What financing is available for assisted living homes?


SBA loans, commercial loans, hard money, private lending, or seller carryback. The most common method we see is SBA loans, however the requirements are getting much stricter. If you plan on getting a loan on an assisted living home or project you need to prepare your business plan. This is not like getting a loan on a residential home. This is a business loan and the banks treat it as such. If you do not prepare properly they will treat you accordingly.


Will I need to provide a proof of funds?


Depending on the seller, you will need to provide proof of funds before seeing the property. It is important to show that you are a serious investor who has the ability to follow through on the purchase by showing you have at least 20% for the total purchase price. It is important to respect the sellers time and efforts for showing you the home. If you do not have the resources recivece a loan it is the polite not to see the home during that period. 


Do I need to have experience in this industry?


It greatly helps when looking at these care homes to know the business well, in order to be able to evaluate at what price the deal will make sense based on your projected expenses and business plan. The first questions a seller will ask us when we say we have someone interested in their home are "what is their background?" and "what do they know about this business?".  These homes involve a full on business unlike buying a passive investment, such as an apartment complex. Many people are interested in buying assisted living homes but unless they are already in the business, have obtained education or hired a consultant in the industry their chances of buying a care home significantly decrease. It is also important to the bank that your background would provide proof that you could run an assisted living home. This is going to be most critical if you are trying to get an SBA loan. It is important to have the combination of proof of funds (whether yours or your private investors) and the knowledge to be able to move forward in this industry.

What information should I expect a seller to provide me with before putting an offer in?


The amount of information a seller will provide before an offer is given is up to the seller. If the buyer has shown they have the financial capability to buy the home and business and they have a solid background and/or partners to run a care home you can expect to get a good amount of information. However most sellers do not want to give out their information to just anyone. It is important to respect their privacy but also to be able to show without an unreasonable doubt that you are a good candidate to buy the home. 


Is it reasonable to ask the sellers to help me transition for a few months?


It depends on the sellers you are buying a business from, but all sellers that we have worked with have offered to stay on anywhere from 1-6 months to help consult in training a new manager and caregivers. This business involves caring for loved ones, and it can really help to have the previous owner help you transition into taking over the role of caring for the residents. Most always this will involve some type of payment to the seller for their services. This payment can range and will depend on the scope of work and what they are willing to work for. 

Frequently Asked Questions: Buyers