Why Doctors Should Consider Investing in Assisted Living Facilities

As a physician, you’re used to thinking about the future and planning for the well-being of your patients. However, have you considered applying the same foresight to your financial future? Investing in assisted living communities (ALS) is an opportunity that offers both financial security and the chance to make a meaningful impact on the lives of seniors. Here’s why assisted living communities (ALS) are a great investment today and for decades to come.

What are assisted living residences?

Assisted living communities (ALS) are facilities designed to provide care and assistance to older adults who require assistance with daily activities such as bathing, dressing, and medication management. Unlike traditional nursing homes, ALS residences offer a more intimate, family-like environment, typically accommodating 5 to 16 residents, depending on the location. This setting allows for personalized care and a better quality of life for residents.

Growing demand for assisted living

The demand for long-term care facilities is expected to explode due to demographic changes. The baby boom generation, numbering 77 million, is aging rapidly. Every day, 10,000 baby boomers turn 65, and this trend will continue through 2030. Additionally, the U.S. Census Bureau projects that the number of Americans aged 65 and older will double to more than 95 million by 2060. This increase in the elderly population will significantly increase the demand for long-term care facilities, including nursing homes. Currently, the United States already has a shortage of about 1 million long-term care beds, a deficit that is expected to grow.

Why this request is important

As the population ages, the need for quality assisted living options becomes more pressing. Many seniors prefer the comfort and familiarity of a home environment over large institutional settings. The COVID-19 pandemic has further increased this need. RAL residences meet this need by offering a more personal and comfortable living situation with a higher caregiver-to-resident ratio, making them very attractive to families looking to care for their elderly loved ones.

Transforming the landscape of assisted living

As physicians and healthcare professionals, investing in RAL residences offers more than just financial returns. You have a unique opportunity to transform the landscape of assisted living care by providing the quality, compassionate care that seniors deserve. Your medical experience and commitment to patient care can help set a new standard in the industry, ensuring that senior residents receive the best possible support in a nurturing environment, allowing them to live out the rest of their days in a community that cares about them.

Profitability potential of assisted living residences

Aside from passively lending money or investing in an assisted living facility syndicate, physicians who want to take a more active approach can consider two typical models:

1. The operating lease model. In the operating lease model, you, as the investor, own the property and lease it to an experienced operator who runs the assisted living business. This model provides stable, predictable income through long-term commercial leases, typically between three and five years. Depending on the category of home, occupancy rates, and quality of the operator, you can earn $3,000 to $5,000 per month in relatively passive income. The operator handles all of the day-to-day management and maintenance of the home, reducing your responsibilities and increasing your cash flow. This hands-off approach is particularly attractive to busy physicians who want to invest in real estate without the demands of day-to-day management.

2. The owner-operator model. If you prefer a more hands-on approach, you can choose to own and operate the RAL home yourself (or with a manager). This model offers higher potential returns, as you would keep all of the profits from the business. By managing both the property and operations, you can earn between $5,000 and $15,000 per month or more, depending on occupancy and service levels offered. However, it also requires more time and involvement in day-to-day operations. You will be responsible for managing staff, caring for residents, and ensuring the property meets all regulatory requirements. While this approach requires a greater commitment, it offers the satisfaction of having a direct impact on the lives of seniors and their families.

Assisted living communities represent an unprecedented investment opportunity for physicians, allowing them to take advantage of the tsunami of money while generating substantial cash flow and providing exceptional care.

Alex Schloe is a family physician.