Steps to take when considering selling your senior housing or assisted living facility and business for the highest price possible with the least amount of inconvenience.
- Take care of all deferred capital expenditures.
- Make sure you have clean financials that can be backed up by your tax returns.
- Make sure you have consistent occupancy and market-rate rents for your location.
- Normalize your expenses so that you have operating margins of around 35%.
- Keep your intentions confidential.
Senior housing and assisted living real estate transactions are about more than just finding a buyer. The real challenge is in all the other steps that lead to a successful closing. Our teams help sellers with valuation, confidential marketing, contract negotiation, due diligence, financing, closing, and management transition.
What is the valuation equation? It’s the income approach to value used by appraisers, lenders and buyers of senior care facilities and just about any other piece of income-producing real estate. It is really simple math once you understand it.
Value = Net Operating Income / Capitalization Rate
“I just want to do a quick calculation of my numbers to understand the value of my business.”
Here’s a very simple explanation of the valuation equation. The Net Operating Income (NOI) is the cash flow your facility generates annually before you pay mortgage payments or any other costs of financing or take non-cash deductions such as depreciation. The Capitalization Rate (the cap rate) is basically the rate of return your facility would generate without mortgage financing. When you divide the NOI by the cap rate, the result is the value of the property.
Now there is almost always more to it than this simple formula, but this is the foundation of calculating value for income property. Please visit here to learn more in-depth on how our financial team values independent living, assisted living and long term care facilities.
- Tips for selling your senior housing or assisted living community
- Sales Process
- Value of a senior housing and assisted living facility
- Seller financing of a senior housing or assisted living facility
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When you are ready to think about selling your assets, our senior housing and assisted living brokerage team is ready to serve you.
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