#185: Creating & Scaling Up Residential Living Centers with Gene Guarino

Welcome to the Accelerated Investor podcast with Josh Cantwell. If you’re looking to retire early with forever passive income, you’re in the right place. This podcast is the go-to destination for real estate investors, both active and passive. And multifamily apartment investors, both new, intermediate and advanced. Now sit back, listen, learn and accelerate your business, your life and your investing with the Accelerated Investor podcast.

Josh: So, hey, welcome back to Accelerated real estate investor with Josh Cantwell today. I am really excited to be interviewing Gene Guarino. Jean and I have known each other for years. We have participated in several mastermind’s together and live events together. But this is the first time he’s been on the Accelerated Real Estate Investor podcast. Gene has trained thousands of investors and entrepreneurs throughout the United States on how to invest in and operate residential assisted living homes. And for the past twenty-five years, he’s been educating people on the strategies of successful investing business and self-employment. He is sort of the kingpin, if you will, of the residential assisted living area in which he has been investing in it for the past seven and a half years and quickly became the number one speaker and trainer on residential assisted living. 

Josh:So in this episode of Accelerated Real Estate Investor, you’re going to learn, number one, what is residential assisted living versus big box assisted living homes? Number two is you’re going to learn the deal structures that need to happen inside of a residential assisted living to buy the property and to own the business of the assisted living and what the projected returns should be for limited partners and general partners. Number three, you’re going to learn the importance of the operator, the operator that owns and runs the building versus the manager that actually works with the residents. Number four, you’re going to learn how many units it takes to scale. This business is going to give you an example of 10 units, 10 beds. But how many of those do you need to have to be at scale to sell that portfolio for a massive multiple to a larger hedge fund or institutional investor? 

Josh: Number five, you’re going to learn why Gene says if he’s not getting at least a 15 cap or a 15 percent rate of return, he’s not even interested in the deal. And number six, you’ll learn why Gene is working with his entire family to run his residential assisted livings and how his family operation has allowed him to give back to his kids and grandkids and really build an amazing family structure and a family business. And so you’re really going to love this interview with Gene Guarino on the Accelerated Investor podcast. 

Josh: So, listen, so excited to have you on Accelerated Investor, looking forward to this for a long time. Thanks for jumping on. 

Gene: Absolutely. Looking forward to it as well.

Josh: Hey, listen, so much crazy things going on with the pandemic. So I’m always interested to know from guess what is what’s something that they’re working on, like today, like this afternoon, tomorrow that they’re really excited about, whether it’s a new property they’re developing, in your case, residential assisted living, whether it’s a new event, a new book. What are you working on right now that gets your kind of juices going? 

Gene: Yeah, you know, we know each other through residential assisted living. You know me from that. But actually, we’re doing a lot of different things. And two that are really come into my mind as soon as you said that is shared housing. There’s a lot of opportunity right now where people can use a piece of real estate, a house and apartment and do shared housing with it. And one of the good, bad things in the world is happening is the government is confiscating my money, your money and giving it away to people that you think are more deserving. So there’s literally billions of dollars right now that are being allocated for shared housing in different forms. So that in our Pitch Masters event, that’s coming up to show people how to raise capital. 

Josh: Oh. So Gene let’s peel back the onion on both of those a little bit, let’s talk about pet capital, because we do a lot of multifamily deals. You do lots of different kinds of deals, focus on residential assisted living. Of course, those larger deals, whether they’re kind of mom and pop, small, medium, large, a lot of people are syndicating those or raising capital. So tell me about this strategy that you used to raise and recruit capital and then you’re going to be having an event on that very soon. 

Gene: Yeah. So we have private equity funds, just like you do as well. And I think one of the key pieces is having a great the sponsor, but the operator, whoever is going to be operating that project ultimately. So in our case, when we say residential assisted living, if somebody is going to invest in that, it needs to have a good operator attached to it, somebody with experience who knows what they’re doing, who’s going to take care of their money, but also do a great job. So  the pitch event, the prepare to pitch event is exactly that. A lot of people want to and need to raise capital. They don’t know what to say, how to say it. They don’t know what a business plan is, a PM, et cetera. You and I know that stuff cold, but a lot of other people need to know that. So that’s why that whole event was created. And we’ve got some big heavy hitters coming in to teach on that. And then in regards to the raising of capital, we do it on a per project basis. So we have a debt equity fund as well as just a the equity fund that’s being invested into specific projects. Those projects are typically in the million dollar to three million dollar range. 

Josh: Got it. So let’s talk about that structure and again, we talked about this before we were getting ready to hit the record button. Selfishly, I’ve got all these apartments that we own, but I’ve got more of my friends, students, joint venture guys. You know, they’re talking more about residential assisted living, other different types of multifamily, not just B class apartments, but it could be mobile home parks. I’m very interested to hear more about what a typical model looks like on a residential assisted living. What’s the GP share? What’s the LP share are their preferred returns. How does that all structure? Because, you know, pitching a deal, building relationships with possible investors, pitching a deal to me. It’s definitely about the return for sure, but it’s a lot about relationships. And I’m sure you’re going to talk about that at your event. But let’s just peel back the only a little bit and let’s talk about the structure first. What is a typical structure that you see in that space that’s winning a lot? Where it’s getting a lot of capital? 

Gene: Yeah. So there are first of all, there’s three elements to it, the real estate, the renovation and the business startup. So when you think of it that way in an apartment, it’s all it’s all the real estate. It’s all it’s got value based on that asset. With the residential assisted living, one of the key elements, it’s not as secure as the business startup. It costs money to start a business, get ramped up, et cetera. So that means there is some more risky money in there, which means it typically will get a higher return. So, first of all, depends on how passive somebody wants to be. If somebody just wants to be in a debt fund where they’re getting eight to 10 percent, just you put the money in and the money spits out and it’s you’re in it for two to five years in debt fund. And that’s pretty much it right now is the eight to 10 percent. And that’s in this day and age. That’s a good rate of return for doing absolutely nothing. 

Gene: And it’s just it’s cash in and cash out on the other side because there is the property, the renovations, all that time frame. And with the current building costs changing and that means going up every day. That and then the operations, there’s more opportunity there. So it really depends on if there’s a debt underneath it. So if somebody is going to the bank, like we would go to the bank at the first 60 percent from the bank. Now the equity is the other 40 percent. That’s more of the risky money on top of there. It’s going to get a higher return. Typically, it is with a profit of some kind. So it might be five percent something in that range where the money is earning money. And then on top of that is some type of a profit share. And that profit share might ultimately get you two. And I don’t want to overstate it. Right. You always want to under promise over deliver, but somewhere 10 percent to 18 percent depending on the deal itself. And I really I want to make sure I know you want to know the numbers, et cetera, but it’s really the same as apartments. And a lot of ways the risk is different. Everything has risk, but all of that. 

Gene: But I really don’t want to shortchange at all the aspect of people, people buy people. I know personally. I’ve invested in other people’s projects without. And I know this sounds bad, guys. I really know. But it’s true, without even reading the business plan, because I know Josh I know he’s a good guy and he’s trustworthy. I know he’s done it before and I’m buying him. I know if he’s vetted that project and he’s involved, I always have a risk of losing money. But I know him. And ultimately, that’s what I’m betting on, is you, not that project. And I’m assuming it’s going to have great returns. But it’s not just that. 

Josh: Yeah, no doubt, I think when we look at like a newer operator or newer business, you care more about the business plan, who’s involved, who’s got capital improvements, who’s reconfiguring. If it’s a small residential assisted living, reconfiguring the house to make room for maybe six to 10 residents or something along those lines, and then after somebody’s done it, or would they have a relationship, it’s like, OK, tell me about the deal. What do you think? High level. Give me that. What the return. OK, good. Here’s two hundred thousand dollars or whatever. Five hundred thousand dollars I have that my own business guys are like I was on your webinar. I’m in for 250 fifty. Right. They listen to the sound of the presentation for forty-five to sixty minutes and they’re in. 

Josh: I’m curious on the residential assisted living scene when, when somebody is owner operating them, what is the typical exit strategy to return limited partner capital. Is it a refinance, is it a sale. What do you typically see? There are people exiting those buildings because they’re getting multiple they’re getting a high cap rate or they decided to refinance and keep them and try to return some of the limited partner money through the roof. 

Gene: Yeah, I’m going to give you what’s typical in and it always depends on somebody’s personal desire. So you just laid it all out. It could be a refi and usually that’s after two years before or five years. So I always say two and five because it takes time to to get that normalized and get it maximized. So the refi is probably going to happen after two years, but before or five years just depends on the world of lending. So that’s one way. The total exit, typically that’s not the exit on this first round, because the better exit is to get a number of these different homes, package them together. And now it’s a much bigger deal. The return is much better that way, but it depends. People’s lives change or they say, I’ve got one guy right now who built an amazing property. 

Gene: He’s got the plans, the land, the approvals for the second building right across the street. But he had sold a software company and the software company basically said, we need you back, paid him an outrageous amount of money. So he’s like, you know what? I got to take it. So now all of a sudden he’s selling his. So there’s ones that do get sold quickly. The businesses themselves right now. My goodness, they’re on fire. You think it’s hard to find real estate, just any kind of deal or project. When it comes to these businesses, residential assisted living. If somebody has one that’s running well and it’s got great cash flow, those are incredibly hot commodities, very, very hard to find. So if you find a good one or if you want to sell, you can get a premium price. 

Josh:So I’ve got a guy who’s actually was a fix and flip student of mine a couple of years ago, we’ve stayed in touch. He’s invested passively in some of my apartments, indications. He has a couple of these residential. He’s sending me his business plan now in the mail. I don’t know why he didn’t just email it to me, but he wanted to send it in mail. So it’s not too big. Yeah. Yeah, right. Maybe we might be a package from you. I know your organization is an amazing job of putting these together, these business plans. So he’s sending it to me. But he says to me, says Josh, here’s the opportunity. 

Josh: Says there was a group of docs, 12 docs that went and built this brand-new facility and it was just about to open and they all threw their money in. Basically, they built it, I think, for cash, a lot of a lot of their own capital. They were about to open it. And then covid hit and they all because their docs, they freaked out. They didn’t want to open it and then have something happen, like somebody pass away in one of their facilities, have the negative press. So brand new facility, never been, I think, fully permitted. I think it’s just on the step of like a certificate of occupancy or whatever you call it in the real space. But the equivalent of that. And then he’s like, I can buy this now. They want to exit it just because they don’t want to deal with it now. So what should I be looking at? 

Josh: What are some questions that as a potential partner, limited partner, I might even have to step in as a GP, maybe sponsor a loan for him? What are some questions that I should be asking him? And this is probably some of the stuff you talk about in your in your pitching academy, because these are the questions that a partner would ask a sponsor or an operator. So what are some things I should be asking him to kind of check the boxes to make sure I’ve got a good deal that I potentially invest in? 

Gene: Great question. And obviously everything is very specific, and I’d have to get that that big business plan in front of me as well. But in the business plan, some of the key elements you’re looking for is, number one, isn’t even needed in that area because sometimes people do things because I heard I read a book, I saw a podcast or heard a podcast, and this is good. And they did it. But that building may be in the complete wrong area. So, first of all, is it in the right location? Is there a need for it? And that’s all about the demographics. So did they do a study where internal we call it an internal feasibility study versus paying thousands, ten thousand outside. But the idea of how many beds, how many seniors, how many beds are coming, etc., we know that this silver tsunami is coming. But the question is, if it’s not in the right area, it’s just pass. It’s a hard pass. If it is in the right area, great. We got the first thing based on demographics. Second, you said not sure if it is approved and I’ll use that word approved because certificate of occupancy means you can use it, but use it specifically for this purpose. And I’m assuming. Right, that they would have gotten that together if they didn’t, major mistake. Well, let’s assume that they’ve got that good. 

Gene: Your next step is really the operator, because it doesn’t sound to me like these twelve docs who were investing were the operators. They were just putting in a million bucks each or whatever it is. So they’re the ones who are just the investors. The key is who’s going to run the show? The best equivalent I can give you. It’s like a restaurant. We’re in a restaurant last night. You walk in the front door, you sit down at the table and the show begins. There’s a front of the house, back of the house. There’s chefs there, servers, there’s planners. Who is going to operate that restaurant? Who’s going to operate the residential assisted living? Or in this case, I’m assuming it’s a bigger community, more beds. So the operator. And if you don’t if they don’t have one or one lined up, ready to go, that is absolutely your first element is who can I get to do that? And now you’re starting a business. It’s not a building. It’s not. So when you think apartments and that’s your main focus right now, it’s a building that I filled with people that need to rent and they’re going to run for me to rent from somebody else. It’s pretty cut and dried. It’s a lot less spending. 

Josh: There’s not a day to day, you know, they come in if they can get keys, they got they got water, they got heat, they got electricity and they have no leaks. It’s pretty hands off. But like my grandmother went from living alone to living with my parents to doing assisted living to go into memory care. My father, who just passed away back in November, he had an eight-year battle with Parkinson’s. Right. And luckily, we were able to keep him home. My mom’s really spry. She was able to take care of it, but he definitely would have been an assisted living candidate and then a nursing home candidate. So this is very near and dear to me of what we’ve been through. But you’re talking about a business because there’s so much more of this. It’s more of the art, right. The feel of running and helping these people in this late care. It’s the business of running it, taking care of these people, not just providing them a room to live in. 

Gene: Absolutely. And that’s I always when I when I teach and we’ve talked. Thousands how to do this, there’s a real estate play and a business play, and the real estate is the easy part because it’s bricks and sticks, dirt and mud. You can knock it down and build it again or fix what’s there. The business side. That’s the people side. And whenever people ask me what’s the biggest challenge in this business, I always say people. It’s the residents, their family, it’s the managers, the caregivers, everything that goes into it. But that’s why we get paid the big bucks. So the average person who’s in that facility might be getting or paying five thousand dollars a month or more. So one hundred of those people, that’s five hundred times five thousand times one hundred people. That’s really, really nice cash flow. And you’re going to net somewhere between 20 and 30 percent in the residential model. That’s what comes to our bottom line. Those numbers are incredible. They’re off the chart. 

Gene: So instead of thinking investor, because if you’re just the investor, Josh, you’re just saying I’m just going to write a check. Now, the question is, what are you writing a check for? Is it just the real estate thing or leasing to an operator and you just own the real estate? Good. Pretty simple. Like you said, the idea of the apartment, less moving parts. But if it’s I’m writing a check and I own the real estate and the business, OK, it’s this is the harder part. You know, the real estate. That’s the harder part. The business, who’s doing it? Do they have experience? Do they have support, all those different things.So it really depends. And this is the way I always say when somebody you mentioned on the first question was the idea of what kind of rate of return or structures. And it depends on how hands on or hands off you want to be and the simpler you want to keep it. I just want to write a check and receive checks, a debt fund. The lower your return, the more you’re involved or the more you’re in part in the thick of it, if you will, whether you’re doing it or not. The higher return because the moving the moving parts and you get paid for that. So in your world right now, you’re probably a six to 10 percent cap rate would be a really good deal in the current market. In my world, I wouldn’t touch it unless it’s a 15 percent or higher. So the moving parts business. Oh, yeah. So it’s it’s really different because it’s not just the real estate, it’s the business operations. And that’s where you get paid big time for now. 

Josh: Listen, so when you talk about the operator, I just want you to kind of further define this not only for me, but for our listeners here. So there’s the operator, which could be one of your students, could be a friend of ours. A guy finds the real estate and the business. But a lot of times there’s the I don’t know if it’s sometimes some of these facilities are big enough that they need licenses. You need somebody that has a license and then sometimes they’re smaller with that. That’s not the case. But it’s typically the man or the woman. A lot of times, in my experience, been women who are on site who are kind of the day-to-day business manager of the residence. Right. So you might have an operator who in my case would be like one of your students, the guy that puts the whole thing together. But they’re not on site every day actually taking care of the residence or working with the cooks, working with the cleaning people. So how important and I want to say it’s super important, but in your opinion, it kind of defined those differences between the investor sponsor of the deal and the actual business manager that’s kind of on site every day working with the residents, because as a as a maybe a limited partner or a passive investor, which is what I would be, I’m interested in both. Right. I’m interested in both people. One that’s more working in the clouds and one that’s really working in the dirt. 

Gene: Oh, yeah. All right, good, I love the way you segregated operator and manager, because the operator could be the business owner they like when I was doing the residential assisted living models, their license for ten. And when I say when I was doing it, meaning when I was the operator, I was never the manager, never the caregiver. You distinctly said they’re different. Correct. Because I would not be there day to day. I don’t want to hear about what’s happening day to day. You do it, you take care of it. That’s why I hired the manager. So the manager is a hired gun, right? The caregivers are a hired gun. The operator is somebody who’s got the owner and they’re operating this where they’ve hired people underneath them like I do and I teach. Or they can be hands on. I mean, there’s a lot of people in our industry, residential assisted living, that are mom and pops. They live in the house right there, the cook, the cleaner, the baker, the candlestick maker. It’s not what I want you to do. 

Gene: In your case, you’re saying if I’m going to be the passive investor, then the absolute critical thing for you is who’s the operator? Because you can’t just say I’m going to buy a mall today because the real estate is cheaper. It’s a good deal. It’s like, well, who’s operating that mall? How helpful is it? Is anybody paying rent currently? Is anybody showing up? That’s pretty darn important because you can buy a mall for ten cents on the dollar right now. So what are you going to do with it? Yeah, what are you going to do with it? So it’s not the real it’s the passive aspect of it. That’s the challenge, guys, right now, because those doctors in the case you just talked about, they came in is passive. It’s like whoever was the sponsor of that deal, who’s bringing it to you now said, look, you bring in the money and I got it from here. So that sponsor, they’re probably not the operational manager. They probably were hiring somebody to be that manager. So the key is, do they still have that contact or to that person to work for somebody else already? Where can they find that? Because if they’re just about the money. So I got the money from these twelve, but now I want to get it from you to get back to them. Great. But who’s going to do that operation? So the answer your question is they’re critically important that day to day manager. 

Josh: And how are those people found? Like if you’re starting with a ten unit and your goal is to build out, let’s say, five of those or ten of those and get to fifty beds or a hundred beds, and now you have critical mass that you could potentially sell that portfolio to a larger investor that wants the scale. But you starting with your first ten, what are some tips or some ways to find that day to day manager who’s going to come in and really take care of that? Because if you don’t have the experience, you run the license. Wow. That could be really dangerous to be responsible for that. 

Gene: Well, first of all, you mentioned license twice and want to make sure everybody hears this clearly throughout the country. A lot of people operate without a license throughout the country. A lot of people are driving cars down the street without a license or insurance either. I don’t recommend either one right in the state. Every state is going to have their own rules and regulations. You should adhere by them. You should follow them. 

Gene: You should have properly trained and whatever the state requires managed. And if you’re an investor, absolutely. I’m not doing a fly by night where there’s risk. When you have a licensed business, there’s rules and regulations which are there to protect the residents primarily, but it also protects you. You can’t get insurance, liability insurance on a business that’s not licensed. Right. So we need to do it properly. And I just wanted to start with that premise. Your question on how do I find them? The two easiest ways are going to be either go and find all of the current operators in that area and say, hey, if you’re looking to expand, I’m looking for an operator, maybe we can partner together. I provide the real estate or the capital. You be the operator, we partner together or to come to one of our classes. We’re sitting around a room full of people saying, half of them are saying. All I want to do is the real estate and the other have a saying. All I want to do is operate the business. And it’s like when go to lunch because I’m paying for the lunch, just set it together. 

Josh: And make it easy on everybody. I love that. That’s great stuff. So do what is I do want to hear a little bit more about your background, how you got started with this. And I also would like to hear more about some advice that you’d pass along. But before I go there, what is the critical number where you see enough beds accumulated under one investment group where they’re able to then sell that portfolio, hit a critical mass, get an amazing exit? Is it fifty beds? One hundred beds is twenty. What’s the number that you think is kind of that magic where there’s somebody else larger fund or a large institutional investor or some other group would want to take you out? 

Gene: All right. Good question. So I’m going to start tiny, then we’ll go to the top. So tiny, let’s say, six beds when you’re in the in our world, residential assisted living, taking a single-family home, converting in the smallest. I think that is worth even considering buying or selling is six beds. I would not suggest anybody do six beds unless you’re in an area that limits you to that. Or you’re something, and then there’s ways to manage that to make it worthwhile. Ten beds, let’s call that the average, because Texas allows you to have 16. There’s 20 states that have no limit. Let’s just say 10 beds. So one 10 bed facility could be worth a half a million dollars. The business itself. So literal. And that’s not the real estate that’s on top of the real estate. The cash flow that is produced from that could be a half a million. I’ve seen themselves as little as fifty thousand and as much as over a million. But let’s just call it a half a million. Now, here’s the deal. If you’ve got one of those, it’s a half a million. But if you had 10 of those now, each one might be worth seven hundred thousand. 

Gene:So because it’s bigger, bigger money now can be attracted to it. A hedge fund doesn’t want to write a check for five million dollars. They don’t want to write a check for 20 million dollars. They want to write a check for one hundred million dollars because it’s the same amount of effort to do the analysis, the due diligence on that one tiny little something versus the big. And their job is about moving money. They’ve got to keep it safe, keep it moving and get a return on it so they don’t want to spend a little bit. They want to spend a big number. So I think you want the numbers there. The big the more units you have, the more you’re valuable. Now the bigger communities are. Because right now, here’s what’s changed. Since last year in 2020, I’ve been saying this for seven and a half years. Smaller is better now. The whole world knows smaller is not only better, it’s safer. Right. These big box facilities are sitting there with people stuck in their room, sliding food under the door. We’re in our homes. These seniors are they’re living life. Right? So it’s safer. 

Gene:The big boxes were struggling big time. We were benefiting big time because people are leaving. They’re coming to us to be in a home, not a hotel that’s locked down like a prison. So smaller is better, but the big guys can’t get into the game with one house at a time. They need you or me or somebody else to put 50 of them together with the systems and the management team. So individually, the businesses might be worth five hundred plus the real estate on top or lease the real estate to them later. That’s what I’m doing. That’s a good play. But the five hundred thousand, if you got one hundred of those now, it’s worth seven hundred thousand each because they can write a bigger check. 

Josh: Fantastic stuff. Wow, I love the scale. I love the fact that just owning more makes each individually worth more than by themselves simply because of the scale. Larger money typically has to get a lower yield because they want that yield to be very safe and secured. And so they’re looking to get maybe inflation times, too, or inflation times two and a half. They don’t need as much of a yield to the willing to pay more to get it. Jean, let me back up for a quick second to ask you if you are very much of the leader in the space, the presidential assisting Academy, if people are very familiar with it? I’ve been familiar with it for years. And this is the first time you’ve been on our podcast or we’ve really had a chance to really kind of dig deep here in all, kind of had to start somewhere. Where did you get started with this? When did you do first facility? Like a lot of entrepreneurs, some people fall into I just fell into it. I got my first building and now it’s boom, I’ve got this big business. How did you get started? What are some of the challenges that you faced along the way? 

Gene: OK, so just really, really briefly, first, real estate was 18. First commercial real estate was twenty-five. But decades later, it was about 10 years ago that my mom started to need help. Now, keep in mind, just like you, I had heard about this way before that. And I remember it was 30 plus years ago when I actually heard about this whole concept. Nobody was able to teach me or show me, didn’t want to and weren’t willing to. So 10 years ago and my own mother needed help. Remember, ten years ago. Twenty eleven. The idea of what’s happening in our economy, all the real estate was going like this. And I’m like, well, this is a good time to buy a big house and start this business. My mom needs the help. I couldn’t find what I was looking for, that I was safe and comfortable having my own mom live in it. So that’s why I said I’ll create it. And that was the beginning of that journey. And so seven and a half years ago, I bought an existing one because there was nobody teaching and showing a house. So I bought one and I said, OK, what do they do right and wrong? What would I do differently? So immediately I was starting on my second one, which was creating my model, how I would do it. So that was a built a I take a house renovated, etc. Immediately people were asking me to teach them how. So the whole education side of the business began as well. What it was seven and a half years ago. And I’m going to have to say it’s because my mom needed help and we couldn’t find what we were looking for. 

Josh: Got it. Got it. I needed to get into it. So challenges, right? Like especially at the beginning, because you didn’t have a playbook. There was nobody giving you the roadmap. What was probably a lot of trial and error. What were some of the original challenges that you face and some challenges that your students face and how are they solving those sugar? 

Gene: You know, I think you and I take things for granted. Sometimes I can tell you have some great hair like I do. So that means you have experience and wisdom and you and I might take something at second nature to us. But the reality is, I had already had experience, like I said, from the age of 18 with real estate. I’ve already been raising capital and doing no money down deals prior to that. But I also am smart enough in this. We’re the age and wisdom comes in to say I don’t know everything. And I’d much rather learn from your mistakes and your efforts than mine. The School of Hard Knocks. The tuition is way too high for an old guy like me. So I knew I need to surround myself with the right people who knew what they were doing, who could show me how, etc..So the first person I when I said I want to buy, I needed to go find a place found one to buy. Second thing is I need that manager, which we talked about how important that is found that manager who knows more than I do because I don’t know anything about this business. Explain the vision to him. Here’s what we’re looking to do. I want you to oversee and we want to grow, etc..So got him in. 

Gene: And once he’s in and we’ve got the first one, I’m doing my thing, which is going on to the next one. So the raising of capital never shortchanged the concept of learning how to raise capital, because if you know how to raise capital from other people, you can do anything you want. You can fund any business, any expansion, any purchase. You can go to the moon or Mars, as Elon is doing. So the point is you can do anything but raising capital, that skill is one of the most important things you could possibly do in your business career, period. 

Josh: Love it. Love it. Fantastic stuff. So as we kind of around third here, Gene and head for home, you got to check it out. Gene’s having this event coming up April 19 through the 20th. You can go to Preparetopitch.com and go ahead and put in the promo code A.I., A.I. stand for accelerated investor here to get fifty percent off of your registration for this event, Gene’s going to walk you through A to Z. How to prepare to pitch not only just for residential assisted living, but it’s a skill. It’s a strategy that I use that you can use for multiple other businesses e commerce, apartments, mobile home parks, use it for lots of different stuff, walk you through everything he does. And in my world is kind of two ways to raise money. 

Josh: Gene, I know you do both, there is the referral model of working with people that you already know, like and trust you. And then there’s the creating sort of a thought leader platform using digital marketing. I’m sure you’re going to talk about both of those strategies, recruit capital for your deals. So definitely can’t recommend that enough. Prepare to pitch dotcom, use the Code AI for 50 percent off. And Gene, final question for you is really, as you said, you know, you and I have a little bit of gray hair. We’ve been around the block. There’s definitely some things you’ve learned about entrepreneurship, leadership, raising money. What are some of your biggest lessons that you pass along to your younger former self and to our audience? Some things that you want to kind of pay forward or some concepts, philosophies that you have now that you’ve learned along the way. 

Gene: Thank you for even asking. That question is a really, really good one. And as soon as you said, tell your former younger self what’s really cool right now, Josh, I’m at the point where I’m working with my family so my kids all work with us full time. And it’s not nepotism. These guys are rock stars, but it’s given me a chance to continue to share with them along the way. Here’s what I’ve learned. And here’s how to do it. They won’t necessarily listen to me every time, but they do eventually. Right, because I’ve been around. But they’ll listen to you before. They’ll listen to me. I’m getting older. 

Josh: Then we can trade families. My kids will listen to you listen to mine. We’ll do fine with each other. Yeah. 

Gene: Which brings us to one of the key points. I mean, I could give you so many, but one is hang around with the right people because your kids will be and you will be influenced by the people you hang around with. We just we play poker once a month and the group of guys we get together with, we do a prayer session beforehand. So we’re sitting around the fire table and we’re praying for each other. But these guys that I’m hanging around with are quality guys who are inspired, who are doing things. We’re helping each other. We’re thinking outside of them and into other people. That’s inspiring. That helps me be a better person. So hang around with the right people. And just like we jokingly said, but we’re serious. You guys, your kids, they’re going to be influenced by your friends, et cetera. Who are you hanging out with so they can speak into those lives? Another thing I think that when people ask me what are the challenges with business, this is really important under capitalization, one of the biggest mistakes business made. They don’t realize how much it takes in order to get to break even in profitability. Businesses don’t start off with profit. Day one, they lose money and then they hit a, we stop losing money. And now we’re now we’re at breakeven and now we’re making big money. But if you don’t know that you’re not prepared. If you do, no, then I need fifty thousand in reserve in order to get from point A to point D. 

Gene: Now we’re into the money, then you’re going to have a problem. And that is a big problem that a lot of businesses have under capitalization. I’m going to there’s so many more I can give. But let me give you one more. You’re going to get good at something. And when I say you’re going to get good at something, we’ve all heard the aspect. Ten thousand hours. So twelve hours, five years, you’re going to be an expert at something. The question is what? And you have a choice. And I think a lot of times, especially younger people, they want the quick cash. I want to fix and flip. I want to make it fast. The problem is the suit. The moment you sell it, you’re unemployed. You’ve got to go find another one of the grind begins. I’m an mastermind’s with people that are flipping one hundred plus houses a month and it’s a grind for them to find the next one to do it and so on. And it’s the same as being a salaried school teacher. You’re on the wheel, so you got to figure it out. And the point is, that’s nothing wrong with that, nothing wrong with the grind at all. But the point is, where’s it taking you? What’s it doing for you? 

Gene: And if you don’t know where you want to go, I want you to slow down and sit under a tree, pull out a pad of paper, not your phone and your electronic notepad pad and pen. It gets in your head that better that way and ask yourself, what do you really want? Do you want financial freedom? And what does that look like? Do you want more time with your family? What does that really look like? Because what’s interesting, Josh, is I sit with people a lot and we kind of as a certified financial planner, we kind of can reposition assets. And lots of times people who are just grinding, they’ve already reached their goals, but they don’t know it because they didn’t define what their goal is and their goal might be. I don’t have to work anymore. What do you need? I need ten thousand dollars a month flowing into my cash, my checkbook. Great. Take these assets, reposition this over here, do one residential assisted living instead of one hundred something and do this and make it simple. It flows in and you’re done. Now you’re free. And if and when you explain it to somebody that they’re like, you’re right. But they didn’t take the time to just write it down. So think it through. You’re going to get good at something. And my final, final piece? Everybody is going to get involved in assisted living one way or the other of our times. Yeah, either the real estate, the business or you were a family member may be lying in a bed writing a check to somebody who does. So right now you got a choice. So decide how you want to play that game. 

Josh: Yeah, great stuff, Gene. Listen, this has been fantastic, just kind of peeling back the onion with you, learning more about residential assisted living, but also structures. Guys, don’t forget to PreparetoPitch.com put in the code AI. Accelerated Investor get 50 percent off your package, your ticket for Gene’s upcoming event. It’s going to be fantastic stuff. You may even see me there. Jean’s going to offer me a free ticket to calm and kind of sit in. I’d love to be there. I think I’m really good at raising money, but there’s always, always something else to learn. I’d love to hear more about your strategies, Gene. So listen, thank you so much for carving out some time for us today on Accelerated Investor. 

Gene: Thanks for having me on. I appreciate it. 

Josh: So, hey, thank you so much again for listening to that episode of the Accelerated Investor podcast. Don’t forget to check out Gene’s opportunity and get fifty percent off of a ticket for his program called PreparetoPitch.com. There you’ll not only learn about residential assisted livings, but also particularly and specifically how to raise the capital for those deals. And of course, you can use those strategies to invest in apartments, mobile home parks and even e-commerce businesses and single-family homes. That event is coming up April 19th through the 20th in this year 2021. And so if you enjoyed this interview, don’t forget to leave us a five star rating in review in iTunes. Also, don’t forget to hit the subscribe button in iTunes and wherever you get your podcasts and YouTube. So you’d never miss another episode of Accelerated Real Estate Investor.

You were just listening to the Accelerated Investor podcast with Josh Cantwell. If you enjoyed this episode and learned something new, help us build the A.I. community by leaving a review and five-star rating on our iTunes podcast channel. Also, don’t forget to subscribe so you never miss another episode. To see passive investing opportunities, visit FreelandVentures.com/passive. To start your journey toward the lifestyle you’ve always dreamed of with multifamily apartments, apply for one-on-one coaching with Josh at www.JoshCantwellCoaching.com.

Gene Guarino has trained thousands of investors and entrepreneurs how to invest in and operate residential assisted living homes. For the last seven and a half years, Gene has been the number one speaker in the residential living space. Nearly every single person in the country is going to interact with residential facilities as Baby Boomers age, so investors like Gene are preparing themselves for this huge shift in housing needs.

Every assisted living deal has three parts to it: the real estate, the renovation, and the business start-up. While there is room for passive investors inside this venture, active investors will have a completely different strategy for managing the property than they might deploy on a multifamily property. The business start-up includes an operator, who is absolutely vital to the operation. Remember, you’re not just providing a place for people to live in. You’re also providing some form of late-stage care.

If Gene’s not getting at least a 15% cap rate, then he’s not even interested in a property, so there is significant room for profit on this venture. Even a 10-bed facility could be earning as much as $500,000 a year. He breaks down the preferred returns, including the GP and LP return, and discusses how scaling up can help you catch the eye of hedge funds.

People buy people. People only care more about the business plan when it’s a new business or investor. But once you have some experience under your belt, people are investing in people. If you want to feel more confident about pitching your newest project to investors, check out Gene’s Prepare to Pitch Summit on April 18th-20th. Enter the code AI (Accelerated Investor) for 50% off your registration.

What’s Inside:

  • How is residential assisted living different from big box residential living?
  • The normal steps of purchasing, renovating, refi-ing and then exiting a deal is a little more complicated in an assisted living center, so Gene shares some of his preferred exit strategies.
  • The more involved you are in the assisted living center, the higher your rate of return is going to be.
  • How smaller investors can package residential facilities to sell to larger hedge funds.
  • How many units does it take to scale this business?

Mentioned in this episode​

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