The Formula To a Profitable Financial Model for a 16-Bed Assisted Living Facility

Welcome back to Assisted Living Investing! Here, we explore everything related to assisted living investments, from getting started in the industry to building your dream assisted living mansion. We’ll also cover how to efficiently run your operations while achieving financial freedom and serving your community effectively.

Today’s session is particularly exciting as I will share an insider’s look at the numbers involved in running a luxury memory care mansion, specifically a 16-bed facility. I will discuss the high level of care we provide, the associated expenses, and how it’s still possible to achieve substantial profits in this sector.

When I entered this field a few years ago, I was initially skeptical. My first coach shared his impressive earnings from multiple properties, claiming profits ranging from $10,000 to $30,000 per house. However, I struggled to reconcile those figures with the income and rent data I observed. To gain clarity, I directly asked him to share his numbers. His cryptic response—“I don’t even share those numbers with my family”—left me wanting more transparency. I realized I needed a solid understanding of the financial realities of assisted living investments to ensure safety and profitability for myself and my investors.

A common challenge in this industry is that many investors cut corners due to insufficient budgeting and financial planning. This often results in inadequate care for residents and less profitable operations. Today, I want to highlight my own financial metrics to demonstrate what a well-structured assisted living facility can achieve.

Here's my Financial Model for a 16-Bed Assisted Living Facility:

Income Breakdown:

In my luxury memory care mansion, I charge approximately $8,000 per month per resident. For 16 residents, this amounts to a total income of $128,000 monthly. I will break down my expenses to provide a clear perspective.
Expense Breakdown

Payroll:
Two caregivers at $18/hour for 24-hour coverage (48 hours/day) plus two managers on salary and a chef. This totals approximately $41,730 per month.

Building Costs:
The 10,000-square-foot mansion cost $2.2 million to build, resulting in monthly expenses (including mortgage and taxes) of about $13,812.

Insurance:
Comprehensive coverage amounts to $2,550 monthly for property, liability, and workers' compensation insurance.

Utilities:
Utility costs (water, electric, gas, internet) are approximately $2,060 per month.

Food and Supplies:
With a chef on staff, my food expenses (including meals, PPE, activities, and office supplies) total about $6,000 monthly.

Hiring and Maintenance:
Hiring costs average $700/month, while maintenance expenses are budgeted at $1,000/month.

Profit Calculation:
Total expenses come to about $68,812, leaving me with a profit of $59,188 per month. This easily surpasses my annual goal of $500,000, which breaks down to about $41,667 monthly.

Alternative Pricing Models
$7,000 per month:
At this rate, my income would be $112,000, yielding a profit of $43,188, still exceeding my annual profit goal.

$6,500 per month:
Charging this rate would generate $104,000 monthly, which is still a strong figure for this business model.

Conclusion:
By establishing a well-planned financial structure and offering a high-quality product, you can achieve both profitability and satisfaction in the assisted living industry. If your goal aligns with financial freedom and creating a caring environment for your residents, this model could be your pathway to success.

Stay tuned for more insights and strategies on how to thrive in assisted living investments!

​