Friday, January 31, 2025
Brett Chotkevys
Starting an assisted living facility can seem daunting, especially when it comes to financing. However, whether you have no money, some savings, or substantial capital, there are multiple ways to structure your deal. In this blog, we’ll break down how much money you really need to start an assisted living business and explore different funding strategies depending on your financial situation.
Two Essential Components: Experience & Money
To start an assisted living facility, you need two things:
Experience & Ability: The knowledge and effort to find, structure, and manage the deal.
Money: Either your own funds or the ability to raise capital.
If you don’t have both, you need more of one or the other—either leveraging investors if you lack capital or finding an experienced partner if you have money but no expertise.
Funding Strategies Based on Your Financial Situation
1. Starting with No Money
If you have no money but want to get started, here’s what you need to do:
Conduct extensive market research and build a business plan.
Identify example deals (even if not purchasing immediately) to present to investors.
Network and find investors who are willing to finance the deal.
Post about your journey on social media to generate interest and credibility.
Secure financing through private investors or bank loans with minimal upfront capital.
Raising capital without personal funds requires strong planning and networking, but it is entirely possible.
2. Starting with $50,000 in Savings
With some capital, your options expand:
Purchase land or secure an extended escrow period.
Use this runway to work with the city on permits while raising additional funds.
Attract more investors by demonstrating your commitment and initial investment.
Gain credibility by having tangible assets to show investors.
This amount allows you to take a more proactive role in securing a deal while still leveraging outside funding sources.
3. Starting with $200,000 - $400,000 in Capital
If you have significant capital, you can:
Purchase land outright, reducing financing hurdles.
Begin working with architects, engineers, and builders immediately.
Secure financing without bringing in investor partners, allowing full ownership.
Choose between SBA loans for new construction or commercial loans for existing facilities.
With this level of funding, you have the flexibility to structure a deal entirely on your terms.
Leveraging Banks & Investor Capital
Regardless of your financial starting point, securing additional funding is crucial. Here’s how:
SBA Loans: Ideal for new construction projects, covering interest, taxes, and working capital.
Commercial Loans: Better for acquiring existing facilities with immediate income potential.
Investor Partnerships: Offer equity in exchange for funding and expertise.
Equity from Real Estate: Utilize owned property as collateral for down payments.
Each approach has advantages, so choosing the right method depends on your specific deal structure.
Final Thoughts: Don’t Go It Alone
The best deals often involve partnerships. Whether you lack capital or experience, finding the right partner can make a big deal more achievable than struggling with a small deal alone. By structuring your business strategically and leveraging financial tools, you can enter the assisted living market successfully.