We frequently hear from multifamily developers who are thinking about getting into the assisted living market. They control a piece of land and the zoning works for either multifamily or assisted living. The pro forma rents for assisted living are much higher than multifamily so, on first blush, it appears that assisted living is the higher and better use.
Developers with lots of multifamily experience may run into real problems with assisted living. To be eligible for FHA, the project must be licensed by the State Department of Health. There must be an experienced senior administrator who can establish the procedures for resident care including activities of daily living. The operating expenses of assisted living are more in line with a hotel than an apartment project. The cost of turning a new empty building into a fully operational, stabilized assisted living facility may be breath-taking to the unitiated developer.
Multifamily developers interested in getting involved with senior housing might be well-served to start with a 62+ apartment project. HUD recently rolled out a special program just for senior apartment new construction. Seniors make great tenants. So long as the head of household is 62+, families are welcome. Rockhall has extensive experience with the different finance programs for senior housing. We’d be happy to give you a free consultation and evaluate your pro formas.