Is it best to buy an existing care home or start your own?
Buying an existing care home can be a good idea or it can put you deep in debt. The cost of buying the real estate and business of an assisted living facility will deplete a lot of liquid assets. Starting a care home will take time. Also there will be no cash flow to cover all the expenses to begin an assisted living facility. So which way is best?
Is now the right time to buy a care home?
Or is it the right time to start one?
There are a lot of ways to make a profit in the care home business. A care home or assisted living facility business can be the American Dream or a personal nightmare. What makes the difference?
Creating a Pros and Cons list for both buying an existing care home and starting a care home can yield great insights.
Starting versus buying an existing care home
The Pros and Cons
Here are the Pros and Cons of buying a current care home property and business.
PRO
- The property has been through the licensing process.
- The business systems are in place even if they need to be improved.
- The operation has cash flow.
- You can get trained by the current owner.
- You have clients from the very beginning.
- There is current staff
Con
- Sellers want a premium for all work invested.
- Buying an investment property requires 20% to 30% percent down
- Buying a business is difficult to get loans and will require even more money down. This will use more of your liquid assets.
- There may be no care home or assisted living facilities for sale in the area you want to own.
- The current staff may not be a good fit.
Here are the Pros and Cons of starting an assisted living business and real estate.
Finding a property which has the ability to be licensed with the least amount of money to upgrade is the goal of the care home property.
The goal of the care home is personal. It means creating a care home business model that will be profitable to meet that goal.
PRO
- Low down payments possible if planning on living in the property.
- There is no added value business cost. It will cost the business asset needed to start your type of care home.
- Buying the correct business assets to meet your business goals.
- You get to build the staff you want
- You get to build an asset from the beginning
CON
- Licensing process can be difficult if not working with professionals to get through the process. (Coffee Real Estate helps connect you with the professionals to evaluate the property and get your care home license). RCFE care homes need a special type of license.
- No current care home business means a lack of business cash flow. (Coffee Real Estate has some ideas for cash flow before your care home is licensed)
- You have to learn everything from the beginning
- You may have to pay an expert or experienced person to be a mentor
- You have to find and train staff
This list of pros and cons is not comprehensive. Also, it is hard to rate the value of each pro and con for your needs. We hope we can work with you to achieve your care home ownership dream. Check out how to invest in real estate for some background information. You can also find out more about selling a care home.
What makes the difference to buy a care home or start one?
Understanding what is best for your vision and current assets. If you don’t have $100,000 to over $500,000, buying an existing care home may not be an option for you. There may be ways to use other people’s money (OPM) to buy the existing care home. How to value a care home business is very important information.
Starting a care home with $10,000 to $50,000 may be possible if you have a clear vision and work out a clear and realistic budget. It means more work, but you keep more of the profit.
In the end it comes down to money. Do you have the money or can get the money to buy an operating care home property and business or not? If you don’t have the money you can start one. You can read more about starting a care home here.
If you can buy a care home property and business you can read more about that process here.
If you need more reasons and insights into owning an assisted living facility you can read more about that here.
If you need to know more about the types of an assisted living facilities you can read more about that here.
Coffee Real Estate website containing information about care home and support documents is about business values intended to provide general information only. Because legislative requirements for home care standards, employment laws and business operations vary, the information presented should not be interpreted as being universally applicable. The information is given with the understanding that they do not constitute legal, medical, accounting or other professional advice. Legal advice & other professional assistance should be sought prior to commencing your care home business in order to determine the impact of all levels of government legislation, rules and regulations, local laws, licenses, etc. upon the operation of the care home business.
