AI Live - Land Shark Mastermind

I have partnered with Lori on 3 residential assisted living, one just as funding and two as actual passive investor. So that has been amazing. There it is. I found it, I found it, I found it. Yay. Okay, Lori. Seasoned entrepreneur, real estate investor, business owner with over 37 years of experience in property management, real estate investing, and business development. Throughout her career, she has successfully managed both residential and commercial properties while building a strong investment portfolio. In addition to her real estate background, Lori spent over 20 years in the temporary staffing industry where she owned and operated a successful staffing company. Which also comes into play with the residential assisted living. Uh, today Lori owns 7 residential assisted living homes, 1 in Las Vegas and 6 in Arizona. She's passionate about showing, sharing how RALs provide quality care for seniors while creating meaningful investment opportunities for entrepreneurs. She's been married to her husband for 30 years. Congratulations for that. And is the proud mother of 5 children and grandma to 13 beautiful grandbabies. So this is my amazing friend Lori. How are you today, Lori?

I'm doing well, thank you.

Well, we're happy to have you here today. We're going to keep this pretty short. We did have technical difficulties, so we're kind of on a time crunch. I'm going to jump in and ask you a few questions that the people watching this might want to know, because we're here to educate investors on all the different asset classes so that they can start adding— like Catherine says, add commas to their bank accounts, right? So we're going to talk today on this asset class, residential assisted living. So why don't you tell us what is a residential assisted living and how does it differ from like traditional, like, care? Yeah, care for older, for older people.

So there are, those are the options are basically large. They're called big box, but facilities. So there can be multiple floors, multiple types of levels. But a residential assisted living is a home. It's a home environment. And it doesn't take care of any medical needs. It's all of their ADLs, which are your daily activities. So yes, so that's what all daily activities— that's bathing, feeding, um, you know, if changing, if you need to be changed, you know, after going to the bathroom, you know, whatever that that might be. Um, it's your, uh, it's your daily living activities. Activities of daily living is what a residential assisted living home does. And you have 24-hour caregivers, um, and if there is a medical need, then they are sent to the hospital, uh, or a doctor can come to the house, or a nurse can come to the house. So that's— I'm gonna try to answer it quickly like that.

Well, that's great. So I think the difference really, um, between the residential assisted living and maybe a traditional nursing home or assisted living facility is, uh, more personalized care. And more maybe a setting at home so they feel, they don't feel like they've been put away into, you know, in nursing homes. So I like that personalized touch about it. That's what was super attractive to me.

Yes, for sure.

So I, and I think it's a great, it's a great thing. So let's see, what does a residential assisted living home actually do to generate revenue? How does it make revenue?

Um, so every— so when someone is there, people might call them patients, but they're not patients because it doesn't have anything to do with medical. So they're renters, they're, they're residents. And most residential assisted living homes are 10 beds. Um, you can share a room or you can have a private room, but that's how you generate is basically rental income based on beds.

Okay, that's awesome. And I guess a private room would create more income than maybe a shared room?

Not necessarily. A shared room is times 2, and a private room is just 1 person. So, but it's more expensive. But yes, it would be more expensive for the person staying there, but not necessarily more income for you as an owner.

Okay. That's awesome. Okay. What are the biggest misconceptions that people might have around residential assisted living? Like, what is something that is just not true that you think people believe about residential assisted living?

I think a common thing that we hear from people is that they're afraid of the liability. And I just don't think that that is— you're covered, you're covered by liability insurance. Things happen. They are elderly people, so things are going to happen. People are going to fall.

There's—

so, but they are very, very regulated by the state. And as long as you are doing your documentation correctly, it's— I mean, and you have liability insurance that covers you, so, and you have workers' comp insurance that covers your caregivers as well. And so those I just don't think that the liability of what people feel that is there is, is really there. That's why all of these systems are in place, and that is why the state regulates it so much so that it can still be something that you can do and be covered. I also think that people think that you need to have a medical background in some way, even though my business partner is a nurse. And probably why and how we got into residential assisted living because of her exposure to it. But it is not necessary to have a medical background to be able to do this for sure. And as a matter of fact, I do think a business background is probably better because it's important to look at finances and look at what's coming up and making sure the cash flow works. It's also very important. I don't know if this is a misconception or if people just don't plan well enough, But you do need to have enough capital for that first year. That first year is, is very, very important.

What is the biggest expense that's involved in operating one successfully?

For sure, the caregivers. It's your very most expensive. And so it's very important. I would probably say the first 6 residents out of 10 pay for your caregivers. So those last beds are very important. It's important to be full. Stay full, you can go down to 9 and be profitable. But when, when your beds rent for $4,500 to $7,000, just one person being gone makes a really big difference.

Yeah, that's true.

So that's a really big difference in your, in your net profitability at the end. Yeah.

Occupancy is very important.

Yes.

So what, what has been like the biggest challenge that you've faced doing these types of assets and how did you overcome that?

Um, I would say the biggest challenge is the caregivers. Uh, so they are there 24/7 and you can't be there 24/7, so you have to have some great systems in place. Um, and you have to have a good manager because you personally do not want to create a job for yourself. I mean, you are going to be busy and you do make day-to-day decisions, but you're not in the home you know, as much as your manager for sure. Um, systems in place and just doing the same thing over and over is crucial and very, very important.

That's awesome. So what do you think would be, um, like the biggest risk that investors should understand before getting involved in one of these?

Um, well, you want to evaluate the zip code, you want to evaluate the need, um, where you are. Um, there's We took like a— we had a lot of training before we even did one. And one of the things that they said is to look for the big box facilities, um, and anywhere within that zip code is a safe— you'll have a safe, um—

oh, that's interesting.

But something that has really helped us is in Arizona is we have a great manager, and she's— it's not just her, she has a whole team. And so they are very, very familiar familiar with the zip codes that work and the ones that don't. So you want to find someone that already knows that. Um, you can't just guess. Um, and even if someone— or if it's— if you're purchasing one that has already been existing, you'll be able to see how full it has been over the years, so you, you can gauge by that. Um, And one, just because one is successful doesn't mean it's going to be successful when you take it over. And just because one isn't successful before you take it over doesn't mean it's not going to be successful either. So if it's in the right zip code and you have the right team and you have the right systems that have worked well for you in the past, you just, you can duplicate it. You can just continue to duplicate it. Right.

So if investors come in and invest in one of these and they're basically a passive investor, do they have to be involved in any of the day day-to-day activities?

No, not at all. No, no. But they can be as involved as they want or to be able to learn the business as much as they like. So that's absolutely something that it's an option. But no, as a passive investor, no, not at all. As a matter of fact, the ones that we have, they are very, very passive. So yeah, they not involved at all. But when they do have questions, it's, you know, we can get them answers.

What does a typical timeline look like if an investor comes in, they want to invest in one of these, say you're doing a value-add. So you've either bought a property and you're converting it into one of these or you're buying an existing one. You're going to, you're going to, you know, refurbish it, restaff it, whatever you need to do to get it back to profitability. How long should they wait and expect to get return?

Um, well, I probably didn't know this before we even got started with it. We had, we had higher expectations for just 3 to 4 months, but I think what we have experienced is 1 year is a really good mark to be able to— your home needs to start gaining a reputation, and if it was already owned prior to that, they already had a reputation. So you need to overcome that reputation. They need to understand what your home has to offer for the future, and When you say the reputation, you're gaining a reputation with the facilities around, like the rehab facilities, the hospitals. Those are the people that refer to your home. And so, um, and then they refer to big box facilities as well. And big box facilities also will refer to a home environment because they're two different things. And so some people thrive thrive more in a facility environment, and some people thrive more in a home environment. In the home environment, this is kind of not answering your question, but hopefully I did already. But those 10 people really get to know each other, and they become friends. It's a home. It's a, you know, it's a bunch of roommates. It's a, you know, you're all sharing one home. So yeah, I love that.

I love that about that. So if somebody wants to invest in this asset, what would you say would be a question that they should definitely get answered? And what might be like a red flag that they should say, oh, I don't think this one's for me? Hmm.

Wow.

Just when they're considering investing in one, they definitely need to know who their operator is. Like, you're vertically integrated. So if an investor invests Yours are— you're operating them, you're in control, you know, um, and so somebody could do due diligence on you. But if it's not you and it's somebody else, what would you ask somebody knowing what you know that might be able to give you a, a sneak peek behind the, the curtain to see if they're, if they're a good fit or not?

Um, well, I can just I guess speak by my own experience is we not only interview the people that we're partnering with, but it goes both ways. So get to know the person that you're considering investing with, get to know their projects, spend time talking with them. We all have women's intuition. Do you even like them? You know, and You know, we, we always talk about like, uh, you know, courting. Basically, you're courting someone and then you decide to get married. Um, so take the time, uh, to get to know them. And how— I, I'm— there's not just one way to do that. So everyone just, just find that way. Um, I know for us it's gotten easier. I mean, I just have to say Tracy was a part of our very first one. Um, and so now we are at number 7, but that very first one, there there was a lot of learning to come along with that. And we, we personally spent almost $60,000 just to learn it, when honestly, to me, we learned a lot more by just the school of hard knocks, by just going in and doing it and start forming those relationships in whatever city that you're doing, because that's where those referrals come from, are those relationships that come about. And that's once we did that. That's how we— the rest of them are in that same town. That, that was our number one. Um, the rest are in that, but now everyone knows us, and now when we have a home, it just goes so much faster. Um, and they know our quality. They know the caregivers that are standard, our higher standard. You get to know for that. And if you're— if you're have a lower standard, you're going to be get— you're going to be known for that as well.

Yeah, I think some of the hurdles that we went through on that first one really probably taught you some of these things where, how do you evaluate a property now to determine whether it's going to become successful based on regulations and even what, like property lines and just all the different things. Yes. That can happen. Yeah. So trial by fire. Like Catherine, Catherine, we like to say we build the airplane while we're flying sometimes.

But I honestly, I'm just gonna say, and this is just my opinion, and I mean, but I think that that is the best way.

Yeah, it really is.

I just, I mean, if we would have put $60,000 into our first one and just made mistakes, I just feel like we would have learned so much more. But I think we all feel like, oh, we need to learn one more thing before we do it, one more thing, one more thing. Um, but I would, I would absolutely say for us, the easier ones, because we've done it both ways, is to buy one that's already existing. And you can even— you can do your due diligence in every way on that. Um, so it's how long has it been in business, how, how, you know, the occupancy rate, meet the caregivers, how long have the caregivers been there, how often do you have turnover, um, you know, all those are all normal business questions. Um, what is the home— this is a big one though, so taking on these ones that are already existing— what is it? What, what's the deferred maintenance? That was huge. We didn't negotiate that with our first one, and we learned that, and we never did that again. So you go in and you have your list, and if you want us to buy this, then all of this maintenance needs to be done before we get in. This isn't something that, you know, you pay another $20,000 to $30,000 to get it to be your standard. What's your standard? So, and there isn't one standard, but you have to have your standard.

I like that. Yeah, that's great. So where do you see this industry in the next, say, 10 to 20 years?

Um, well, there are tons of research, you know, out there that the silver tsunami Within the next 10 years, absolutely, there are not enough. There just can't even be enough for what is going to be needed. So that's just summarizing it, but you can look that up. Look up Silver Tsunami, and you can read all about the statistics of what that is bringing.

Yeah, it's going to be overwhelming. There will not be enough housing for us, for people aging out. So, yes. Definitely a good need for sure.

So, um, there's one thing that I feel like also wasn't taught to us, even after spending $60,000, um, is, um, there's definitely a difference between Medicaid, uh, having your home be Medicaid certified and being private pay. If you, if you purchase an already existing residential assisted assisted living home, um, and it's already Medicaid certified, there, there is a value to that. There really is, because the process of doing that is— takes quite a long time. Um, and you can always do private pay. Private pay is much easier. On the first, you have your rent. Um, when you have Medicaid, um, it can take 3 months for you to actually get your money. And then once you're getting it, it's consistent after that. In that, in that 3 months, the person could pass away. And so there's, you know, and, um, this part, please, um, forgive me because the— who you— who we're talking about is our people, um, and they're very, very important, and we care. We really do care. Um, but when I'm talking about numbers, um, it seems a little uncaring because you're just talking about what this person means to the business. Um, but our, our heart and our everything is about these people, and it's about how we can improve their lives. So everything that we do is about that. Um, but yes, being profitable is very important, and, um, and the beds being filled, literally, it's the bottom line. It's the everything. And even that very last person, that's $5,000, that means your profit was, you know, $6,000 or it's $11,000. So that's quite a bit different, you know. And it's just one person. Um, and, um, it is hard when you get to know these people also and they pass away. It, it's hard. That part is hard. So is there that— I would say that that is also one of the very hard things. And I've gone to several of their funerals. Um, and it's— that part is hard because they're real people and they matter, and how they're treated really matters. So in what we're doing, are we making a difference? Um, while, you know, because we all— as all of us as investors will have a rental, we have a short-term rental, we have a long-term rental, we do fix and flip, we do— but does— do any of those really make a difference? And honestly, you make a difference in these people's lives. And so if you have 8 people and that means you didn't have any profitability that month, but you just made a difference in 8 people's lives, you still did something really, really good.

Um, investing with impact. I can hear it in your voice, you're so passionate about it. You just came alive when you started talking about the people, you know, because we always do numbers, like, you know, do the numbers. The numbers are always what you have to look at because They're going to tell you whether something's profitable, whether it's not. So we have to talk about numbers and it doesn't diminish that we love these people, want to give them a great quality of life. I mean, I think that's the beauty of marrying it together is that we can make money and do good at the same time and cause an impact. And on the months that it's slow, you can rest assured that you actually did help some people and that, that make it feel better. Talking about numbers, if you've gotten over your one-year hump and you've gotten something stabilized, What would be kind of an average return that you've kind of seen across the board that maybe investors could hope to maybe get across the board?

There, there's an average probably of around $10,000, around $10,000. It can range all the way up in profit a month. Yes, profitability a month.

Okay. And so it just, it just depends on their percentage of investing and what their ownership would be.

So yes. And so yes. So then if the whole net profit is that $10,000 and you're a percentage of that, then of course that's where that would come into play. Yes. And to purchase one and to own one is going to cost different. It is going to be different no matter where your state is, whatever the, you know. So those are all very different. Your cost of caregivers, very different.

Your—

what you can charge for rent is going to be very different. Uh, and so these are numbers that are closer, definitely in the Phoenix area in Arizona, uh, and also pretty, I would say, pretty consistent with Las Vegas as well, although we only own one in Las Vegas. So, mm-hmm.

Yeah. Okay, so if you had to start over today with no portfolio, knowing what you know now, Uh-huh. Would you still choose to invest in residential assisted living?

Yes, absolutely. And we've been investors for so long. We have rentals everywhere and we have short-term rentals. We've done fix and flip, we've done wholesaling. And this is our focus from now on. It's definitely our focus. And you can sleep well at night knowing, uh, that you're making a difference while you're doing it. Um, is it easy? No. If you don't have the right team, it's constant headache. It will be a constant headache. Yeah. If you don't have the right management, because you cannot be in there. And what I love about our Las Vegas one is we live in Las Vegas, so we are there a ton. Um, but we don't need to be. It shouldn't be that way. That's not the way to do it. That's not the smart way to do it. Um, and so we're actually selling that one, uh, and we— the model that we have in Phoenix is so much better, so much better. So we have something to compare it to, and, uh, it is nice to have it in your own town, but don't set yourself up to create a job for yourself.

So the team and the, the operator is the most important thing. I love it. Well, I love this, this, this asset class. Of course, that's why I'm invested in it. And I have loved being your partner. You're amazing. And I really appreciate you coming on here today and helping educate some of our investors who don't know anything about this asset class. So thank you so much.

You're welcome. And I am happy for you to share I'm happy to talk with anyone. I'm happy to help just on the side. If anyone wants my phone number, feel free. I'm happy to, to share.

Yeah, that's amazing.

I'll just tell— we paid $20,000 to have one-on-one person just talking to us and giving us their opinion about the residential assisted living. Don't do that. We did that, and don't do that. So yeah, just throwing that out there.

Yeah. Well, you're always so willing to be helpful and to talk. And when I asked you if you'd come on this, you're like, oh, cool. Presentation. But I was like, I don't need to be one. We'll just talk. So this has been great and very informative. And I think Catherine, did you have any questions? Is Amor and Tommy still on here? Does anybody have any questions? Yeah, I'm here.

No, that was really great. Thank you so much for sharing.

I really appreciate it.

Yes, you're welcome. You're welcome.

Yeah, I love it because it lines up with the doing good while doing well.

Oh, I, you know, I love that. I do. I love that. And I, I actually, I, I don't know how much time we have, but I just have— how we even got into it was, um, my business partner is a nurse of 30 years and she is a discharge nurse at this point. And so she would refer people to they would be leaving the hospital discharge, and she would refer them to residential assisted living. And they would, you know, now and then they would come back to her and say, why did you tell us to go there? Like, ew, it was horrible. And so she started checking them out, um, and she's like, oh my gosh, I had no idea. Um, and then she talked to me about, hey, is this something that you would want to do? And so she took me to a couple, and I'm like, nope. No way.

I am not.

If I would not put my parents in there, no way. I'm not doing that. I couldn't go home and take rent from someone and feel good about that. But then we started seeing these beautiful homes. Their caregivers were amazing. They were clean and organized, and the residents seemed happy. And I was like, what? Okay, yeah, I can do that. I can do that. Uh, and then, and that's what we've done. Um, and sometimes when we take ones on that have already started, we absolutely have to overhaul it and get it to what we would have it be and to improve the lives of these people. And that's what we do.

So love it. Well, it's amazing. Thank you so much for sharing. Yes, thank you. This is absolutely incredible. I, yeah, I, I can already see we're going to have more deeper education on this inside of the Seven Streams Investor Clubs. So this is exciting. I love it.

Oh, well, thanks for having me. I'm always happy to share. You know, I feel, um, I don't know, I just, I also just feel led by God, and it just, every door has just been