How to Maximize Income from Your Assisted Living Investment

Welcome back to Assisted Living Investing with Brett Chotkevys! Today, we’ll dive into practical strategies to boost your assisted living revenue, increase rents, and maximize the potential of your investment. As someone who is passionate about maintaining a luxury product, I believe in setting ambitious financial goals. For me, earning six figures a month in income from my assisted living properties is non-negotiable, and I'll share how you can do the same.

Focus on Income, Not Just Cutting Expenses
There are two main ways to increase profitability: cut expenses or raise income. While reducing expenses like labor or food may seem tempting, over time, these cuts can harm your reputation and quality of care. This could lead to vacant beds, lower rents, and ultimately reduced profits. Instead, I recommend focusing on increasing income, as the potential for growth is limitless. While expenses can only be reduced to zero, income can always be scaled up, and that’s where we’ll focus today.

Enhancing the Physical Product: Location and Building
1. Choose the Right Location
The location of your assisted living property is critical. Opt for affluent areas where residents can afford higher rents. For instance, instead of targeting neighborhoods where rents range from $3,500 to $4,500, aim for areas where rents are $6,500 to $8,000. While properties in these neighborhoods may cost more initially, the higher rental income will more than cover the increased mortgage payments.

2. Private Bedrooms with Baths
Residents (and their families) are willing to pay more for privacy and comfort. Offering private rooms with attached bathrooms can increase rent by $1,000 or more per month. When selecting a property, consider if it has enough bedrooms or space for an addition. For example, in my first home conversion, I added 3,500 square feet to create 15 bedrooms, which allowed me to charge premium rates for private rooms with baths.

3. Room Size Matters
Room size also affects pricing. In my market, there’s a significant difference between a smaller room (11x11) and a larger one (17x14) with its own bathroom. This difference can be worth an additional $1,000 in monthly rent. When planning your property or renovation, ensure the rooms are large enough to justify higher rates.

4. Furnished Rooms
We found that providing fully furnished rooms increases convenience for families and justifies higher rents. By offering turnkey rooms with a leather chair, TV, and dresser, we charge an extra $500 per month. While furnishing each room costs about $2,500 upfront, the ongoing profits make it a valuable investment.

Upgrading Your Services: Enhance Care to Solve Bigger Problems
1. Target Higher-Needs Residents
To increase revenue, consider shifting your target market to residents with greater needs. Instead of focusing on relatively independent residents, I cater to individuals aged 85 to 100 who may require help with mobility, toileting, and memory care. By solving more complex problems for families, you can charge higher rates.

2. Provide End-of-Life and Memory Care
By specializing in end-of-life and memory care, you can differentiate your facility and charge premium rates. My facility offers these services to residents in their final years, allowing us to charge more while providing families with the peace of mind that their loved ones are receiving comprehensive care until the very end. This approach has enabled us to command higher rents, increasing overall profitability.

3. Invest in Licensing for Specialized Care
If you want to offer more advanced care, ensure your facility has the necessary licensing. Whether it's for memory care or end-of-life services, upgrading your license can open doors to higher-income residents. Review your state's licensing requirements to explore these options.

Increasing Income Through Facility Amenities
1. Luxury Amenities
Luxury amenities play a crucial role in justifying higher rates. Ensure that your facility has spacious common areas, a dedicated activity space, and high-quality dining services, such as an in-house chef. The goal is to create an environment that offers a premium experience—something that stands out compared to larger, less personalized facilities.

2. Offer Fully-Managed Services
The more comprehensive the service, the more you can charge. We provide everything from furnished rooms to full-time caregivers, managers, and chefs. By solving all the logistical and care challenges for families, we charge higher rates while maintaining a high standard of care.

Conclusion: Why Increased Income Matters
At my memory care mansion, we charge about $8,000 per month per resident. With 16 residents, this results in $500,000 annually in revenue. This income allows me to hire full-time staff, including two caregivers, two managers, and a chef, ensuring top-tier care. More importantly, the increased revenue has given me time freedom. I now work just half a day per week, attending manager meetings, while the facility runs smoothly.

​Focusing on increasing income, rather than cutting expenses, not only boosts profitability but also enhances the quality of life for your residents and gives you more personal freedom. If you want to elevate your assisted living investment, these strategies can help you achieve your financial and lifestyle goals.