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The SBA's attractive 7(a) Guarantee Loan Program has enabled senior care owners to make great strides in serving seniors and growing their businesses. What are your plans for growing your business? If financing is part of the picture, you had better act fast because some of the program's special terms that make it easier and more affordable are expiring at the end of February.
 
Joan F. Kinate, Vice President at Wells Fargo SBA Lending in Green Bay says the additional monies available are a result of The American Recovery and Reinvestment Act, and contain a number of loan fee reductions and higher guarantees. This, combined with lower down payment requirements and longer-term amortizations makes this financing option very attractive for business owners. "These programs help small business owners keep their cash in the company, to weather storms like we've had over the last 18 months, and to invest in the company for growth," Kinate says.
 
Here is a capsule review of the 7(a) program:

 

For your own purposes, think about how the program might enable your business to do and earn more. Potential uses could include:

 

If you are interested, Kinate says there is a sense of urgency in play here. "It takes time for the paperwork to be processed. It is important to get the process started, and the information in to us as soon as possible," she explains.
 
While certain features of the 7(a) program expire at the end of February, Kinate hopes there will be more stimulus money available, but there are no promises at this time. "If you're sitting on the fence about some type of business expansion or improvement, I encourage you to take advantage of the opportunity that's out there," she adds. While the benefits of low down payments and long-term amortizations will still be available, the waiver of the guarantee fees and higher guarantee amounts may not.
 
For more information, contact Kinate at joan.kinate@wellsfargo.com, or call 920-436-6103.

 

 

WISCONSIN 

Wisconsin:  Price Change - 26-bed residential care apartment complex. 11.3% cap with upside.  Priced at only $82/SF.  Motivated Seller - $1,950,000.

 

Wisconsin:  Price Change - 24-unit independent senior apartment building with two commercial units.  Priced under $10,000 per unit and under $9/SF.  Motivated Seller - $250,000.

 

 

Wisconsin/Minnesota:  Two assisted living facilities with total of 27 units, licensed for 31 beds. Excellent cash flow, high occupancy and 17.6% cap - $2,900,000.

 

Contact Daren Dudgeon about these and other Wisconsin listings - daren@seniorcarerealty.com or 877-834-4175.

 

 

Arizona:  Three assisted living homes with 20 beds on 7 acres.  Fully occupied with a waiting list.  Excellent reputation with a 10 year track record.

 

Contact Kerri Ciesielski about this and other Arizona listings -

kerri@seniorcarerealty.com or 877-834-4175.

 

 

 

 

 

In my previous article we discussed some of the benefits of investing in the senior care industry. This article will discuss some of the risks that a potential investor could confront in the industry.  The Great Recession has shown a bright light on the snares of easy credit and the ensuing problems that which follow: a reduction in asset prices, loss of jobs, more government regulation, and more. Although this "black swan" contains many learning lessons and will affect the economy for years, there are some risks that every investor will face whether the economy is growing or in a recession: 

 

Federal, state, and local government agencies all have significant roles in the life of the senior care industry. Building codes, safety and environmental laws, state regulation of senior care facilities, employee work laws, and entitlement programs used by residents to help pay for services are a some of the ways the government regulates or is involved in the industry. The risk of more new laws or new interpretations of current laws requires the investor and operator to keep up with changes.  An effective way to keep up with changes is through participation in trade organizations, such as the Assisted Living Federation of America (ALFA) and various state trade associations.
 
A well-run operations team is crucial to maximizing the investment potential in a senior care investment. Your operations team faces many challenges: caring for residents, managing employees,  maintaining stable resident occupancy, complying with regulations, and properly maintaining the real estate. A close relationship between the investor and operations team is essential in cultivating a profitable and headache-free investment.
 
Along with other forms of real estate, investment in senior care can be an illiquid investment. Unlike stocks or bonds, senior care real estate is generally not purchased as a "current asset" and an investor in need of cash can expect to wait months for a sale to close. An investor looking to establish a stake in the senior care industry should be prepared to have a long-term outlook with the investment.
 
While these risks are important, there are others that investors should consider.  Having a sound understanding of each property and its operations helps to identify and manage risks, as well as teaming up with qualified professionals in the industry.  Investment in senior care real estate comes with risk but that risk can be managed.
 
For more information, I invite you to review "Addressing Your Risk Potential in Assisted Living" from our November 2009 e-newsletter. In this piece, we spoke with Christine Kenyon, a senior account executive and partner at M3 Insurance Solutions for Business.