• May 14, 2015
  • Comments : 3
  • Posted By : CoffeeRealEstate
  • In Category : Real Estate

5 Tips for Purchasing a Care Home

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Care Home for Sale


Care home properties offer a substantial opportunity to grow wealth.  The prospect of significant cash flow and asset gain draw people to invest in care home properties and businesses.


Care home properties are more about the business opportunity than real estate. The standard real estate investor is looking for ROI (Return On Investment) but with the presupposition owning an asset, not running a business.


Therefore these five tips for purchasing a care home property is more about the whole process, not just finding a house to buy. Also, the many types of care homes have specialized issues that need to be understood before investing in the opportunity. These are a beginning guide, not a blue print to build a care home enterprise.


Tip one is the government issues. Each type of care home requires the correct license. A few types of care homes are Adult Residential Facilities (ARF), Residential Care Facilities for the Elderly (RCFE), Group Homes (GH), Alta California Regional Center (ACRC) service provider and more. Each one requires government license, qualifications, education and more. Knowing exactly what is needed before buying or starting a care home is imperative. TYPES OF RESIDENTIAL CARE HOMES



Tip two is the property issues. First know if a care home can be operated at that location. Check zoning, CC&R’s and HOA’s before investing in the property. Check to see if the property meets current government standards to the type of care home planning to be operated. Also, make sure the layout will work with the type of care home.


Another aspect about property issues is funding. Some lenders will not make loans on a converted garage property. Also know if ADA compliance or fire systems are needed in the type of care home to be operated.


Tip three is a business plan. This may be mandated with some type of financing. But even if not, understanding that a care home is a business is key to the long term success. Marketing is an important issue that needs to be understood. How is the care home going to get clients? Staffing is another key area that needs to be known. Accounting and financing issues must be realized with in the business plan.


Tip four is staffing. Most care homes are 24 hours a day, 7 days a week operations. People are critical to care home businesses. Also, most staff has to meet experience and education qualifications. And many have ongoing training as well. The staff also has to be trained about the specific care home and the rules and regulations that apply to it. Compensation is also very important to the staff and the profitability of the care home.


Tip five is finances. Finances have three basic aspects. The first is the fun one. What are the financial goals; how much money the owner wants to make for the investment? The next two are not so fun. Where is the money coming from to buy the care home property and/or business? This is reality check number one. The down for most loans start at 20%. Finding a lender for care home properties is not an easy task. The last area of finances is the monthly overhead and cash flow issues. Don’t live in a dream world when evaluating the numbers. Real life means having back up funds and plans.


A bonus tip is futuring. Picture yourself in the role of care home owner a year from now. Think of all the things required and look at the money to see if that is something worth doing. If the vision is, I would love doing that, than move forward with the opportunity. If the vision is, that is not me, than look for other real estate opportunities.


Care homes can be great investments. Care homes help people and are great for society. Use these tips to identify if care homes are good for you.

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