Making Some Good Money With Residential Assisted Living With Gene Guarino

Episode 428: Making Some Good Money With Residential Assisted Living With Gene Guarino

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There are many ways to make money in the real estate industry that, sooner or later, one grabs your attention. For Gene Guarino, it was the residential assisted living model. Gene is the Founder and President of RALAcademy, America’s number one source for senior care home investment and business education. He has over 30 years’ experience in real estate investing and business and now focuses on investing in the mega-trend of senior assisted housing. On today’s podcast, Gene joins Mitch Stephen to share how he got into the space and how he’s educating people on how to start and operate a residential assisted living business.

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Welcome to the show. I’m here with Gene Guarino. We’re going to be talking about residential assisted living and how to make a dollar at that, and also how to take care of some people that need to be taken care of. It can be some trouble if you don’t do it right.

I’ll show you how to stay out of trouble.

That’s half the battle sometimes, making sure we don’t get in trouble. I’d like to thank my sponsor for this show, LiveComm.com. You buy your phone numbers there. Every phone number has got a text distribution list attached to it. If anybody calls that phone number from a cell phone, it gets put into that text distribution list and you can text it. That and so much more. Go to LiveComm.com and watch the video on the homepage. I’ll show you why I average 12% down in nine days on the market for my seller-financed homes. That’s 70% of the reason right there. It has that capability. I finished paying the bills, Gene. You’re in Phoenix, Arizona, right?

Yes.

Give us a little bit of your background and we’re going to jump right into this topic. I know this is a popular topic and you can make some good money at it if you’re good at it. You just need to know what you’re doing.

I got started in real estate when I was eighteen years old. I was a lot younger than a lot of people. It was a different route because I was a professional musician. We had a music school recording studio, a small record label. We are renting a property for two years. We ended up saying, “That’s it. We’re either shutting it down or we’ve got to get a room.” We bought a home with no money down because we had no money, no credit and no clue. We did fix and flips, some buy and hold. We segued many years later and now I do just one thing. We turn single-family homes into this residential assisted living model. It’s been a lot of fun and a lot of journeys in between there, but that’s my brief history.

There are many ways to make money in the real estate industry that sooner or later, one grabs your attention and you have a passion for it or whatever. Most likely you think not everyone’s doing this, so you get in. Later on, you might find that it’s popular, but at least you didn’t know while you were boning up on it. Tell us about your first assisted living place. How did that come about?

It was several years ago when I said, “I want to get into this industry.” There was nobody to show me how to do it. The only way I could do it is to buy an existing one. I bought the real estate and the business combined. It was $500,000. The real estate was valued at $450,000, so the business was $50,000. That’s expensive for buying a business, but there were reasons why that was the price. I bought it using other people’s financing. I purchased it. As I got into it, I learned and dissected it. I figured out what was right, wrong, good and bad. Within six months, I bought another property that I converted from scratch into this model and we did it again. Along the way, we’ve taught a lot of people. It’s something that’s needed, but not a lot of people understand what it is when I say residential assisted living.

Did we sufficiently define residential assisted living or do we need to jump into that?

Let me go into it a little bit. There are two parts involved. One is the real estate, one is the business. A lot of people look at this and say, “It’s a real estate play.” It can be, but it’s a single-family home in a residential neighborhood starting there. It’s not multifamily and not a hotel. It is not a commercial. It’s residential. When I say converting it or using it for residential assisted living, it’s a group home for the elderly. It’s not a significant amount of changes to the home, but a lot of our students do to make them upscale luxury more functional for that. It’s not the golden girls and it’s not a nursing home. It’s somewhere right in between. In this residential home, 24-four-hour care is provided, but it’s not doctors, nurses and gurneys.

These people just need assistance. They don’t need you to watch over them.

Residential Assisted Living: Nobody moves into assisted living unless they need assistance.

It’s 24-hour care, but it’s not medical.

Do you give them meals and everything?

Yes. All of their needs are taken care of. Nobody moves into assisted living unless they need assistance. If you’re retired, you move into a retirement community, age-restricted and adults only, golf, pickleball and tennis. In assisted living, the only reason you move in is because you need help, but you’re not ready for a nursing home. It’s not medical help. You can’t be home alone or the family can’t give you 24/7 care that you may need. This way it’s that group home for the elderly.

I was so burnt out on real estate at one point in my life that I was going to move into an assisted living. I didn’t need anything. I just didn’t want to do anything anymore. I wanted everyone to wait for me for six months. How many places do you have?

I’ve sold the businesses. I own the real estate. I leased it back to the businesses. In addition, I invest in. I talk about beds and we’re involved in about between 200 and 300 beds across the country that are either up and running or in development. We started a franchise and launched our National Convention in October as well. It’s growing and expanding across the country.

You’re more from owning it to leasing out the property to operators. You relieve yourself of some duties.

With these homes, they’re not your normal rental home, 2 bed, 3 baths, 1,500, 1800 square feet. They’re a bigger home in a nicer area that people couldn’t cashflow, but when you’re leasing it to somebody who’s operating the residential assisted living, you can charge anything you want and anything they’re willing to accept. I always say twice the market rent with a long-term lease. Imagine having a home that you’d normally rent out for $2,000, now you can rent it out for $4,000, or instead of $4,000, you’re renting it out for $8,000. Instead of a one-year lease with a family that’s going to trash it to move on, now it’s somebody who wants a five-year lease and they never want you to kick them out. If anything, they want the option to buy it from you.

I suppose there are some restrictions in some areas that would not allow you to do that, so you’ve got to look for places that it’s allowed.

It’s understanding the Federal Fair Housing Act does allow. In this case, it works in our favor because you cannot discriminate against the elderly and disabled, etc. The elderly fit in that description. Even if the homeowner’s association says, “You can’t have more than four unrelated adults. You can’t operate a business out of your home.” This is outside of that. The understanding of that case law and how to present it, you can do it in a nice neighborhood and virtually anywhere. We also don’t want to have problems that we don’t need to. We’re looking for the best areas, right rules and regulations, understanding them and know how to get through those challenges when they come.

I know some people that are excited about this business and they do quite well. The people I’ve talked about, they did the same thing. They got it up and going and then they leased out the land. It takes a special person to want to operate.

I never went into this to be the hands-on operator. I’ve never been a manager or a caregiver. That’s not what I do. As a real estate investor and as a business owner, I understand how to know the right location, the demographics and how the business works. You find the manager and they find the caregivers. The training, retaining, and all of that is up to the manager. A lot of people don’t get a clue there. What I mean by that is if you own that business, residential assisted living, and if a caregiver calls off, that means you have to go in and fill in a shift. That’s like thinking the person who owns the hotel is going to run in when the cook doesn’t show up. The manager figures it out, not you.

They are limiting thoughts and we all are limited at some level because there’s always another level to go. I had a DPS pull me over. He said, I had to give him my concealed handgun license and my license because it’s required by law that I show them both at the same time. He goes, “Do you have a handgun?” I said, “Yeah, at least.” He goes, “What do you mean at least?” I said, “I think I have 2 or 3.” He goes, “You think?” I said, “I know I have one in the console. I might have 1 or 2 under the backseat.” I have a King Cab truck. He goes, “Let me get this straight. You got three guns. You think, but you’re not sure. You’re not sure where they are. Are they loaded?” I said, “If they’re loaded, I’m sure of that.” He goes, “You don’t know where they are.” I said, “No, sir.” He goes, “Does that seem strange to you?” I said, “No, it gets way worse than that.”

He said, “How did it get worse than that?” I said, “I own 300 houses and I have no clue where they are.” He started laughing then we got into a long conversation. I ended up giving him one of my books and he let me go. They ask people with a concealed handgun license. You don’t get one of those because you’re nice. You get one because you got a clean record and a bunch of other stuff. You have a book out. What’s the name of the book?

The book is called Blueprints: How to Start a Residential Assisted Living Business.

People can get that book for free.

Because you asked, we’re going to give them a free gift. Thank you, Mitch.

I appreciate that too. I always try to get a little something. It’s good for you too. You get them kicked off because they may not understand. It’s quite a lucrative business from what I understand. I have not done it, but I have seen properties that I was looking at that I called up people that do it and sold it to them because we can only do so many things. I got to try to stay in my lane sometimes. As much as I’d like to try all this stuff, I learned that I’m better if I stay focused on what I do good. Go to 1000Houses.com/RAL. You’ll get a digital copy there or you’d be hooked up. Whatever we’re talking about and all the connections to Gene here will all be over there. Do you offer courses or something on this?

We do. We’ve trained thousands of people over the last few years. We’d love to do that. We’re doing virtual trainings as well as the in-person. They’re both exciting. There’s so much to learn. I want to give it its full weight. The idea of if you know what you’re doing, you’re doing well. If you don’t know what you’re doing, this is not something to dabble in or dip your toe in. I want people to learn before they get started. It’s important. You have a tremendous opportunity to make money. We call that doing well, but doing good, helping other people. That’s our whole motto is do good and do well.

You couldn’t be in that business if you didn’t want to help people because you’d be in the wrong place. There’s a responsibility that goes with that just like anything. I seller finance houses every month to people. I have a responsibility to add here the Dodd-Frank, some of the regulation and the state federal laws. Make sure everybody’s getting what they think they’re getting and make sure it’s straight up. It’s nice to sleep at night when you know that you’ve studied under the pros. The pros are telling you there shouldn’t be any surprises. You’ve got your I’s dotted and your T’s crossed. There’s a certain amount of peace of mind. When I got into the business, I learned from the street. There’s never any peace of mind because I never knew if I was doing anything right. I should have never done it like that.

I would rather learn from somebody else’s mistakes than my own.

That’s what I mean. I had to do it all the hard way. That was many years ago and granted education wasn’t as readily available, but you could have still found some good education in Dave Del Dotto, Jimmy Napier and probably LeGrand as old as he is.

It’s funny you’re bringing out some of the OGs of the industry.

Do you have bootcamps, conventions or annual convention. Tell me about how you educate people?

Blueprint: How to Start a Residential Assisted Living Business

First of all, the book that you’re going to allow them to get is a great place to start. We do a three-day training. We do it that way because there’s so much to teach, but your head can only fit you so much. The three days is an immersion class and we do it Friday, Saturday and Sunday. It’s virtual online or we do it live in-person. People fly into Phoenix, Arizona. We do that eight times a year. The classes are always full. People come from all over the world, mostly the US, Canada, Philippines and Australia. It’s incredible. In addition to that, we have the RAL National Association, which has a national convention. We had the fourth annual national convention. There were 1,000 people there virtually online. We’re looking forward to getting together again. We do so much more, but we’re pretty much virtually. That’s good to be able to do it that way online. To have a great education and then all those people participating virtually was great.

You have an educator’s heart.

I’m a teacher by nature. I’d love to see the twinkle in somebody’s eye. I’d love to see when a student does it and all of that. My father was a college professor. My mother taught nursing. I didn’t even graduate from college. I went for a semester, but I’ve been a business guy my whole life.

I tell everyone I graduated from La Calle U, the street in Spanish. Some people get it and some people don’t. I’m going to make a college ring that says, “La Calle U.” I earned it. That’s the most expensive college in the whole wide world. It’ll take everything you have and spit on you. I don’t suggest it at all. I’m proud I survived it, but I’m not proud that that’s how I went about it because I shouldn’t have. Go to 1000Houses.com/RAL. Get the free book called Blueprint. Learn about how you might get involved in the residential assisted living business. You do not have to figure it all out by yourself. Get with some pros. That’s one thing about teaching those classes and even me having this show or whatever. You think you know about everything and then you start talking to people. You start picking up a whole other set of stuff because it’s hard to be everywhere at the same time and experience everything. When you start talking to students or audiences, you can get a lot from them.

It’s having an open mind. If you’re constantly in that mindset of I want to grow and learn. God gave us two ears and one mouth for a reason. If we listen twice, as much as we speak, we’re going to learn a lot more. I walk into rooms. I remember I was at dinner with Robert Kiyosaki and at one point, he turned to me and he said, “What are you thinking?” I’m going to sit quietly and I’m going to listen. I’m sitting there intently and I shared a little something with him, but I could tell he was intrigued. I’m the only guy who’s not sitting there blabbing about everything I do or this, that and the other. They’re going to learn everything about you because they are willing to listen and take the time to absorb it.

Tell me one of your highs in the business. What’s one of your biggest highs?

One of my highs is when in our national convention, somebody comes up that I’d never met before. They did our home study course or something. They come up and say, “Thank you. You changed my life.” You know what that feels like. When you’re sharing from the heart what you’ve done and somebody listens, they do it and it changes their life. They start telling their stories about how they’re helping these seniors. One of our instructors, he’s a student who’s now an instructor. His name is Jamie. He showed me a video of his little son, Porter. Porter is two years old. This sweet little kid was helping this grandma in one of these homes and the smile on her face was magical. He shared with us that the daughter shared with him later when showed her that video that the grandma had not smiled or spoken in two years. The little baby and the interaction between those two brought out the smile, words and it brings me to tears thinking about it.

We ring the bell around here when people reach their financial independence and can quit their job and devote 2,600 hours of the year to themselves to become who they’re supposed to be. That’s what we do. It is emotionally rewarding because if I made another million dollars in the next five minutes, it’s not going to change what I eat, drink, live, and do. There has to be a higher reason at 60 years old and 25 years of house buying and selling. There’s got to be something else. It’s got to be a higher reason.

I’m also working with my own family, my grown kids. They’re 23, 32 and my three oldest out of the four work with the company. They’re the COO and CFO. My son-in-law is the chief marketing officer. One of my daughters-in-law is the operations manager. It’s not gratuitous and not nepotism. These guys are rock solid. They’re so good. To get to spend time with the kids and passed that first eighteen summers growing up with little kids has been incredible. That’s powerful stuff.

I work with my family too for a long time. It can be challenging too at times. I’ve had mixed emotions about working with family before. It’s all fine now because it’s all settled, but in the beginning days, it was tough. You sound like your family really performs. For anyone who performs, it’s not an issue, but if you have people that aren’t performing, it’s hard to fire our family.

My daughter who’s the COO of the company has to fire her own mother-in-law. Talk about tough.

I hear about it all the time too. People catch their relative’s embezzling.

She didn’t do anything wrong. It just wasn’t a good fit.

Sometimes I talk to people about, “Think about before you hire a family, depending on where your family is in the growing up stage.” If everyone in your family is working in your business and you all want to go on vacation together because that’s the whole point of owning a business, then your whole business is shut down because everybody’s got to go with you. That’s running the thing. I never have been able to avoid having family in my mind though because they’re the ones that care the most and pay the tension the most. It’s not just a job to them, it’s more.

We do travel on vacation together. My daughter and son with their spouses, we went to Nashville for a week for a wedding. My nephew got married. We all went out there. We rented a place. We hung out together. We do peel away and go. Any time we can get the whole family out together, we rent a big Airbnbs. We have a great time.

It helps when you have your systems and you start to run a real business because the complications were when we all had to be boots on the ground. I’ve outgrown that. We’ve all outgrown that. If these guys get a copy of that free book Blueprint, they’re going to start out from the very beginning. Is it basic? Does it start you from zero?

That was my latest book and I wanted to give people an idea of how I got started. Where did I start? What is this industry? What is the future opportunity out of it? From there, we lay out the blueprint of, “Here’s how you do it.” Somebody said it to me once years ago, “Gene, what you do is you take a single-family home, fill it with gold folks, get a babysitter, and you walk away.” I’m like, “No, that’s not what we do. There’s so much more to it.” We lay it out, but it’s the basics. From there, if somebody wants more information, we’ll give them access to this too as well. We’re going to do some webinars that they can watch to get more education. At that point, if they want to have a phone call to talk to somebody on the team, they can do that too. The training is awesome, but I want people to get information so they can decide if it’s right for them.

Go to 1000Houses.com/RAL. It’s been nice talking to you. Is there anything you want to say to someone who’s contemplating or looking for a thing to get rid of their job, or looking for that side gig, the side hustle so they can get free? What would you say to them?

There are a lot of people that are making new decisions in their life. Some of them have been sequestered in their own home or laid off from their job and they’re questioning, are they on the right path? I’m going to highly encourage everybody who’s reading, you have to find something that you are passionate about. You’re going to get good at something. You’re going to put your 10,000 hours in, but you better be passionate about it. It’s not just about the money. Mitch said and I agree, if he made another million dollars in the next minute, it wouldn’t change anything because he’s living his passion. You should be living your passion as well. When it comes to residential assisted living, think forward, not backward.

Lots of things worked many years ago, whether it be REOs, short sales and foreclosures. Many years from now, the seniors or the Baby Boomers who have been driving the world’s economy for 70 years, their last stop is assisted living. You’re all going to get involved one way or the other. Either in the real estate, the business, you or your family member could be lying in a bed writing a check to somebody who does. You may as well learn all you can and choose how you get involved. This is a great way to do it.

I once heard the Baby Boomer’s population described as a basketball moving down on a garden hose. It affects everything when it comes. When it leaves, it affects everything.

It’s 10,000 a day on average are turning 65, but the biggest fastest-growing demographic is the super seniors. Four thousand people a day are turning 85 years old. That’s 1.4 million people a year. Hundreds of thousands of them will end up needing assisted living. There’s not any room in the end. There’s a crisis on one side, which gives an opportunity on the other side. It’s here for the next twenty years.

Residential Assisted Living: Residential assisted living is a tremendous opportunity to make money. We call that doing well, but it’s also doing good and helping other people.

Talk to me about someone who’s over saying, “I don’t have any money. I can’t afford to do this.” Tell me about that.

My very first deal when I was eighteen years old was no money down because I had no money, no credit, no clue. My very first residential assisted living business and home real estate business was no money down. Why? It’s because I had the knowledge. It wasn’t a money issue. It’s because I know how to do it with other people’s money. Somebody asked me, “If you had $25,000, what would you do?” I’d said, “You’d invest in your education. You learn what to do and what not to do, where to do it and when not to do it.” There are many people out there with money that don’t have the time, energy and inclination to do it. They need you more than you need them. Don’t talk to me about, “I don’t have money.” What you don’t have is the knowledge and the confidence to do it. Once you got that, there are trillions of dollars sitting on the sideline.

It’s the consummate businessman or the guy who can write a great contract and get a great deal, that’s the guy that finds the money. It’s about the deal and the transaction. Go ahead and get his book, Blueprint. Check it out. If you don’t know where to start and if this sounds interesting to you, it’s worth a look. The guy is going to give you the book for free. He’s going to tell you how he does it. It gets you fired up and gives you enough information to at least figure out if it’s for you or not. Don’t shoot yourself out of the saddle before you even start.

That’s the silver tsunami coming your way. It’s like seeing a stamp chart ten many years in advance. When you talk about seniors, you know they’re coming, you cannot stop it. That’s why I call it the silver tsunami of seniors.

I want to thank LiveComm.com for being a sponsor. Please go and check it out. There’s a reason why my properties last nine days on the market and I averaged 12% down on my seller finance homes. It’s a great way to find out who’s interested in your product and then stay in touch with them. Watch the video on the homepage. It’ll explain everything. If you’re not even sure what I’m talking about, then you need to go for sure because it works for all kinds of businesses. What business wouldn’t want the cell phone number of everyone that called them? What business wouldn’t want the cell phone number of every customer that ever called their sign or called them out of the yellow pages? They can text them for $0.02 apiece. They’ve already raised their hand and said, “I’m interested in what you got.” For $0.02, you cannot waste any more money trying to sift through people. You pay $0.02 and send the text right to the person that raised their hand. Gene, I want to thank you so much. I hope you get a lot of people to send out a lot of books and I’m sure you will. Are these digital books or hard copy books?

We’re going to give them the download of that. If they want to get the hard copy, we can figure that out too.

It has been easier to get it digitally. It’s instantaneous, you sign up, go over to 1000Houses.com/RAL, and putting your information. You’re going to have a book in a few minutes or a few seconds. Thanks a lot, Gene. It’s been a pleasure.

Thank you, Mitch.

I love your aura. You seem like a super great person. You’re doing some good stuff out there.

You and I are a lot alike. We’re the same age and both drummers because I played drums too. I’ve written some songs, but I can’t do it to this day, but keep doing that. You know as well as I do, you get a couple of songs out there and you’ll get checks forever.

That’s the greatest job in the world. If you can get a cut, you get paid to turn on the radio every morning. If you’re interested, go to MitchStephenMusic.com. I’ve written hundreds of songs over there. I’m on ReverbNation and a couple of other places. If it sounds like it was written 30 years ago, it probably was. I keep going and I get better as it goes along.

Some of the best music was written back years ago. I listen to it all the time.

Three Chords & The Truth. We’re out of here.

Important Links

• 1000Houses.com/RAL
• 1000Houses.com/Livecomm
• 1000Houses.com/Moat
• 1000Houses.com/aof
• 1000Houses.com/coaching
• Gene Guarino
• Blueprints: How to Start a Residential Assisted Living Business
• MitchStephenMusic.com

About Gene Guarino