Managing A Residential Assisted Living Business (Toby Mathis PODCAST)

Managing A Residential Assisted Living Business (Toby Mathis PODCAST)


– This is Toby Mathis with the Anderson Business Advisors podcast, and I’m joined today by Rocky McKay, who’s with Peak. Is it Peak Care, Rocky? – Yeah, Peak Care Assisted Living Homes. – Yeah, and we’re going to be
talking about assisted living, residential assisted living, specifically. But before we jump into that,
I just want you to get to know our resident expert today. Rocky, why don’t you give them a little bit of background on who you are, where you grew up, and all that fun stuff? – Hello, everyone. Yeah, I’m Rocky McKay. I originally grew up in
Idaho, and I’ve been living down here in Scottsdale,
Arizona, now since ’97. And so then, I got into the residential assisted living homes. Started getting into it about,
almost four years ago now, when we started researching
of how, what needs to be done. And we launched our company, and have been successfully operating now
for a little over two years. – Yeah, that’s fantastic. A lot of folks don’t know
exactly what assisted living is, or residential assisted living,
so could you break it down into bite-size pieces so they understand what we’re talking about? – Yeah so, I mean, really the basic end, there’s two things for assisted living. You got the big-box facilities that you always see everywhere, the big, hundred-person places
and everything like that. And as residential assisted living goes, you’re really in homes and neighborhoods. You can drive by one of
our homes and not even know it’s a residential assisted living home. – It’s just a house, right?
There’s just everybody– – A house, yeah. – A home with a bunch of residents, and maybe it’s been tailored
so they each have a bathroom, with their bedroom or something. – Yeah, yeah. The insides
have usually been remodeled to fit the needs of it, depending on what the individual is wanting
accomplished with that in the individual home. With my homes, you know, they’re all ten bedrooms homes, so we do have a lot of
bathrooms, lot of bedrooms, that we’ve remodeled our homes into, so it just varies from state to state on how many rooms you can have, you know, compared to how many residents. And, but, in Arizona we can have up to ten in a residential setting. – And so, are these
people dementia patients, are they just elder folks,
are there regular adults that live in these, what? – Well, most of them
are they need to have, they have some sort of, like, needs for their activities of daily living, ADL is what we call it. Helping manage medications,
helping, you know, do some washing, you know, so usually people come in
here after independent living. So they might be in a big
box for independent living, but then they need more care because they might be physically disabled, they might be in a wheelchair,
walker, need more help. Or they do get up to
dementia, Alzheimer’s, some that we have in
here that are forgetful, they might be physically
able to do a lot of things, but they are, can’t remember to do it. So that’s the type of individuals that come into our homes. – So, so, an activity of daily living, that’s, like, brushing your teeth, maybe getting dressed, eating– – Yes. All that stuff.
We’re there to help them, assist them, from bathing
them, brushing their teeth, to help them remember
to do the basic things. Because sometimes, you know like I said, you’re dealing with the
dementia, Alzheimer’s, they can’t remember, or they might think that they’ve already did it. You know, but physically they can do it, they just need help remembering to do it. – They just need a helping hand. So, in other words, maybe
somebody who shouldn’t be living alone. – Correct. – And, instead of living alone, they live with a few other
people in a home, in a house. – Yeah, in a house. They
have access to the kitchen, everything that you see. You walk in, you think that you’re
going into a normal house when you first walk into it. – Yeah. – We just have a lot more bedrooms. – What’s the typical age
group that’s in your homes? – In my homes, the typical age
is roughly between 85 and 90. – Wow, okay, so it’s basically, hey, you don’t need to be
taking care of this stuff. Like my mom’s 80, and I keep, we have a conversation
every time I see her. She loves being independent but she also needs a little help, and everyday, she said in two years, she’ll
probably transition out, I keep trying to say, well, you know, don’t go to a big box.
Where are you gonna go, and she has her ideas,
but, this is the idea of somebody actually there, that maybe does cooking
for you, does your laundry. – Yeah, we have everybody
that does all that stuff, from cooking, cleaning, their laundry, so I mean really,they’re
technically just being waited on hand and foot. They’re able to do as
much as they’re able to do and we encourage it, but when it come to you know like cooking we have residents that
are remembering recipes, and they’ll like sit there and tell the caregivers how to cook. – Yeah. And they’ll come up with like a menu and everything like that, and the caregiver will cook it for them and everybody else in the house. So it becomes nice and personal. – So what caused you to go into this area? What was the draw? – We was really looking,
me and my partners, we were looking at
different places to invest in the real estate market, and senior living kept on coming up more and more, and then we, we came across residential
assisted living. And we started really researching
this little niche market, and found out, you know,
there was a big need for, you know, good
quality, high-end homes that provided really great care. And we started researching that thing, we’re just like, you know,
the homes that was offered in the areas we was looking at, here in the Phoenix metro area, they were nice, but
there was only a handful that we would really feel comfortable putting our own parents in. So we decided to jump into
this, to do this better. And you know to provide the
type of home that people would really like to live in. And so that where we
started really focusing on doing this stuff. So every home that we have
we’ve remodeled and brought it up to our standards of what
we think they should be at. We far exceed what the state and even city mandates
us to do in the home. We feel that it’s better for
our residents and for our caregivers who they’re taking
care of our residents and more that easily we
can make them have ease of use of things, the
better for everybody. – Right, changing topics
here a little bit. Lets talk about the money of it. So your into a house that
has 10 people, what is a general, what is the typical
monthly fee that you receive so that you can operate this per resident? – So, I, between all my
homes I average anywhere between $4,000 up to $7,500 a month. – Wow, okay so lets say you
add 10 houses or 10 rooms in a house, so you have
$75,000 dollars coming in. And your responsibility is to
provide round the clock care or is it just during… – Nope, no, round the clock
care, so we offer 24/7 awake staff all the way around. So we have two to three
caregivers on during the day and then one awake at
night, that’s sitting there doing bed checks, making
sure if anybody needs help, wakes up in the middle of the
night to go to the restroom that we’re there to help them. If they had an accident,
you know that they, we’re changing out
their briefs or anything like that in the middle of the night. – Good of you. How are the margins? Are they pretty strong? – Yeah, their pretty
strong, you know you make your really good, if you
operate a really good high-end, quality home,
the margins are very, very well that will rival any
you know investment out there. – All right so, who should
consider getting into residential assisted living? Not, not to go become
a resident, obviously. But if your an investor,
or you own real estate. What should you be looking
for as to when you might want to do residential assisted living? – Well I mean it’s, I mean,
everybody has their own what they’re really looking for. If you want to come into
residential assisted living, if you own homes that you
think would be a good fit. And each city might have their
own little qualifications, of what you have to do
to make sure your home is able to be a assisted living home. But you know it’s a good
place to where okay, hey, you’ve just been renting
out this home, let’s say you have a 5,000 square foot home. You’ve been renting it
out and you rent it out for $2,500 bucks a month,
or something like that. And but you’re only making
a profit of $500-$600 bucks on it. You know, you need to make
you know, convert this house, put a little money into
it and you know you can turn around where you can be
making anywhere from you know around $10,000 dollars a
month profit off of that. And so if you.. – Is that pretty common? To have that type of margin? – Yeah, on the higher
ends yes, if you go to the little bit lower were your
pressing, where your maybe only averaging a 45. You can probably be looking
at $7000-$8000 dollars. – Right, so I’m going to set the table for these folks, real quick. So, there’s really
there’s three businesses when your talking about
residential assisted living. There’s the real estate
itself, having the house. There’s being an investor and one perhaps doing the loan on the home
or being the money person to start one up. And then there’s the
actual active business. – Yes. – And the act of business means, hiring, having the employees. Is there a magic number of how many homes you should be running,
when your an operator? And you’re running the active business? – Well, it really depends. So like, we try to do
everything in twos because, I can hire one of my managers
they can by state law they can oversee two homes. – Okay. – So I haven’t got what, if
I’m only hiring one person that manger, you know
your probably not getting your cost, you know down
if your not running two. – So, you should do two at a minimum. – In Arizona, yeah. In other states you know it’s different. But you know, we’ll
just keep it in Arizona. Two at a minimum is very beneficial. – What’s the hardest
state to run a residential assisted living in that you’ve seen? – California. – Yeah, you’ve gotta get
licensed first and all that jazz. (laughs loudly) – Hey, what are the big pitfalls with residential assisted living? – Where do you see people trip and fall? – Not understanding the
operation side of it, of how much daily involved
you have to be into it. You know, you can get
investors coming here, they know real estate, they
come in here, they find a good home, they convert
the home, they do everything. And then they struggle of trying to find somebody good to manage it. You know, this is such a
you know, niche market, where its very hard. People want to know who the owner is. Or who’s making those decisions. And you know it would be
investors or real estate people who own real estate and
they might be out of state or anything like that. It’s very hard for people
to come to terms with like, well, who is this? Can this home disappear
on us really quickly? So, that’s the biggest pitfall I’ve seen. – Okay, that’s fair enough. Do you see people getting
into this, getting in over their head and then
having to bail you know, dumping it or bailing it to.. – Oh yes, I’ve talked with
three different people that have done this before. They got into remodel it. He wasn’t able to get it built up, or get the traction they wanted
to and they ended up just turning around, selling
the home out to other people. – What, rather than doom and gloom, do you have any success stories? Anybody that’s done a really
great job or your like “Man that’s really awesome,
what these people did.”? – Yes, you know there’s,
I said on the association there is its own association
for assisted living homes. So, I got to know a lot of
the home owners out here. I’ve seen some great
people that come in here Open up homes and just
really get it right and hire the right people, be able
to come in and do it right. And they’re happy with their investments. I mean, they’re excited. You know, there’s three
or four home that I’ve you know, helped out with that
have become very successful. – If it was one thing
that you wish you knew, prior to getting into assisted
living, what would it be? – Prior to getting into assisted
living, I think you know, just knowing how much, you
know, I mean, especially on the operating side of it. Its, you know, I’m involved
in the business everyday. It’s not a, you know a, nine to five job or anything like that, you know. When you’re taking care
of people, you have to have the drive and dedication,
want to be able do this. This is, you know, and
its been rewarding for me. So just you know, getting
in here, I really didn’t know how much day to day
operations I would be in. But I probably put myself
more into it, just because I care so much about it. – Now, tell about you guys. Because I understand that
your different and a lot of folks will tell you how
to do assisted living, but a lot of folks won’t run it for you. Your company is a little
different, you’ll go in and you’ll act as the
operator for these folks? – Yeah, so I mean we had
some of our own homes that we’ve built and done
and we operate for ourselves. But we also have a company
that can operate for anybody. So if they want to come
in and like “Hey, I really want to do this, I have this great house, I think we can do.” I can help them from the
start, you know making sure It’s being built or
reconstructed or remodeled right. To if they’ve already done
it, to come in and hire a staff, to operate and
help them get the licenses. For the house license from the state. And be able to really
focusing on running the operations for them. We hire everybody and we do all of the profit losses for them. We’re out there the marketing for them. We do all of the bills. So, you know just like anybody that’s in an apartment complex, they
don’t hire an apartment complex. They, you know its a hundred
plus units, they’ll hire a management company to come in and do it. And that’s pretty much what
we do at the same time. – Now, if I have an apartment and I hire a management company, they’re
charging me probably about 10% of whatever’s generated. Is that in line with what you guys do? – Yeah, so I charge 10%
on the assisted living. So that we divvy up like
the payroll is dedicated to what is happening at that house. So, each caregiver clocks
in, clocks out of that house. And we, no matter if we
use caregivers elsewhere, just what they are working
at that specific location. The payroll, the workers
comp, everything’s done and broken out just for
that specific location. The meals are ordered
specifically for that location. So everything is based right on there. We take a 10% management fee off of their gross revenues. And then everything else goes
down to their bottom line. – It’s not bad is it? That’s actually… – No, they get a pretty
good deal from that, we take the headache away from them. – Yeah so, if your, is this
only in Arizona, by the way? – I’m only operating in Arizona as of now. We’re looking to expand,
but that’s going to be a year to two years down the road, before we expand to other states. – Right, so if you’re in
Arizona and you’re listening and you don’t like
running your own home and you’re saying, “Hey its worth 10% to let somebody else deal with the headaches.” Then they should contact you. How does somebody get a
hold of you, by the way? – They can email me at rocky R-O-C-K-Y @peakcareliving that’s
P-E-A-K-C-A-R-E-L-I-V-I-N-G.com. Or they can go to our website which is www.peakcareliving.com and
just hit contact, the button or they can call me at 800-906-1030 and I’m extension 101. – I’ll post all that too
Rocky, so you don’t have to… – No problem. – Otherwise they’re gonna
be pausing and listening. But you know what if I was
in Arizona and I had assisted living, I’d probably be doing that. Because I don’t want to run my own homes. I actually rent houses, or
lease houses to operators. And so I have several on the
east coast where its like, its different, everybody’s different. Some operators, by they
way its not just the elder, it could be autistic adults,
you know, where somebody just needs to have, you
know, somebody watching over that still wants independence
and they live in a house. – We have some younger
gentlemen in our homes, they’ve had just bad accidents and they can’t do a lot of things. They’re in their 50’s that
are going to be with us. They just had bad
accidents, they don’t want to be burdens on their families. So they’re taken care of. They can’t do a lot of
things and so whatever insurance they have or you
know, If it was an accident they just, you know, pay monthly. And a lot of times with
people come in here It’s a relief, because now they are not burdened their family of
trying to take care of them. – And sometimes you don’t want your family being around that. Like again, I’ve dealt with this enough to know that Its sometimes you just don’t want the hassle of having
to maintain your house. – Yes. – Or change your own light
bulbs, you don’t want to have to cook your own meals. Unless you want to. Could a resident in your home cook their own meal if they wanted to? – No, we usually do it
for them, just because we have so many people that
we have to cook for. You know 10 people. And you know just if
something happens, the only reason is, its kind
of harder to pass by. But you know that’s why we
allow them to, if they want to, to design the menu and
tell us how to cook it. You know, and so we try to
get them involved that way. – There’s a little bit of
give, you know, there’s a little bit of give for these residents. – Yeah. – Is what your saying. – But again, the whole
idea, is that at least your not doing it, you
know, It’s not your family. – Now are most of these private pay? Is this long term care policies? What’s paying for the $4,000 a month? – So, ours is private pay. But a lot of these
people do have long term care insurance like that. But we don’t get paid through
long term care insurance. So what usually happens
is, is a long term care insurance pays the families
like 30-45 days after. So, lets say June first
I had a family pay me, and on July first we submit
the paper work to the insurance company saying
“They were here everyday.” Because most of these insurance companies pay out daily rates. So they want to make
sure that if the resident was here everyday. And then say “Okay.” We submit to the insurance
company that yes, the family paid us, here
is the paid invoice. They were here every
single day and then they turn around and cut a check back to the family to reimburse them. – Oh yeah, I understand it. That’s pretty good. – Hey, kind of in
closing, what’s one piece of advise you’d give to somebody? You can go back a few
years and say hey, before you got into this, what
would be the one piece of advise you would give to
somebody who’s looking at this as a potential? – One piece of advise is you
know, make sure you bring in people who know what they
are doing around you. I was lucky enough to
have people around me that really helped me get this off the ground. And you know, and its a lot of work. You know your going to
be involved in it daily. So I mean, if you don’t
have the time, resources or the drive to do it, you know, make sure you hire that out. Do something like us that
manages it, because you know, it takes a lot to take care
of the elderly people and people expect a lot. Because you’re dealing
with somebodies parents. And trust me, if things
are not going right, their sitting there complaining
to you in every single note. – Now I’ve been lucky
enough to go down and actually teach some continuing education with some of these groups. Are the groups in Arizona all licensed if they’re in this realm? – Yes, they have to be
licensed by the state. So everybody, even if they
only have one resident up to 10 residents on the residential side have to be licensed. – And then you guys probably
have a bunch of associations. I know of a couple down there. But you’ve got associations
that you work with? – Yes. – I mean you tell somebody
that’s worked with folks that are inside
of an association, or would you go outside of it? – Arizona Assisted Living
Homes Association is the one that we, is the main
one that kind of goes to the state and we try to
lobby everything for it. We worked with the cities
and everything like that. I sit on the executive
board of that association. We are the largest
association, so we do represent roughly 1,800 homes, in
the state of Arizona. – Lets just get that, 1,800
homes, not 1,800 residents, but 1,800 homes. – And they can be licensed
anywhere from four or five, all the way up to 10. – Yeah, it’s pretty amazing. And I think that’s really
great, I mean you can just tell that there is a need. I don’t know all of the stats but it seems the baby boomers are really
hitting it right now, right? – Yeah your starting to
get a lot of the early baby boomers that are,
the early baby boomers are starting to really look at this. Maybe starting to live
independently, they come in here. Like I said, my youngest
resident that’s in here for not, besides the two
that I talked about earlier, who really needs to be for
an elderly reason is 74. So I mean that’s right
on the cup of I think the baby boomers, the first
you know, generation of babies. – It just seems like there
is a growing need for it. And again, I’ve looked at
this, you have the big box. You have some of the higher
end, where you’re paying some of these things I’m
seeing, you pay a quarter of a million dollars,
just as an entry fee. – Right, yeah, yes. – You lose it, It’s gone. – Yeah. – And then you see these, where people are actually saying “Hey,
let’s get a really nice house, golf course or something like that, some nice neighborhood, you’d
love to be there anyway.” You know, I think our friend
Gene used to say “You want it to where you want to drive to it, you don’t want to drive by it type place.” – Yes, yup, yeah. – And some of those big-boxes
scare the heck out of me. It always feels like a laminate, you know? – Yeah it is. You just, you know, you
don’t get a personalized feeling of being home
in one of those places. – You know the care ratio is where it really differentiates on
that is the big-box is usually you run anywhere
from one caregiver to 10-15, and I’ve even
seen up to 20 residents and one caregiver trying to take care of. And here we run 1-5 and
even sometimes better than that during the day, depending on what we’re doing that day. So you’re getting a lot
better quality of care, hands on touches. I mean but we’re usually
telling family members “Hey we’re seeing a slight
change here with your mom or dad.” And you know we’re telling
their family and they’re like “Okay, we might need
to have this checked out.” “Why don’t we go have this check out?” “Oh here’s the, you know.” Things like that, to
where they really rely on us giving really good feedback of what is happening
with their family member. – You have eyeballs on them every day. – Yes. – And I think that’s, a lot of folks can identify with it, those of
us who have elder parents, or at least an elder
parent left, can, I think everybody relates to it,
is they want independence. But they also, you want to,
you want the piece of mind knowing that somebody
is checking in on them. – Taking care of them,
checking to make sure they didn’t fall out of
bed, do any of that stuff. – And if they have medication, making sure that they are at least taking it. – Yes. – Or if they do trip or fall or something, that they are not sitting
there for two days, before somebody figures it out. – Yep. – Yeah absolutely. I really appreciate
you coming and spending some time. – No, thank you. – With us, and again, I’ll
post your information. So if your in Arizona
and you don’t want to run your house, call Rocky. If your, hey if you’re
interested in getting into that realm, you can call him too. He’s a good guy, lots of
information really I could just say from having
known him for a bit here that he is good person,
surrounded by good people. – Thank you. – And you don’t go into this just because you decided your going to
have rental properties. Your going to do this
because you’re drawn to it. Because you want to help
your elders out there. – Yes. – And make a difference. So I think that’s great. So again, thanks Rocky for being with us. – Thank you Toby. (upbeat music playing)

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