operate lawfully. However, when you acquire the facility, a new license is needed and potentially may be under new or different rules and regulations.

Do the Math for Financial Returns

Rule of thumb: whatever sounds too good to be true usually is. Though revenue is relatively easy to verify, expense reports have wiggle room. For that reason, it is imperative that potential buyers scrutinize expense reports. Pay added attention to expense reports that seem too low. If you are unable to replicate the expense matrix, chances are, it was understated and you paid too much for the asset. This results in a smaller profit margin going forward. Read: How To Manage A Profitable Skilled Nursing Facility

Use Common Sense When Meeting Sellers

Simply planning to buy assisted living facilities is no small task. Take the time you need to collect all the information necessary to make a confident decision.

When a seller is pushy or demands a non-refundable deposit too early in the process, take a step back. They may be trying to hide a flaw or hand off misfortune. A proper and honest seller allows you time for due diligence and provides all the practical information you request.

The JCH Group for Your Housing Investment

The JCH Consulting Group is a senior housing brokerage curating high quality deals on a daily basis. Our investment specialists do our best to filter out all red flags prior to bringing the facility to market. As a result, everything you see with us passes our standard of excellence.

Trust your next senior housing investment to the experts at JCH. Our team is available to ensure that your transaction is as profitable as possible. To speak with one of our investment specialist, contact the JCH Group at your convenience, Nick Stahler 714-463-1663 and Jim Hazzard 714-463-1677.

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