Surfing the Silver Tsunami: Investing in Residential Assisted Living, Real Finds Podcast #13 Transcript
Gordon Lamphere: Hi, I’m Gordon Lamphere, and welcome to the Real Finds Podcast, the podcast series where we interview key entrepreneurs, scientists, and activists who are shaping the commercial real estate industry and, as a result, our world. On today’s podcast, we’ll be speaking with Isabelle Guarino. Isabelle is the Chief Operating Officer at Residential Assisted Living Academy, which specializes in senior care home investment and business education. On the podcast, we discuss common industry trends, the methodology behind consistently hiring quality talent, best practices for implementing effective business systems, the growing silver tsunami, and the future of residential assisted living. It’s well worth a listen. Isabelle, thanks for coming on the podcast today.
Isabelle Guarino: Thanks for having me.
Gordon Lamphere: I wanted to start by having you tell the audience a little bit about yourself. Could you give us a brief background?
Isabelle Guarino: Sure. I’m the COO of Residential Assisted Living Academy. We teach and train real estate investors and entrepreneurs how to start, own, and operate residential assisted living homes. Not only do we teach it, we do it ourselves. We’ve been in the business for about 10 years. It all started with my dad, and we’ve been able to carry it forward from there, and it’s been a whole lot of fun.
Starting With Why
Gordon Lamphere: The most important thing we always like to start with is understanding someone’s why. Why did you get into assisted living, and what drives your passion for the industry?
Isabelle Guarino: That’s a perfect place to start. It really began with my grandmother. She fell, broke her hip, and the doctor said she couldn’t go home alone. She needed 24/7 care and help with activities of daily living. My dad and his siblings were faced with the situation many families face: does one of us quit our job and take care of her full time? Do we get her one-on-one care? Or do we put her in a home? As soon as you say it, you feel icky, and maybe you even promised your loved one you wouldn’t. As my dad searched for options for her, he found nothing suitable, places where we wouldn’t want to leave my goldfish, let alone my grandmother, and he vowed to find something better.
He stumbled into residential assisted living during that search and did some quick math. He realized he’d be paying five grand a month for her to live in one of these homes, or we could own the real estate, own the business, be cash flowing, and she could live for free. It just made sense to buy one and get involved. That was about 10 years ago. Then last year my dad passed, and for me it has transitioned into carrying his legacy forward, doing good and doing well, and sharing the mission of Residential Assisted Living Academy with as many real estate investors and entrepreneurs as I can.
Gordon Lamphere: So what is Residential Assisted Living Academy? There are a lot of ways you can take that name. What is the business?
Isabelle Guarino: We’re an educational company that teaches and trains real estate investors and entrepreneurs how to start, own, and operate their own assisted living home. Not a commercial facility, not a big box like a Brookdale or a Sunrise. It’s a residential home, a single-family home, though not a three-bed, two-bath. These are luxury homes with lots of bedrooms and bathrooms, but still single family. Instead of mom, dad, two kids, and a dog living there, you’ve got six to sixteen seniors who need 24/7 care and help with activities of daily living. At our trainings, we show real estate investors how to purchase or renovate the property and the business, how to hire the right staff so they don’t have to run the business hands-on, and how to make sure the seniors are getting the best of the best care and the caregivers are doing what they’re there to do.
Small Homes Versus Big Facilities
Gordon Lamphere: What’s the biggest difference between a small and a large residential living facility? Most people have an image of senior living in their heads.
Isabelle Guarino: The difference in quality of care is drastic. In a big facility, it’s 30 seniors to one caregiver. In our homes, it’s four seniors to one caregiver. People often want one-on-one care for their loved ones, a caregiver coming into the home, but it’s not always feasible. The average cost is $27 an hour in our nation, and if you need 24/7 care, that’s $27 times 24 hours times 30 days, about $19,000 a month, plus your mortgage or lease, food, activities, everything else. You’re talking $20,000 to $25,000 a month. Most Americans can’t afford that. So a four-to-one or five-to-one ratio is much better care than 30 to one. One person cannot care for 30 people. That’s what’s happening in these big facilities, and they’re charging a ton while the care is poor. It’s not the caregivers’ fault; it’s the system’s fault. There are many differences, but the biggest standout for me is quality of care.
Four Ways to Get Into the Real Estate
Gordon Lamphere: Getting to the real estate perspective, one of the biggest things we look at when folks are considering investing in facilities is ADA requirements. You’ve talked about smaller facilities. Are you typically rehabbing a building, or suggesting investors build new? What’s the usual structure for tackling the real estate side?
Isabelle Guarino: All we teach is the residential side, not commercial, and there are four ways to get involved. One is buying land and building a custom home from the ground up. For people in the Midwest or Texas, where there’s still land available, that’s a great way to do it. Another is buying a single-family home and converting it. That’s how we got involved with two of our properties. They were roughly 6,000-square-foot homes, and we chopped them up differently. They didn’t start as 10-bed, 10-bath homes, but they became that, maybe from six bed, five bath, with a renovation to create more private bedrooms and bathrooms for the seniors. The third way is leasing a property and partnering with the landlord, whether they’ve done the renovations or you’re going to, so they know what you’re doing in the home. And fourth, you can buy an existing one, real estate and business together, so you’re up and running and cash flowing day one.
Gordon Lamphere: In an ideal world, what’s the strategy you typically recommend?
Isabelle Guarino: It depends on price point and timeline. With land, it’s taken some of our students two to three years to get their homes up and running, but they’re spectacular, so I love that if you have the time. Other people say, I need to change my life, I need to be cash flowing 10 to 15 grand ASAP, and for them, buying an existing one is the fastest way to start that cash flow. It depends on your preference, but custom land builds are a lot of fun because you can make the home to perfection.
Gordon Lamphere: We’re working with a group right now purchasing land. We’re representing a bank and helping them sell it, and the facility they’re putting in is going to be absolutely beautiful. We just hope all the i’s get dotted and t’s get crossed. That’s the avenue we’ve gone in the past, so I’m fascinated to hear how people create value in an existing facility. What’s the biggest gap you typically see when someone purchases an existing one?
Isabelle Guarino: Eighty percent of the residential assisted living industry right now is run mom-and-pop style, meaning the person who owns the business also lives and works in the home. They’re often an immigrant from another country who came over with a heart for seniors, took in one or two, then three, four, five, and now it’s 10 seniors and they’re doing everything themselves. When you’re buying a business from someone like that, they’re very attached. It’s emotional for them. It’s not as transactional as buying from a true owner-operator. Then you’re having to completely redo their books, because there may be a missing administrator, since that’s who they’ve been, and if you’re going to run this as a business, you need to hire the proper people. Redoing the numbers, seeing where they’ve been missing expenses or adding expenses, the books are definitely the toughest part of buying an existing RAL.
Who Residential Assisted Living Is For
Gordon Lamphere: Finances are always difficult. That’s why we have a nice CFO over here who helps with all of ours. I want to come back to something we probably should have discussed at the beginning, and it’s one of the most important questions: how does someone know if residential assisted living is for them? There are a lot of business opportunities out there. Personally, I love people, but I don’t love people that much. I’d struggle in that kind of profession, but it’s an absolutely necessary one. How does somebody know if it’s in their future?
Isabelle Guarino: From the investor or entrepreneur perspective, for the people who come to us interested in learning more, it’s almost always about making an impact. Our students in class are typically already business owners who already make a lot of money. The cash flow is exciting to them, but they say, I’m over making money. Money becomes just money, and I want to leave an impact, change my community, change the world. Having that purposeful heart set is a really good place to start from. Secondarily, we get a lot of people, just like my dad, who have a loved one who needs assisted living, are disgusted with the options, and want to create something for their own family members, and maybe themselves one day. They say, I don’t trust that my kids are going to put me in a great place, so I want to build something great I could live in and pass on as a blessing to my kids. Familial ties and making an impact, that combination creates an amazing new entrepreneur in this business.
Building Effective Systems
Gordon Lamphere: One of the things you discuss a lot is creating effective business systems, and regardless of industry, you can learn from the methods and systems being applied elsewhere. When you look at a facility that’s in progress, what are the first systems you typically look at to change?
Isabelle Guarino: There are so many systems in a residential assisted living home: onboarding, hiring and firing, dealing with all the independent contractors, and all the contracts involved not only with residents and their families but with the licensing process. So making sure all of those are intact. And since 80% of this is run mom-and-pop style, a lot of times it’s hard-copy books. Nothing is systematized, nothing is digital. We like to come in and make things as digital as possible, because all that manual work takes way too much time.
I like to teach people to work on their business, not in it. I spend one hour a week on the phone with my manager, and I visit the home every other month. I’m not hands-on at all. Most of the seniors and their families don’t know me or my name. They’ve never seen my face, and they don’t need to. I’m not a caregiver or a licensed administrator. Those are the staff members caring for the seniors day to day, and that’s who the families need to know and trust. I want to work at a high level on the systems so we can be hands-off and everything runs smoothly. Digitalizing as much as possible makes everything easier, from intake forms to building websites. If you buy an existing home, it might not even have a website or a Facebook page. It’s so simple to do those things and get everything in alignment so that marketing happens without you having to do everything yourself.
Hiring the Right People
Gordon Lamphere: We could go back to marketing and digitalization, which is a recurring topic on this podcast, but what’s interesting is you mentioned hiring and firing. One thing that connects both our industries is that we’re ultimately managing people. We’re service driven, whether a real estate company or an assisted living company. How do you go about the hiring process? It must be a difficult labor market, and it must be hard to find employees willing to work in the industry. How do you search for and sort through employees?
Isabelle Guarino: We love a tool called Predictive Index. Have you used it?
Gordon Lamphere: I have not.
Isabelle Guarino: It’s amazing. The simplest way to describe it is a personality assessment, but it’s a two-question quiz that tells you who this person is naturally, who they feel they have to be at work, and how they come off at work. If who they are naturally and who they feel they have to be at work are completely different profiles, they’re not going to have longevity in your job. That’s the person who can’t wait until Friday and hates what they do, because they’re not using the skills of who they actually are. Finding people whose natural profile matches the job profile, and who feel like this is who they’re supposed to be, gives you people who are happy in their role and using their God-given skills. To me, that’s amazing. I literally won’t interview people unless they’re a nine out of ten match on the Predictive Index for the job, and you can create different job profiles for each role.
When it comes to interviewing, I also like to do working interviews for caregivers. I tell them, come in, don’t mind getting messy, it’s a four-hour working interview. They’re not going into bedrooms or bathrooms or doing anything intimate in caring for the seniors, but I want them interacting with the staff, with the families who come in, and with the residents, because it’s one thing to say you’re a certain way and another to see it.
And then references. Nowadays, especially in small business, people throw that out the window. They see that someone worked somewhere before and don’t take the time to call. In corporate culture, it’s normal, but in small business a lot of people just trust. It’s really important to lean into that and call and ask what it was like when this person worked for you, and why it ended. There are always two sides to a story. There’s a lot you can do to make sure you’re hiring the right person for the right seat.
Gordon Lamphere: That’s fantastic. We’re heavy users of references. There’s a lot you can glean, particularly from our relationships with other management companies and brokerages in the area. But I’m blown away by your first two methods, and I want to follow up on the working interview. What are you typically looking for?
Isabelle Guarino: Something I look for, and we jokingly call it the pen drop test, works in a sit-down interview too. There’s a pen on the table, and I flick it off. Does this person try to grab the pen as fast as they can, like the floor is lava? Do they not even notice the pen and just look dead at you? Or are they somewhere in between? For a caregiver, I need someone who, when a senior is sipping a straw and the cup is empty, hears that and proactively fills Sally’s cup. Not someone who doesn’t even notice the straw. The pen drop test is an excellent way to determine whether this person is innately going to grab the pen, fill the cup, get a blanket for the person who’s cold, or help them get up. Every industry is a little different, and I’m a person who wouldn’t notice the pen. There’s nothing wrong with that; I’m just not a good caregiver. I wouldn’t hire myself for this. But it’s a skill I know I’m looking for. If I ask someone, are you attentive, everyone says yes. I need to see it.
Gordon Lamphere: I’m absolutely fascinated by that. It’s something we’d love to incorporate into our hiring practices, particularly for property managers, because nothing matters more than being attentive when you’re managing people and buildings in the service industry.
The Silver Tsunami
Gordon Lamphere: This podcast is always curious about the future, and in a lot of your content you talk not only about methodology but about where you think residential assisted living is going. What trends are you seeing in the industry?
Isabelle Guarino: Currently, the Silent Generation is who’s living in assisted living, and there are only about 47 million of them. The baby boomers are yet to come. We call it the silver tsunami. It’s approaching but not here yet. We see the wave building, and we’re still maybe 10 to 20 years out from a huge crash. There are 76 million baby boomers. We’re currently 1.3 million beds short in assisted living, and NIC is projecting we’re only adding about 50,000 beds per year. With the number of seniors needing care nearly doubling, we’re already short and we’re not building fast enough. I see a huge crisis. And it was a world war that started the baby boom, so it’s not just America, it’s the entire world.
But I also see the biggest opportunity our generation has ever faced. It’s the follow-the-money method. The baby boomers have been driving the economy for 70 years, and this is their final wave goodbye. I don’t care how people take action, whether it’s investing in medical beds, long-term care insurance, diapers, I literally don’t care. Choose something you’re passionate about and go, because there’s a 20-year span ahead of us with massive need for home care assistance and everything people need in those last years of life.
I also feel COVID shined a huge light on what was happening in the big commercial assisted living facilities, and praise God for it, because the neglect and abuse in those homes, and how terribly residents were treated during COVID, basically like prisoners locked in their rooms with food slid under the door, is not okay. A lot of families pulled their loved ones out of the big boxes and were begging to get into our smaller care homes. We’ve always said smaller is better, and I think COVID proved it. Now you have people looking for alternatives. I truly think residential assisted living is the way of the future. It’s the Uber to the taxi, the Airbnb to the hotel. Even if we’re living in the metaverse, someone still needs to take care of mom and dad. I don’t see this going away. Supply and demand are in our favor, and the numbers are in our favor. We’re all aging or know someone who is. It’s the perfect recipe: however you want to get involved, get involved, because this is happening and we can’t stop it.
Gordon Lamphere: My grandmother was in a residential assisted living home as well, and we made the choice not to go with a big box. Going back to COVID, I know most people don’t want to talk about it, but it’s particularly fascinating for residential living and nursing care. What was the biggest thing you learned from COVID that you adopted?
Isabelle Guarino: Because our homes are smaller, six to sixteen seniors depending on what each state allows, it’s not like a big box with hundreds of staff coming and going, a janitor, a front desk person, a chef. You might only have two or three staff members on during the day and one or two at night, the same people coming and going. So it was significantly easier for us to control who was in and out of the home. The big facilities just can’t, and if one staffer went out partying the night before and brought something in, it is what it is. We really didn’t have to change much of our day-to-day operations.
What it did was make us more creative with activities in the home and with family visitation. We always suggest really nice front yards and backyards, and we’d do outings to the park and let the families come. It also helped us build a really strong family environment in our homes. When there are only six to sixteen seniors, they all know each other and become friends. With families potentially visiting less, the residents relied on each other for social interaction, so we drove up the activities and made it fun within the home. We didn’t have to change nearly as much as the big facilities did, and we got to grow and strengthen together as a family within that household.
The Final Four
Gordon Lamphere: We’ve talked a lot about personalization, and now we’re going to the most personalized part of the podcast, our Real Finds Final Four. One of my favorite questions: ten years from now, what do you think will have changed the most about the assisted living and residential assisted living environment?
Isabelle Guarino: Ten years from now, I think we’ll see a lot more niche homes and facilities. The Silent Generation doesn’t care as much about their food and activities. The baby boomers do. I think we’ll see vegan homes, gluten-free homes, wellness homes, men-only, women-only, and LGBTQIA+ communities. A lot more niche-style assisted living, and that’s going to be a big draw.
Gordon Lamphere: Let me follow up on that. What are the fastest-growing niches you’re seeing right now?
Isabelle Guarino: By far, wellness. Anything surrounding healthful food choices, physical therapy activities, stretching, senior yoga, pet therapy, gardens in the backyard, farm-to-table vibes, designated time outside getting vitamin D. Wellness homes are a huge trend, and I think they’ll be the biggest push.
Gordon Lamphere: Very cool. I can only hope to be living well later in life. We like to look not only toward the future but back as well. Isabelle, at the start of your career, if you could give yourself one quick bit of advice, what would it be?
Isabelle Guarino: When I started with my dad, he owned three homes, and we slowly started teaching and training people and built from there. It was him, me, and one other gentleman starting one company, which is now eight companies and 50 employees that I run primarily myself. I would never have imagined that. I thought I was just a little assistant or helper. So I’d whisper in my own ear: have confidence, you can do this, and keep putting people first, whether that’s people in the company or the seniors we’re doing this for. Keep people at the forefront and have confidence.
Gordon Lamphere: The confidence to add value is an incredible trait. One way we can add value to folks right now is by looking at the books or knowledge that influenced you. Are there books, on real estate, business, or your industry in particular, that have truly influenced how you see the world?
Isabelle Guarino: The book I always recommend is The 5 AM Club. I love that book. It’s about what the title says, waking up at five, but it’s really a fiction book, a story about how prioritizing your life and your goals and living for your true purpose changes your life. It’s less about waking up at five and more about prioritization, your heart set, headset, and mindset all being in conjunction, and how your life grows and flourishes when they are. There are so many amazing books. My dad wrote a couple on assisted living, because there were very few out there, and I recently wrote a book, Living Legacy, about my journey in assisted living and tips on getting started. We definitely need more content in my industry. But The 5 AM Club has definitely helped guide my journey.
Gordon Lamphere: We’ll have to put Living Legacy on the list as well. Our legacy on the podcast is trying to bring more influential voices into the real estate industry and into the way we view business. Who would be the next person you’d like us to bring on, in assisted living or commercial real estate?
Isabelle Guarino: Love that. I’m really loving Phillip Vincent. I don’t know if you know him. I can connect you if not.
Gordon Lamphere: I would love that. I don’t know Phillip.
Isabelle Guarino: Awesome. He owns a company called Mom’s House. It’s similar to what we do, but he handles the other side of assisted living: the person, place, and things. That’s very important for people in the real estate space, because we’re going to have all these homes on the market from seniors moving into assisted living. What do we do with them? He has an amazing plan for that, he teaches it, and he does it himself. I’m happy to connect you.
Gordon Lamphere: Isabelle, thank you so much for hopping on the podcast today. The last question, and the most important: where can someone find you?
Isabelle Guarino: We’re on all forms of social media at RAL Academy, but also check out RAL101.com. It’s a great first place to get started. We’ve got webinars, books, and all sorts of downloads at no cost, and you can connect with me or my team there.
Gordon Lamphere: Isabelle, thank you very much for hopping on today. We’re very appreciative, and we’d love to have you on again in the future.
Isabelle Guarino: Yes, thanks for having me.
Gordon Lamphere: Thanks again to Isabelle. We appreciate her insights. If you enjoyed the podcast, please give us a like, a five-star rating, or a review. Your comments, interactions, and subscriptions truly matter and help us continue to provide quality guests. You can follow us on YouTube, Spotify, or wherever you get your podcasts. I’m Gordon Lamphere with the Real Finds Podcast. Thank you for listening.
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