Residential Assisted Living Real Estate Investment Opportunity – Castle Pines Village

Residential Assisted Living Real Estate Investment Opportunity – Castle Pines Village


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Residential Assisted Living

America’s Senior Housing Opportunity1

The number of seniors is expected to double to 41 million by 2035.2 By 2050, 81 million people are projected to be aged 65 and older.2 This is causing an unprecedented number of seniors, who are expected to live well into their 80s.4 This increased population will cause stress on the so called “sandwich generation” who will have to balance taking care of their children and their elderly parents.5 At least 70% of people over the age of 65 will require some form of long term care services and support during their lives.6 However, the caregiver support ratio will shrink to 4 to 1 by 2030, leaving a gap in care that needs to be addressed for this growing population of seniors.7

All of these factors will cause accelerated growth for the senior housing industry over the next two decades. The occupancy rate for senior housing is currently around 90%, and has held above 85% for over five years.8 Because of this accelerated growth, consolidation is a trend within the industry, as well as contributing to a rise of Real Estate Investment Trusts (REITs) within the space. Assisted living facilities, long being a preferred type from residents, are on the rise. Private-pay senior housing is expected to rise well into 2020.9

The largest threats to this industry include sensitivity from being private-pay, the lack of public knowledge, high levels of new construction, normal real estate risks, and the lack of skilled workers. However, the investor demand for these properties is increasing as their cap rates dip into the low-8 percent area.10 There is a strong investor demand within this rapidly expanding niche because of its strong portfolio diversification and high returns.11 This is a booming market, one that will continue to increase for many years, and will provide the opportunity for significant profits.

Project Introduction and Overview

Project Introduction

Sky Castle Real Estate LLC will raise capital to purchase and renovate this 6,066 square foot estate built in 1994 into a residential assisted living (RAL) home.  The home is located on a wooded, corner lot in Castle Pines Village gated community in Douglas County.  The home is a 2-story with full walk-out basement.  Home will be a Colorado State certified Assisted Living Home licensed for 10 residents in Castle Rock CO.  Home will be leased with a 5-year business operating lease starting at the completion of renovation (estimated Jan 01, 2017). Sky Castle Real Estate LLC will be responsible for real estate taxes and insurance (including liability), landscaping maintenance, home warranty provision, and HOA dues.

Real Estate Amenities

Real estate amenities will include a gated community with emergency services department providing security patrol, alarm monitoring, certified emergency medical technicians 24/7, and access control 24/7, the Canyon Club, the Village Lake Fitness Center, the Summit Club, nearly 11 miles of trails (paved and natural), and 3 parks.

Investment Overview

The investment opportunity for this project is based on an annual simple interest over 24 months with interest payments starting in January 2017 and incrementally increasing until end of term.

Rehab Overview

This home is in need of extensive basement layout reconfiguration to be more suitable for assisted living.  Current home configuration on top-floor includes 3 bed and 1 bath which will be reserved for in-home caregiver(s).  Landscaping with be rejuvenated and entire exterior to be painted with updates to doors, lighting, and ramps.  Fire suppression system is currently configured in the property.  All real estate investment documents, including, but not limited to site selection, floor plan review, and legal documents, will be reviewed by the Residential Assisted Living Academy Board of Advisors.

Contractor Overview

Licensed contractors will be used to complete all work and will be requested to provide firm-fixed price proposals with 4 – 5 month schedule starting demo in July 2016.

 

Next Steps

If this is the type of opportunity that you’d like to learn more about as we continue to rapidly build our RAL portfolio in the Denver area, we’d love to meet with you and learn more about your goals as an investor in this industry.  Please call us today at 720.505.2005.

 

 

1 Residential Assisted Living Academy.  “America’s Senior Housing Opportunity.”  2016.

2 Mace, Beth Burnham. “Aging Well.” The Letter- America (2014). Web.

3 Passel, Jeffrey S., and D’Vera Cohn. “U.S. Population Projections: 2005-2050.” Pew Research Centers Hispanic Trends Project RSS. 11 Feb. 2008. Web.

4 “Retirement Communities in the US: Market Research Report.” IBIS World, Dec. 2015. Web.

5 Families and elder care in the twenty-first century.: Future Child 2011 ;21(2):117-40: Ann Bookman, Delia Kimbrel.

6 Genworth 2015 Cost of Care Survey. Genworth, 20 Mar. 2015. Web.

7 “Housing Market Drivers.” NCREIF Conference 2013, 14 Nov. 2013. Web.

8 “Seniors Housing Occupancy Rises to 90.1% as Strong Demand Surpasses Inventory Growth for Second Consecutive Quarter – National Investment Center.” National Investment Center. 2016. Web.

9 The State of Seniors Housing 2004. Washington, DC: American Seniors Housing Association, 2015. IRR – Seniors Housing & Health Care. Web.

10 “Better Market Spurs Seniors to Sell Homes, Move to Senior Housing by Marcus & Millichap.” NAIOP. 2013. Web.

11 Mace, Beth Burnham. “Aging Well.” The Letter- America (2014). Web.

Comments

  1. Bill Stehlik says:

    I am not clear. Are you offering the real estate or operations and the real estate.

    What is the asking price? Not clear on what your selling.

    1. The intention of this blog was to provide an investment opportunity to private lenders who desire a higher return on their money than the typical retirement accounts. In this particular deal, we were offering a high return on private investments in order to purchase and renovate the property to be suitable for residential assisted living. For this project, we hold the real estate and lease it out long-term (no longer than 10 years) to the business operator.

  2. Justin Bybee says:

    We saw Genes post about this opportunity today. We have many investors within our circle that want to partner with us on more deals. The problem is finding them! We just bought the premier one in our area of salt lake but are looking to expand. If you think we could help you bring the capital to the table, we’d be interested in knowing more details.

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