October 22, 2014

Residential care facilities for the elderly, otherwise referred to as RCFE, is a type of care facility specifically designed to serve and assist the elderly with their daily lives. These facilities are also known as assisted living facilities. For those making plans to buy RCFEs there are a few basic pieces of information to know in order to build a strong foundation of knowledge in buying one of these facilities.

What is Residential Care For the Elderly?

RCFEs are homes and/or facilities that house the elderly and assist them with daily living activities. Those who qualify as the elderly are anyone over 62 years of age.

Assisted living style-care for the elderly includes bathing, grooming, cooking, regular housekeeping and whatever services the specific facility has available. RCFE care also includes incontinence care and medication management so that all residents take the right medication at the right time as instructed by their doctors and physicians.

Are RCFEs Regulated?

In California, these facilities are regulated by the Department of Social Services, specifically by the Community Care Licensing Division, also referred to as Title 22. (In other states with Medicaid waivers, the Department of Health Services regulates assisted living.)

For Title 22 Regulations, you can visit the Department of Social Services, which provides manuals and licensing requirements that every RCFE in California must meet for proper operation.

Though the state provides general requirements, the quality of care from facility to facility differs depending on the operators. When searching to buy RCFEs, build your own set of standards and expectations by which you can grade potential facilities. For each prospective RCFE buy, visit the physical plant.

Actively getting to know the staff and familiarizing yourself with the physical facility is extremely telling to the quality of operation. Are the staff members friendly and welcoming? What does the population look like? How do the residents like their time at this specific facility? Is the plant clean and organized or do they seem understaffed? Because RCFEs are regulated by the Department of Social Services, they undergo inspection, most commonly, once every two years. This means when you visit assisted living homes for sale, these facilities should be meeting minimum requirements, at the least.

Next, study the plant’s financials. Check on rent rolls and any records on profit and loss to see if it is viable as a business and that the numbers are where you want them to be.

How Do I Find Out the Track Record of a Facility?

Because the state regulates all RCFEs, records of any assisted living facility for sale are available at the Department of Social Services by county. These records include licensing history, founded complaints, deficiencies and other information available for your review.

The JCH Group is Your Senior Living Brokerage

Our teams at The JCH Group are responsible for consistently orchestrating successful relationships when it comes time to buy healthcare properties. We can help find a congregate care facility for sale that matches your goals and preferences.

The JCH Group provides complimentary assessments for those looking to sell or buy RCFE and/or skilled nursing facilities. As a premier senior living brokerage, we are dedicated to facilitating profitable deals and honest trades resulting in healthy and conducive senior care facilities.

September 30, 2014

Owners of skilled nursing facilities looking to wait for the right time to sell should wait no longer. Facilities are receiving all-time high valuations, properties are worth more and buyers are making aggressive offers.

Sell When Your Facility Is Doing Its Best

Most sellers are resistant to sell an operation that performs well and they find it counter-intuitive to sell at all. Historically, however, transactions that take place when your SNF is performing at its peak yields the highest valuations. This is because income-producing properties, your assets, are valued upon their income stream. When your income stream is at its strongest point, the valuation reflects that performance.

Pros and Cons of a Fast Deal

We sell as fast as clients would expect, but from our experience, deals that take a bit longer to consummate are more profitable from the seller’s position.

Fast deals are made because of distress – issues in finances, licenses and partnership—which prompts for quick deals for a less favorable price. On the other hand, the sellers who have time are typically owners of high performing SNFs seeking a deal with the highest payout. This additional time allows buyers to visit different debt and equity sources and achieve the cheapest debt, which allows them to pay the highest price. Additionally, it allows for the skilled nursing brokerage to create a deal that breaks through the current market price.

Pros of selling fast:

  1. Money goes in the bank today, and a dollar today is worth more than a dollar tomorrow.
  2. Less chance of profits fluctuating during the escrow timeline. This is because during the sales process, buyers often request a discount prior to closing when the facility experiences dramatic profit decline.
  3. Less chance for the general marketplace to discover you are selling. When your SNF is for sale, profitability wavers and the facility staff tends to leave.

 

Cons of selling fast:

  1. Buyers negotiate a lower price. A quick closing usually requires the buyer to pay all cash.
  2. Less time results in less marketing exposure that is necessary to create a multiple-bid situation.
  3. Less time to construct a financial plan for your proceeds from the sale.

As a generalization, quick closing deals call for the seller to lower the price of the skilled nursing facility for sale. Many factors are taken into consideration regarding the speed of transaction versus profitability and a thorough assessment of all situational factors results in a well-advised decision. With the assistance of a skilled nursing brokerage, quality buyers looking to buy skilled nursing facilities are matched with the seller, maximizing payout.

The JCH Group as Your Choice Skilled Nursing Brokerage

If you’re interested in selling your skilled nursing facility or buying a skilled nursing facility, feel free to contact one of our team members. All of our valuation assessments are a complimentary service. We are happy to sign any confidentiality agreements stating that the JCH Group will not disclose any financial information provided to us to another party.

The information that is provided is taken for analysis, digested and summarized for the owner. We then provide the best market price for your property. The only time the seller owes anything to the broker is when the deal closes with the buyer introduced by the broker.

The JCH Group has been the choice skilled nursing brokerage for some of the most successful operators today. To obtain an assessment by our team, call us today.

August 29, 2014

Don’t Miss Senior Housing’s Perfect Storm

With so many seniors in the United States today, there is a great and pressing need for assisted living. Growing demands for senior healthcare facilities prompts people of action to create supply. Though the senior housing marketplace may have been underestimated in the past, recognizing the urgent need for these facilities has changed investors’ minds; as a consequence, nursing home brokerages business is booming.

Several important factors contribute to a successful senior housing market such as market climate, buyers and sellers and whether or not there are assisted living homes for sale. There are very few times when these factors align in such a way to create the perfect opportunity for anyone looking to get involved.

Buyers and Sellers Get the Best of Their Own Worlds

Owners with residential care homes for sale experience the benefit of all-time low capitalization rates, maximizing on profits from high sales prices. Those wanting to buy healthcare properties have the advantage of low interest rates from lenders who see the current and future strength of this market.

Because there is plenty of debt and equity in the market, there are several groups of financiers eager to join the game. Larger private equity firms, real estate investment trusts (REIT) and even high-net worth individuals are all investing into the senior housing market, creating plenty of opportunities for bigger profits and growth out of assisted living properties for sale.

There are Numerous Skilled Nursing Facilities for Sale

Sufficient inventory gives buyers choices and because they have the financing needed to complete the deal, transactions take place regularly.

Even though skilled nursing facilities have recently experienced a reimbursement shake-up that resulted in distressed assets, particularly in California and Illinois, it also created a high inventory for buyers, offering a wealth of choices, making it easier to buy skilled nursing facilities. The availability of both debt and equity at competitive rates has made it the perfect time to purchase assisted living facilities and skilled nursing facilities.

Buyers for assisted living facilities are encouraged by the presence of debt, but low inventory of high-quality facilities stifles speedy transactions. However, the facilities that do become available trade at low cap rates.

Operators Sustain Facilities with High Quality Service

Operators are the most important player in the success of any facility after the sale. Because they are responsible for managing the facilities on a day-to-day basis, their role is vital in sustaining high quality homes with dependable services that meet the increasing demands for assisted living and skilled nursing. Inevitably, their profits substantiate a healthy market and prove that it is an investment in both the short and long terms.

The number of seniors needing professionally-operated assisted living and skilled nursing will triple in the next 20 years. Though skilled nursing operators may face challenges with some undergoing bankruptcy, the vast majority performs well, maintaining high quality facilities and services.

The JCH Consulting Group Approach to Senior Housing

As a full-service senior housing brokerage, JCH continues to make honest and career-long relationships with buyers and sellers in an effort to establish caring environments for every senior seeking assisted living.