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Time and Circumstances

By March 19, 20222 Comments

I heard a saying once that always stuck with me. The saying was something like “all real estate owners will be sellers, it’s just a matter of time and circumstances”.

Over the years, I’ve seen this truth play out again and again. On the surface, it may seem obvious that an owner of an assisted living facility, taking an example from our world, will sell one day. But the point is, despite all our planning, we don’t know when that day will be.

Life happens, with both positive and negative events that we don’t foresee.

An inheritance puts you in a different financial position. An opportunity to live in your ideal location comes up. A grandchild is born a few states away.

Or, maybe it’s something like an illness, financial stress, or a bad partnership. None of these things may seem likely today but they happen. They are things that eventually lead to a sale.

So what does this mean to the owner of an assisted living facility?

It means that we should plan for contingencies. It means that we should learn to hold loosely to our own plans. And, it means we should be prepared to sell our business at any time – not that we will but that we can.

Something I’ve seen too many times is the owner of an assisted living facility unexpectedly becoming a seller. They’re not prepared and haven’t even considered the possibility. I don’t want that to happen to you.

How To Be Prepared To Sell Your Assisted Living Facility

There are many things you need to do when preparing for a sale. Here is a list of some things that will help you be more ready to sell when life happens.

Don’t defer maintenance

Replacing an old roof, resurfacing a parking lot, installing fresh carpet are all things that take time, especially over the past few years when it’s been challenging to find supplies and service. Bite the bullet and spend money on major maintenance items so that a buyer won’t deduct even more from your sale price. Plus, your residents and staff will be able to enjoy the benefit of those upgrades today.

Keep your books up to date

This one isn’t just for those selling. Owners of assisted living facilities should keep their financials up to date all the time but I know it’s something left near the bottom of the to-do list for many. When it’s time to sell, having accurate and up-to-date financial statements will be critical for showing the value of your business.

Document your procedures

Assisted living facilities normally have a policies and procedures manual – they’re often required by regulation. But what about the things you do as an owner on a regular basis. If you ever need to step away from your business, whether temporarily or permanently, those left in charge will be thankful you wrote down the processes you follow to keep the wheels turning at your business.

Step away from day to day

Once you’ve documented your processes as the owner of an assisted living facility, test them out by having someone else do your job for a day. Or maybe a week. Or maybe a month! Seriously, one of the best ways to find if you’re ready to sell is to leave and do something else for a while. Plus, you’ll have the benefit of proving that your business is ready for a passive owner-investor to take over. You will be selling a business and not just a job, and businesses are more valuable.

Know your tax situation

Potential sellers often use simple math to daydream about what their retirement nest egg may look like if they sold. Their formula subtracts the mortgage balance from the sale price and that leaves them with a pot of money to enter the next stage of life. Not so fast! Taxes will also take a bite out of the sale proceeds and probably reduce the income you’d enjoy in retirement. Sorry to bring that news but it’s important to know your real numbers. Make sure you talk with your tax professional, maybe once a year, for an estimate of what your tax bill might look like if you sold your business.

Know your debt situation

Here is another potential trap to think about before a sale. Most of the home mortgage loans we’re all familiar with can be paid off anytime with no extra fee. Mortgage loans for assisted living facilities (or many commercial-investment properties) will often have a pre-payment penalty if they’re paid off early. Sometimes it’s a relatively small amount but sometimes it can be a deal-stopping amount. As a potential sale becomes more likely after many years of ownership, watch out for larger pre-payment penalties that can take a bite out of your sale proceeds.

Be Prepared

These are just a few of the things you can do to be prepared for the sale of your assisted living facility.

Remember, time will pass and circumstances will change. One day, you will sell your business and, hopefully, it’s all according to your plan for a prosperous exit to the next stage of life. But if the unexpected happens, be prepared for the sale you weren’t expecting, too.


  • pat lannan says:

    i am looking for a management company to run/operate a 10 bedroom assisted living home in mesa az.

    • Mike Collins says:

      Pat – I’ll follow up with you in a separate email with some ideas about how we can help you out. Mike

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