How to sell an assisted living facility or care home?
Selling an assisted living facility is about creating value for the buyer. The buyer has to understand the value of the business. The business value comes from systems, staff, marketing and operations. A well run and documented operation will get a top dollar sale price. An assisted living facility or residential care home is an important asset. Creating value in the home is about location, the design of the property, current condition and the marketing advantages the home has.
Buyers will pay a premium for a quality property and business. But the opposite is also true, a business which is not profitable and a house in disrepair will only attract buyers who are bargain hunters.
What to get ready to sell your assisted living facility or care home?
Work on both issues at the same time. If you want top dollar for your assisted living operations, the property has to be in top shape. All repairs done, all living areas must look in the best condition, all operational like the kitchen, storage and the office need to be clean and functional. The business asset must have all the books up to date and in a format that an account review will find the numbers correct and proper. The business systems, HR, client care and operations SOPs all need to be documented and in a clear and organized presentation. And all government and licensing issues need to be up to date, without any outstanding issues, and properly documented.
What if you have no time to get ready to sell your assisted living facility?
We can handle it. If life happens and you need to sell right away, that is ok, we will work with what you have. I recently had a care home owner that needed to sell immediately. They had a medical emergency and needed to stop operating the care home. I got the property sold and the owners are able to deal with the personal issues.
How to sell your assisted living facility for the most money?
The best way to sell your assisted living facility for the most money is to find a buyer ready, willing and able to buy both the real estate and business operations. By selling the real estate as one sale and the care home business as another sale to the same buyer is the best way to maximize the selling price. RCFE has many business operations that add value to the care home.
Assisted living facilities and care homes are made up of two sales
The reason why a care home sale is really two is because the property is real estate. Property titles are very detailed and legally mandated systems of the transfer of ownership is very well established. The second sale is the business entities. There is no title to a business. How to pass the current business asset to the buyer is a big part of the negotiations of an assisted living facility transaction.
What is my care home business worth?
When you think about all the value a care home brings to the community it is hard to look at the value as numbers on a profit and lost statement. An assisted living facility is a special place that families and children entrust people to give care and long term housing for the seniors in their lives. Care home operations provide personal care support, meals, medication and transportation. The senior care business has been around for a long time, and will continue to be needed. To understand the numbers of what a care home is worth check out our article Value a Care Home Business.
It goes into much detail and the numbers of how to value your business. Business broker view the current gross income looking to sell for maximum value. Find the right buyer using the gross income of the business is one way business brokers work. Skilled nursing facility who have an approved hospice waiver help the business owner sell for maximum value.
You are rewarded for building a business with the two sale method.
The care home owner built a business with all the systems, staff issues, marketing, licensing, and government matters. By pricing the sale with a business and real estate, you are rewarded for the effort.
One big note when selling an assisted living facility in California is licenses are not transferable. The buyer must apply and go through the process to get approved for their on license.
Department of social services (CDSS)
#26. Is the license transferable to another licensee or location?
No, a license is issued to a specific entity (i.e. individual, partnership, corporation, LLC) and for a specific location.
Another benefit for selling both the business and property is that it is easier for clients.
Having a buyer for both the real estate and business will make the transition to the new ownership much easier for the clients. There will be a time generally between the property sale and the completion of the new ownership license that can be used as a transitional period with the clients. This will help the clients get use to the new people and help the new owners learn the clients’ wants and needs.
Legacy is another benefit of selling both the business and house.
Most of the time when an assisted living facility changes ownership the care home will maintain the current name. This is a good feeling that what you worked hard for will keep going. I have sold businesses in the past a few of them have kept the name. It is nice to see that the foundation I worked hard to build is still growing.
Passing on knowledge to the new owner and employees is another benefit of selling both assets.
The knowledge transfer is very helpful to the clients. The care home staff and owners learn what makes the clients’ life better. And it is good to pass that knowledge on to the next owner. Also, all the business operations, HR, staff issues, venders, and even how to deal with the inspectors are all passed on to the next owner if the transfer is properly done. Understanding how a buyer of an assisted living facility looks at the deal is a good ideal.
There are challenges for the buyers to get funding.
Funding the real estate is a known issue and can be dealt with. It is not easier to get a care home property funded. Most lenders will not loan on these types of properties. But getting money for the business purchase is really a SBA issue. Finding the right SBA lender is the key to having a deal fund and not wasting everyone’s time with a no deal outcome. No seller likes a business seller financing deal. It is one thing to be seller financer on real estate. But seller finance on a business transaction is a big risk.
What is the number one fear for care home sellers?
Care home business owner want to know if the buyer be able to get licensed to operate the care home and in a timely matter.
- The buyer must apply to get their own license in California. Here are the steps from the California government website:
- For a new licensee, completion of a three-part component process, consisting of: Orientation for a specific facility category and obtaining a certificate for completion. Component II is conducted by the reviewing analyst one-on-one with the applicant once the application is submitted and reviewed. Component III is category specific training and discussion in areas not often understood by new licensees intended to promote successful facility operation. Component III is conducted prior to licensure.
- Submission of an application, with appropriate fee payment. This fee is not refundable. Applicant must include the proposed facility address on the check or money order.
- When I write the buying contract I put a time line for the buyer to submit the application to the government. The process is long and detailed. The buyer should not delay a day to get started. This will give the seller the confidence the transaction will be completed.
- If the care home is an Alta or regional center, it will take much more time to complete the process. Alta process is called vendorization. Some of the levels need the licensee to have a year of experience of work in that type of care facility. This can be a deal killer in some cases. A clear and up front conversation of the issue is mandatory in my option.
- The time to get a license does give the current owner more time to train the new owner.
- Time in the real estate and business transaction add a level of risk. The time added to care home transaction kills many deals. And this is a big factor when owners decide to sell their property another way without the business.
A create way to sell an assisted living property
Closing down the business operations of a care home and just selling the property is the second major option.
The easier option is to end the business operation of the assisted living facilities and just sell the home. Many of the Sacramento and Placer care home properties I’ve sold the owners wanted this option. They wanted the easy option because some just wanted a fast sale, others wanted no training, and still others feared the buyer getting the license. My job is to fulfill the owner desire the best way possible.
1. The easy option of just selling the care home property and not the business works out great for many sellers. To sell and walk away is very appealing to people. This does not mean we sell at a low price. If fact, I get a premium above the local market value for a former assisted living house. I can market it to buyers wanting to get into the care home business, but do not have the funds or credit to buy a business and property. I can add value to the property as a multigenerational home. And there are many other ways to add value to the property which will make it sell for a higher price.
2. The license issues are a major reason why sellers of assisted living facilities will close the business and just sell the real estate. The need for the buyers to get their own license in California mandates that they will have to qualify on their own for it. If they do not do the required work of the application process, they will not be licensed. Therefore the seller will have to maintain the license or the business will have to be shuttered putting the clients at risk. This is too bad of an outcome for some care home owners to take the risk to sell the property and business together.
3. Assisted living businesses need a highly trained staff as well as administer and licensee. This training is no small undertaken. There is a great time commitment to train the new owners and staff. Many current licensed care home owners just don’t want the headaches. So they sell the care home as a property sale only.
4. Business is not an easy way to make money. But many people think they are a professional in the medical field and can easily run a business. Selling a business to a non-business person is a deal that is likely to fail. And if the new owner wants business training, no assisted living business owner wants to do that just to sell their business.
5. The relationship of a care home owner and the clients goes beyond a business relationship. By closing down the business, the current owner can make sure the clients will be in a good new home situation. All the client issues go away if the business is closed before selling.
6. Funds for a business operation are not easy to secure. By closing down the business and only selling the real estate, the new buyers only have to get a real estate loan. That is much easier to achieve and create a situation where the transaction will close in a timely matter.
The seller of just the property of a care home operation weighs all these issues versus the money to be gained with a business sale and decides it is better to close the business and do a property sale.
Coffee Real Estate has done many sales like this and got the current owner a premium price for the property. We found value as a multigenerational home, or a former care home property which could help get a new care home license easier. And sometimes the zoning of the property has a windfall value. Let’s find out how we can create value for your property sale.
How to sell my assisted living facilities in Sacramento, Roseville, Elk Grove in Sacramento and Placer County?
Care homes are a very local business. Families like to live close to one another. The clients of the assisted living facility want to know they have friends and family close by. Also the characteristics of the neighborhood are part of the care home’s dynamics. The location of the care home is a big part of the marketing and what price they can command for clients.
One of the most basic tenets of real estate is location. The real estate value will be impacted by its location. So selling a residential care home in Sacramento, Roseville, Elk Grove and any other local area is individually determined. Coffee Real Estate works in the central valley and in the sierra foothill markets. Ask for a free evaluation of the care home property and business.
Final thoughts:
Final thoughts on how to sell a care home and business is to be realistic of both assets. Care homes which are located in a very nice, upscale neighborhood sell for maximum value. If a qualified buyer agrees with both values, we can get the deal done. But if the two values continue to not come to a common point, there is no deal to be made. We will work to make the best deal for you. Let’s see how we can make selling your care home a profitable experience for you.
Care homes sold by Dan Parisi – Coffee Real Estate
Sold Affordable Great Neighborhood Care Home Property
Elk Grove home in Sacramento County was designed as a assisted living facilities ready to go on day one. The house is licensed as a care home. It passed all the inspections to get approved recently. There is a staff room, office and upgraded garage.
Assisted living facility can be great investment both for a business and real estate. Care home property take special marketing to get top dollar. Potential buyers for living facilities should have the experience in health care to get licensed.
Remarkable Alta 4i care home Sold in Sacramento
The value of this Sacramento care home opportunity is the property value and business value. The business value includes that this is an ongoing Alta 4i care home. This property as a care home is extremely functional. This is like a purpose built care home. The living space in the care home exhibits a family like atmosphere.
Alta care homes can be great investment both for a business and real estate. Alta assisted living facility are take special marketing to sell to the right buyer.
Assisted living facility Sold in Sacramento
Resident care homes SOLD in Sacramento California are residential properties that are designed or laid out to function as a business to care for people. The people could be elderly or senior care or individuals with physical handicaps or even emotional needs. Senior living RCFE with hospice waiver can find the right buyer in Sacramento County.
Coffee Real Estate website containing information about care home and support documents is assisted living facilities 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.
