Table of Contents - Assisted Living Facility Investing with Emmanuel Guarino
Dave Debeau [00:00:08] Everyone, this is Dave Debeau with another episode of the Property Profits Real Estate podcast. Today, I've got someone very, very interesting on the podcast.
Emmanuel Gaurino [00:00:18] Are we talking about a topic
Dave Debeau [00:00:21] that we haven't touched on yet? So I'm really excited about this. And our special guest for today is Manny Greeno. How are you doing today?
Emmanuel Gaurino [00:00:28] I am doing very well. How are you today, Dave?
Dave Debeau [00:00:30] I'm fantastic. So many here calling in from Beautiful Phenix, Arizona. Yeah, I'm here starting to get Chilean beautiful Kamloops, British Columbia. But it's great to have you on the call. I'm really excited about talking about assisted living facility. So first of all, why don't you tell us a little bit about because I know this is what you do with your father.
Emmanuel Gaurino [00:00:49] Yeah, that is correct.
Dave Debeau [00:00:51] How did this all happen? How did you guys get into this system?
Emmanuel Gaurino [00:00:53] Yeah, well, a number of things happened. My father had heard about this idea about 20 years prior. There was a man on the front of the stage and he said assisted living is where you want to be. And he talked about it for about 15 minutes. And my dad ran up to him after the presentation and said, show me how to do this. And the gentleman said, I can't show you how to do it because I don't actually do it. And so we've all met people who are like that. You should do it, but they don't do it themselves. So a few years pass by and my grandmother, she was starting to get older and started to need assisted living of her own. And my father had always wanted to get into the business. And so he said, hey, now's the perfect time. We can put our own loved ones in there. We can run. It's great business so we can do good and do well, a lot of people and make a lot of money, which is a combination I think a lot of people are going for. And so that's how we actually started doing it. We started the first one, then the second one. And by the time we started the second one, people were coming up to us saying, How are you doing this? Because when we were starting to get into it, nobody wanted to share any information on the topic. And so when we got into it, we said, all right, we're going to do things differently. We're going to show people how to do it the right way. So that way they don't have to make silly mistakes like we did on the first and second one. And now we're up to six residential assisted living homes. And we figured it out by now.
Dave Debeau [00:02:11] But yeah. All right. Very good. So so for folks that are watching this or listening to this and they're not quite familiar with what exactly an assisted living facility is, why don't you give us your 30 second version of what those things.
Emmanuel Gaurino [00:02:24] Yeah. So this will get their attention. So what we do is residential assisted living. And what that might look like is we have a single family home in a residential area. And in that home, I'll give you an example of one of our homes, kind of a rough breakdown. We have about 10 residents who live in that home, elderly residents who need help with activities of daily living, cooking, cleaning, getting up and out of bed. So there's caregivers in that home helping those residents out with their activities of daily living. But each one of those residents is paying around four thousand dollars a month, a month to live in that home. So we have ten residents at four thousand dollars a month. The homes bringing in around forty thousand. The expenses to run that home might be twenty to twenty five thousand. So after all the expenses have been paid, that one home can be bringing in 10, 15, 20 thousand dollars depending on that particular month. So it's a great new way of real estate investing. And like I said, help a lot of people and you can make a lot of money to.
Dave Debeau [00:03:23] All right, well, it sounds very, very appealing, that's for sure. So what's the difference between what you guys do and what people think as
Emmanuel Gaurino [00:03:29] an old folk song? Yeah, you know, many people when even when I share what I do, they don't even they're not familiar with this. They're always familiar with the big box facility, is what we call it, and what that might look like, as you might have a couple hundred people living in one of those facilities. And let's say for an example, we have five hundred people living there. The biggest differences is that we're a home when someone's in their 80s or their 90s and they've been living on their own for the last 10, 15, 20 years, they don't necessarily want to go move out of their home and move into a giant facility with a bunch of strangers that can be scared to leave the room. Also, if I'm in a building that can fit five hundred people is probably a very, very large building. If I'm in my 80s or 90s, it's hard for me to walk around. So for me to get from one side of the facility to another can be very, very difficult. And the other thing is you should be a caregiver to resident ratio is a lot lower in our homes versus a big box facility in ours. We might have one caregiver to every four or five or six residents in a larger facility, might be one to eight, one to ten to fifteen. And so we can provide a much better service that they need in that time. So that's kind of the biggest differences that you see many times from maybe a classical large, big box facility versus what we do. So it's a much better setting for someone who really needs these type of services.
Dave Debeau [00:04:50] Now, that makes that makes a lot of sense. So many. What kind of shape are the people that are the residents of your facilities in? I mean, how much how much assistance do they need? What are the again, I don't have a lot of experience with this one. Are they kind of the different categories of
Emmanuel Gaurino [00:05:07] homes or so in the senior housing category? There's really three different types of care. You have independent living, which is really more like kind of an apartment style. Everyone's kind of living on their own. They're independent. They don't need help. They don't need assistance. So that's kind of like a sixty five and older community where they can do their own thing. But maybe it's more. We have a restaurant in the middle of the apartments and things like that. There's a golf course right there, but they don't need true assistance. What we do is the next level up. When someone is getting older, they don't necessarily have a lot of medical issues going on. Sometimes they're just getting older and sometimes they just need help living life. And so what we focus on is activities of daily living. So like I was saying, cooking, cleaning, getting up and out of bed, bathing, showering, all of those things are activities of daily living that you were, I wouldn't think anything about. But for them, they're starting to help with those activities and that's what those caregivers are helping out with. Now, the next question, as well as in medical, is it this is it that doctors and nurses, that would be the next level, which is called a skilled nursing facility, which is medical, which is doctors and nurses and all that type of stuff going on. So ours is the level below that, the level above independent living. And what's nice about the assisted living is that there's a lot of people who need the service and it's not medical. So it's not the same type of maybe insurances or liabilities that maybe some of these facilities would have. They were skilled nursing facility from that standpoint.
Dave Debeau [00:06:41] All right. Very good. Well, that's a good explanation. That's a lot clearer for me. So let me ask you this. Your residence, is this kind of a transition place that they're in with you? Because they're they're going from independent living, either on their own and their own homes or perhaps even an independent living facility. But now they're in this assisted living facility. Are they then transitioning on to the next level, which is medical or how does it.
Emmanuel Gaurino [00:07:10] Yeah, so when someone's getting older, sometimes they transition from living in their own home to, hey, it's not safe for me to be living in my own home by myself. What happens if I fall? What happens if I can't do all those things? That's a horror story waiting to happen. We don't want that. And that's where the assisted living is. There is is to help them live their lives and help them out with those activities of daily living that they might be struggling with. Now, someone in the home, they might start to have medical issues and they might have to start moving into a skilled nursing facility or different places like that. But some residents, they stay with us. Might be one year, might be ten years or something in between. And then they move upstairs, which is heaven from there.
Dave Debeau [00:07:56] And so I guess that's kind of a question. Are most of your residents. Excuse the expression, checking in and checking out with you guys on a permanent basis, is it?
Emmanuel Gaurino [00:08:07] Yeah, that definitely is a part of our industry that we deal with as people move in and they move out, they move out upstairs, like we were saying, and some people move on to a higher level of need, skilled nursing. But what's nice about this business is that, like I said, we get to do good, do well, get to help a lot of people in a time of their lives where it's tough for anybody who's listening, who's ever been through that process, understands that it is a tough part of life when you're in that from the children's standpoint and the person who's living there. We want to make those some of their last days as awesome as possible. That's what it's really about. And when you can do that, you can run a very good business and make money, do good and do well. But that's what's nice about it, is we get to do good. We get to help the community, help the people around us. And it's just such a powerful time of their life.
Dave Debeau [00:09:01] Yeah, that makes sense, so I guess another question I've got is, how are your homes? So, again, you're talking about basically a single family home that you're turning into an assisted living facility. You've got a relatively small number of residents there. What do you say? Typically in the end range
Emmanuel Gaurino [00:09:20] kind of thing, yeah, somewhere around there, maybe six to 16 generally speaking, and many times with our home sometimes and I'm speaking, people will say, well, how am I supposed to fit ten residents into a two bedroom, one bathroom, house, rental property, know? And for us, we always kind of laugh because that's definitely not what we're doing. We're not using rental properties. We're not using apartments. What we are doing is using a single family home. It's usually a nicer home in a nicer area, single level. And the rule of thumb that we like to use is three hundred to five hundred square feet per resident in that home. So 10 residents, three thousand five thousand square feet. There's not many rental properties that are three thousand five thousand square feet. And then we also like to have as many private bedrooms and private bathrooms as we can. So we might be converting some the garage space. We might be adding on to the house. There might be a large master bedroom that we put up a wall in between and turn that into two bedrooms. So we do a number of things to these homes to make them suitable for what we are looking to do. But more bathrooms, more bedrooms, bigger homes, nicer homes in nicer areas, because we talked about it's four thousand dollars a month for someone to move into one of these homes. We want to be in areas where the population nearby can afford to live there. There's people we're paying ten thousand dollars a month to live in assisted living and there's people paying two thousand dollars a month and everything in between. So where we want to be is where essentially those baby boomers are, where they live because they don't want to put their mom in a facility two hours away. They want it to be five to 10 minutes away. So we want to be in those type of areas where we have a population of people who can afford to put their parents in these homes at those particular rates
Dave Debeau [00:11:02] makes a lot of sense. So two questions for you. First of all, primarily, are people in their own individual rooms? Are they sharing rooms, if you prefer to have it, as as many individual rooms as possible? But is that the norm or is that the
Emmanuel Gaurino [00:11:17] example when someone moves in to one of the homes? Whenever I go out and go speaking, I always ask the the crowd. I say, if I give you two options, which one did you pick? It's a hotel room. It's one hundred dollars a night for your own private room, your own private bathroom, or seventy five dollars tonight with no bathroom in your room and a stranger sleeping in the bed next to you. And it's like, who wants optional, who wants to be in. And everyone. Ninety nine percent of people pick option A and sometimes you think well isn't it like college in the dorms if they want to be. And it is a little bit different because they would rather have their own rooms or in private bathrooms, the families would much prefer that as well. If mom or dad needs to go to the bathroom, they don't want it to be way down the hallway. They want to be right there, their room. So they have that. And then also we don't know who that other person is. They could be nice. They could not be nice. So people would rather have their own rooms. So the reason why we do that as well is because it's much more desirable. And you can also a lot of times charge a lot higher rate for that. It's more desirable, like I said. So maybe instead of charging three thousand for a shared room, it might be five thousand for a private room. So there's a big difference there and what you're able to charge and the numbers at the end of the day.
Dave Debeau [00:12:32] So you get a lot of our listeners are up here in Canada. So things as we've discussed before, we started recording our a little bit different. But who do you find is paying for the bill primarily for your residence as it themselves is a combination.
Emmanuel Gaurino [00:12:49] It really is a combination. Many times if someone does not have any money to move into assisted living, the state will pay an amount for them to live in a home in our country. It's about two thousand dollars a month for our numbers to really make sense. With ten residents, we like to see it at thirty five hundred dollars a month or higher. That's kind of like our cut off point. That's what we like to see. But when someone is paying to live in one of these homes, it could either be state pay, it might be cash. IRA's investments. They might have long term care insurance, which is an insurance that covers someone to move into assisted living, might be a life insurance policy that they're selling off early, getting some of those funds. Where might be the children? We're helping chip in and help pay for that so that four thousand dollars a month, sometimes it sounds expensive. That's what the national averages in the US for living in an assisted living in a private room. It sounds expensive, but really, when you start breaking it down, it's like, wow, they're getting food, they're getting care, entertainment. All of their bills are being paid for that four thousand dollars, not month. And that care is really the biggest part of what they're paying for, having someone there to help take care of them versus living in their own home, which can be extremely expensive. If you're hiring someone to one on one, come out to your house, take care of you. It's usually around twenty five dollars an hour, which can really add up fast. That's ten, fifteen, twenty thousand dollars sometimes that we see. So ours is much more affordable. They're getting some socialization without. Being around five hundred people and a better caregiver to resident ratio, so it's usually a very, very preferred method when someone's choosing what they want to do, when it comes time for mom or dad to move into an assisted living or have that assisted living care,
Dave Debeau [00:14:32] that makes sense. So I guess one question I have from a business perspective would be understand correctly, most of your facilities are in and around Phenix, is that correct?
Emmanuel Gaurino [00:14:43] That's right. Phenix and Scottsdale,
Dave Debeau [00:14:45] but especially so lots of lots of demand, lots of seniors in those areas. How is it from a hiring perspective to find, keep and stay competitive with your employees compared to the big boxes? In my opinion, might have bigger budgets to work with.
Emmanuel Gaurino [00:15:07] That's a great question. One of the big things we want to make sure we're near a large population of people. We don't necessarily want to be in the middle of nowhere in the woods, in a cabin. And because it's going be very hard for the children, first off to come visit. And it's also hard for the caregivers to get there. If they live 30 minutes away, they're going to work somewhere that's closer. So when it comes to us versus the big box hiring, one of the big things that you hear a lot of times from caregivers who are in the larger facilities is I'm looking over 20 people and trying to take care of all these people all at once. And that's just too much. And they're not getting paid more that it would make sense for them to do it. They're not getting paid three hundred thousand to work in that facility at 50 bucks a day to working hours. It's relatively comparable. And what we hear from caregivers, a lot of times we had one caregiver come to us from a large facility and our caregiver to resident ratio overnight is one to 10. She was working in a facility where was one to fifty one to fifty people. So she came to our home. She's like, this is a breeze. I love it. I actually get to know these people and they're like my family and and she just loved it. So really that's the biggest thing is we might not be able to compete with them as much on the pay scale, but we can compete with them on the working quality, the environment. And also we know their names. We're not some giant hedge fund in New York. That's a faceless corporation. We are. We're the boss. We're the manager. We know who you are. And so that's a goes a very, very long way to when it comes to where someone wants to work from that standpoint.
Dave Debeau [00:16:42] Yeah, that makes a lot of sense. All right. Very cool. So another kind of business type question. So typically, how many employees are required or what's the staff requirement for your typical home? And is is that doable or do you have to have a bunch of these to make it make sense
Emmanuel Gaurino [00:16:59] and have most of the time the state requirement will be what the owners see as needed, which is just pretty up in the air of what that means. What we see, though, is once you get past watching over six residents, it is a little bit tougher to handle that. So like I was saying with that example, if somebody is watching over 20 people, it's just way too difficult to be doing that. That's very, very stressful. So we see one to five is our kind of sweet spot that we like one to five caregiver to resident ratio when it comes to economies of scale. When we had we just acquired three new assisted living, but when we had our first three, what was nice about those is you could drive from one home to the other and ten to 15 minutes so we could buy food in bulk. We could have a caregiver. Could it make this shift? We could have someone from here jump over there and lowered our overall cost. So it's actually sometimes easier having more than one. The first one is always the hardest, right? Because it's new. It's a learning experience. But once you get the first one, then the second one is kind of like kids. You know, the first one is definitely the hardest. And then you get the second and then you're you're laughing. You know exactly what I'm talking about. And it gets easier as time goes on. So I hope that kind of answers that as well.
Dave Debeau [00:18:12] It makes a lot of sense. But I guess is this is this a business where you could have one of them and it would almost definitely make sense? It's doable. It's working.
Emmanuel Gaurino [00:18:22] And that's an interesting thing, too, is, you know, some of our students, some of their goals are, hey, I want to have ten of these. I want to have one hundred of these. I want to make four million dollars each month. Hey, that's great. But that's not everyone's goal. Not everyone's goal is I want to be working one hundred and twenty hours a week. Sometimes people say, hey, I want one of these. I want to make ten, fifteen thousand a month, which is a great living and I want more time to travel. I want more time to do this so everyone will have different goals. But one home. What's nice about this is that instead of owning one hundred rental properties or having get a thousand dollars or whatever it is we're talking about doing one residential assisted living and having significant income coming in each and every month, ten, fifteen, twenty thousand dollars with one single family home, which is a lot less daunting than buying thousands of deals.
Dave Debeau [00:19:10] So I guess the other question people might have is, so does this mean that I need to go out and get all sorts of training and certification and. College degrees and whatnot to become a manager of an assisted living facility, or is that something that you guys higher up?
Emmanuel Gaurino [00:19:24] Yeah, that is definitely something we hire out. You don't need to be in the medical field. What you need to do is align yourself with the right people. So for our homes, we have caregivers in the homes. They're taking care of the residents. We have a manager above them. This isn't a property manager. This is a manager of a residential assisted living. They oversee the residents, make sure that they're happy they're doing well, and they also oversee the caregivers. So if someone needs to switch schedules, they can deal with that. If someone needs to call off, they can deal with that. If someone is not happy, they can deal with that. And then we're just overseeing that manager that's overseeing the residents and the caregivers. That's how we set it up. So we're not in their daily doing the hiring and firing and making sure this resident or that that manager is doing a lot of that and then we're just overseeing them. That's really how we like to set it up, because if you are and there are a lot of people who do this, if you're the owner and the manager and the caregiver, the cook, the baker, the candlestick maker, you bought yourself a job. And a job isn't wrong for everybody. But that's not our goal. That's not what we're going after. We want time to have the travel to do all those things. And that's why we set it up the way that we do.
Dave Debeau [00:20:35] So as we're wrapping up here, what is what does demand look like for these kind of services these days?
Emmanuel Gaurino [00:20:43] Right now, there's roughly about a million beds for assisted living in the US and there's about four thousand people a day turning. Eighty five years old, four thousand times, 30 times twelve is about one point four million people every single year. And that's right. Now we have a monster demand currently, but in the future, we have ten thousand people today who are turning sixty five years old right now. So those people are turning sixty five. They're not moving into assisted living today. But in the future, when we talk about what's good today, what's good tomorrow for the next 10, 15, 20 years, this is an amazing business to be in because that silver tsunami, as we say, it hasn't even hit the shore. So it's a great time to get in now. And then later on 10, 15, 20 years, you can sell off those homes to someone else who wants to pay two to three times what you paid for when you first bottomed and got them started.
Dave Debeau [00:21:36] 15, 20 years, I might have to move into one of those damn
Emmanuel Gaurino [00:21:41] nine a.m., right. There you go.
Dave Debeau [00:21:45] All right, Matt, there's been a lot of fun. Thanks, my friend. So people want to find out more about you and what you and your dad are doing with assisted living. What you think is
Emmanuel Gaurino [00:21:53] the best place to go is our AOL one one dotcom. Roger Allen, Larry, one on one dotcom Ariah, one on one dotcom. We have an intro course right there that they can go through. And it's, I think, an hour to an hour and a half once they go through that. The thing I would recommend, instead of a discovery call, set up that call. And what we do is we just go over, is this the right industry for you? Is this something that you could see yourself doing? Is it appropriate for you? And if it is, that's awesome. And if it's not, that's totally fine, too. That was one of the things that we were talking before we jumped on. What's the biggest thing or mistake? You see real estate investors making the shiny penny syndrome? You know, there's so many different ways to make money in real estate wholesaling, fixed apartments, assisted living, you name it. They can all make you money. But what you need to do if you want to be successful is you have to focus in on one of those things, like a laser beam. They all work. They're all going to take work. They're all going to be tough, but they can all make you that money. And so if you have a desire and you are committed, this can be a really, really good thing. If some of your listeners are saying, hey, this is what I want to do. So that's what I'd really recommend, is watching those videos, that intro course and then setting up that Discovery column, really find out is it the right set going from there?
Dave Debeau [00:23:11] That has been a real pleasure. Thank you very much for sharing some insights into assisted living.
Emmanuel Gaurino [00:23:16] My pleasure. Thank you so much for having me, Dave. I appreciate it.
Dave Debeau [00:23:19] All right, everybody, thanks for joining in and see you on the next episode of Well, thanks very much for checking out the property profits podcast. And you like what we're doing here. Please head on over to iTunes, subscribe read us and leave us the review. He very much appreciated. And if you're looking to create a regular flow of inbound investor inquiries about your real estate deals, then I invite you to attend one of my upcoming live online demonstrations. And you can check that out at Investor Attraction Demo Dotcom Ticker.