[00:00:00] Speaker A: You're listening to the preferred way, a retirement podcast brought to you by preferred trust company, the preferred custodian for all alternative investments.
[00:00:09] Speaker B: So welcome to the Preferred Way podcast. Today we have Ryan Beatty here with us today. Thanks, Ryan, for joining us.
[00:00:15] Speaker A: Thanks for having me.
[00:00:17] Speaker B: And we're going to talk about build senior living, right? And we're going to talk about how important this is for not only us as aging Americans, but making sure that we have senior living facilities for our parents and ourselves later on in life. So, Ryan, tell us a little bit about yourself. Let's start with you, and then we'll go into build senior living.
[00:00:42] Speaker A: So after college, I was in sales in a variety of different capacities, pharmaceutical sales, but one of the last sales jobs that I had was home care sales. So sending caregivers to the elderly and developmentally disabled, and in that role, I just saw this massive need. In this case, it was home care. But for assisted living, in any real service that takes care of seniors, every single day, I would have three, four, five different families reaching out to me, asking for caregivers to help their loved ones stay at home or in some cases, stay with their loved ones. That assisted living communities. And my experience of going into these assisted living communities was, one, wow, they're always full.
Two, wow, the loved ones are always telling us how expensive assisted living is and any senior housing is. And three, in a lot of cases, these communities were not places that I would be proud to send my loved ones to in 2020. I pivoted my career into private equity there. I worked in a lot of different types of asset classes, multifamily, bitcoin mining, pre IPO stocks, self storage, obviously assisted living, and a number of other things. And what I found was that the assisted living spoke to me not only because of my background, but also because I gravitate toward very predictable things, especially when you're talking about other people's money.
But I gravitated toward assisted living, and more specifically, assisted living with build senior living. And so in 2022, I pivoted away from a lot of the other things that I had been involved in.
And one of the big reasons for that is there's so many levers that need to get pulled in some of those things. And it's not to say that those aren't great asset classes that people should consider. It's just for my taste. When you're talking about value add, multifamily, or bitcoin mining, or any of these pre IPO stocks, there's so many things that need to happen in this business plan.
The business plan that build senior living executes is simple, which, like I said, speaks to me. And that business plan is to go out and identify cities that need assisted living communities.
And the way we do that is by running these market studies, very lengthy market studies. They're great reading. If you're having a hard time sleeping, you know, they're tremendous reading. It's about 70 pages of data, specifically data on the seniors in that area.
[00:03:25] Speaker B: Okay.
[00:03:26] Speaker A: And so we run a lot of these studies, and we're constantly buying land to develop assisted living communities in when they make sense to do so.
And so we identify.
So we started in Michigan. So we've got a number of communities in Michigan. We have a number of communities in Florida. We're under development in Texas.
We've got one open in Missouri and a few others under development there, and then a few under development in Virginia. So our plan is to continue growing, buying new land. We have about eight other parcels of land, I believe, that we've purchased and not even started developing on yet.
[00:04:03] Speaker B: I.
[00:04:03] Speaker A: So we're constantly running these studies, constantly finding new places to build in. And then as we finish communities and open them up and we operate them ourselves, we start construction on another property, and the cycle just continues and continues and continues. Yeah.
[00:04:21] Speaker B: Yeah.
Let's talk about the analysis that you're doing for just a minute as you enter into each of these markets. You started with Michigan. You said, correct. Okay. Why Michigan? Why did you start there? What was the key factor in that analysis where you're like, Michigan is the place we're starting.
[00:04:41] Speaker A: You know, it's interesting. So Shahid Imran, our CEO, lives in Michigan. And while he lived in Michigan, he started. This was about 14 years ago. He was a salesman, selling things to assisted living communities, walkers, CPAP machines, things of that nature. And he saw, you know, basically what I saw at assisted living communities when I was in home care, which is a lot of these places are not places that you would want to send your loved ones, unfortunately. And he saw an opportunity to provide first good food to seniors. This is really a calling card for his communities, excellent food for the seniors. And I'll tell you a little story before I go on.
Shahid and I had a conference call on Zoom maybe about a year ago, and I don't think he knew I was on the call yet. His screen was black, and all I could hear was, I want them to have smoked salmon. I want smoked salmon. I've never seen smoked salmon at an assisted living community. I don't care how you have to make it happen. I want smoked salmon. And then he gets on the call and he just starts talking as usual. And I'm like, so you're serving smoked salmon now, huh? He's like, yeah, think about that. Smoked salmon at assisted living community. And then he got very serious and said, you know, you never know at these assisted living communities. When is somebody's last meal going to happen? And so I want them to be taken care of, and I want a potential last meal to be a great last meal.
And so that's the one thing they.
[00:06:09] Speaker B: Have to look forward to, right? Every day they wake up and it's like breakfast, right? And the next activity is lunch, and the next activity is dinner. You know, it's a, you know, I didn't think about it until you just said it the way that you did. But, yeah, I mean, it's an event, three events a day that they, that we will look forward to. And why not make it one that, you know, also tastes good, right. And it's something we want.
[00:06:37] Speaker A: Exactly.
[00:06:38] Speaker B: Do you mind if I step back for just a second? And, you know, you've said a couple of times that, that you and both the CEO have walked into these places and thought, why? Why is it like this? What's happening? Why is it like that?
What do you believe is the reasons why, you know, we're walking into senior facilities or, you know, assisted living and going, I would never put my parent here. Why is that happening? And, you know, obviously you guys are looking to make change there, but why is it happening?
[00:07:17] Speaker A: So I think there's a few reasons for it. One is they fill up regardless of how they look on the inside, especially as you look at some of the fundamentals in the industry. The oldest baby boomer right now is 78, 79 years old, which isn't even, quote unquote assisted living age yet.
And so just imagine the type of need that there's going to be for this. You know, this silver tsunami, as it's called, is not even going to crest until 2050, 2055.
And so these places don't, for lack of a better word, need to step their game up.
Interesting other issues that fortunately we don't run into because we accept private pay. Only a lot of these rely on government payers.
And so unfortunately, over there, the government is a reliable payer, but they don't pay a whole lot. They don't necessarily always pay on time. And so there's budgetary constraints at some of these communities, and then some of the other issues that you run into is if you go to a lot of these reviews for a lot of assisted living communities, you'll see families posting things like, nobody checked on mom, nobody checked on dad for hours while I was there. Staffing can be a major hurdle because there's not a whole lot of money for the communities to use on these, and it's hard to staff these jobs as it is.
And so our method of going around that is a little bit.
A little bit different than a lot of these communities are run.
Typically, what you'll find with build senior living, or Hampton Manor, as it's known to the public, because that's our operating name, is. Our communities are typically built in pods. So we typically are building three communities in an area. And in doing so, we're able to share some staff, like you mentioned activities earlier, with meals. We share activities directors at our locations, and a lot of times we share staff at the various locations. And so in doing that, you know, we don't run into a lot of the staffing issues that, you know, if we just went and built one community in St. Peter's, Missouri, that we would run into versus when we build one in O'Fallon, in St. Peter's, and in Wentzville, Missouri.
[00:09:32] Speaker B: Makes sense. It totally makes sense. I mean, the efficiencies of your resources are so much greater.
I mean, it makes perfect sense. So is that the model you make sure that you're building them within, what is it, 50 miles, 20 miles radius?
[00:09:49] Speaker A: It's typically about 50 miles. Some of it's tighter. Some of it's a little bit looser. Like if you look in Florida right now, we've got one in Punta Gorda and in Cape Coral, and another under development nearby. So those are all within about 50 miles of each other. And so that's pretty much our model. And if you look at our product, which we have on our site, they're all very similar looking. All one story buildings, all roughly 70 to 80 assisted living units and then 15 to 20 memory care units.
[00:10:21] Speaker B: Okay. Okay. Now, you had mentioned early on that you guys are full gamut, a to z. You're acquiring the land, you're developing, you're constructing, and you're running the facility.
[00:10:35] Speaker A: Yes.
[00:10:36] Speaker B: At what stage in that process are investors able to engage?
[00:10:42] Speaker A: Yeah. So investors. So when we buy a piece of land and have that study run, and then we own it and acquire it, there's a lengthy permitting process. Can take up to two years to get permits done for that. So we aren't accepting investor capital at that point. Once we break ground, then investors can come in on the development side. And we've found that this shortens the investors time in the project. It's not just sitting there while we're having permits done. And so we let investors invest in the development side or we let investors invest in the stabilized side. And so some people looking for cash flow, like investing in a property that's 90% full, others don't necessarily need the cash flow or it doesn't fit their investment portfolio to look for cash flow. And so they like the development side. The other thing that we do is it's not uncommon for folks to do 1031 exchanges into our stabilized communities as well.
[00:11:36] Speaker B: Makes sense. And do the investors stay in for the long haul or are they in for a certain period of time before it's stabilized and you guys take it back under your wing? How does that work?
[00:11:48] Speaker A: Yeah, so on the development side of things, investors are typically in it for two to three years, depending on the development time and the time it takes us to get the refi done.
On the cash flow side, you know, we usually say three years, but sometimes people just don't want the money back.
They like the returns, so they can really stay in it longer if they like to. The only time when we have to, you know, kick them out is the rare occasion that we decide to sell a property because our model is not to build these and then sell them.
[00:12:20] Speaker B: Okay. It's build and hold.
[00:12:22] Speaker A: Build and hold, yeah.
[00:12:24] Speaker B: How many you currently have?
[00:12:26] Speaker A: We have 13 now, and then we have another five or six under development. And like I said, we've got lots of parcels of land ready to go for 2025.
[00:12:36] Speaker B: Awesome. And you guys have been only doing this for how long?
[00:12:41] Speaker A: 13 years.
[00:12:43] Speaker B: 13 years. I say only because, I mean, this is a long game. You're talking, you know, you talked about, you know, 2050 being a scenario where it's really going to become an issue. Do you think we as a society are going to be ready for 2050?
[00:13:00] Speaker A: We're not.
[00:13:01] Speaker B: Yeah. Are there enough of you out there doing this?
[00:13:03] Speaker A: Will we be prepared where as it stands right now, we're already not, as a nation, not building enough to meet today's needs, much less needs in the future. One thing that happened during COVID is a lot of projects fell apart and so development stopped and they just didn't pick back up again. So there is a big, a big lapse there in development. But I think assisted living in a number of other spaces are also not prepared for what's going to happen when the baby boomers hit that age where they're going to really stress some of these systems. And so we're trying to build as many as we can. We'd love to, love to build more, but building like six a year or so, finishing six a year or so is our model at the moment.
[00:13:46] Speaker B: Okay. Will that model grow?
[00:13:48] Speaker A: It will. It will.
[00:13:51] Speaker B: Okay.
When will you guys hit your capacity? Are you there? Are you at your stride? I mean, you're 13 years in.
Do you think five will turn into eight will turn into ten? I mean, is that, is that the long term goal or are you guys in this for the long haul or.
[00:14:07] Speaker A: Oh, we're certainly, we're certainly in it for the long haul. The, I mean, the behind the scenes intention is to eventually reach a point where we sell the entire portfolio to a reitzen, but that's not for pretty far in the distance.
You know, we would love to build more and we've identified more areas that need assisted living communities. We want to go into more states.
This last year we broke ground in Texas. The year before that we broke ground in Missouri. So we're going to continue expanding into new states. That make sense to do that.
And if we have the investors to continue expanding will expand at a more rapid pace as that allows.
[00:14:47] Speaker B: Okay. Do you use IRA funds? Do you allow investors to invest with iras or self directed iras?
[00:14:56] Speaker A: Yeah, absolutely. That's, I think a tremendous way for an investor to vested our development deals in particular is through self directed IRA funds.
I've had people invest in our cash flowing deals with their self directed iras. And inevitably the problem that they run into is like, Ryan, it's great that your properties are performing like you said they would, but I'm getting like 1200 bucks a quarter. What am I supposed to do with this?
And so to some extent, we try to work with them on lowering minimum so that they can redeploy that capital or transfer into a different share.
But yes, I think our development deals certainly make the most sense within IRA funds.
[00:15:38] Speaker B: They absolutely do because we get into the operating side of things. You also have ubit taxes associated. And when you're investing in a tax sheltered environment, the development side is really where IRA funds can be catapulted because it sits there. They are earning.
What are they earning, by the way? What are the returns looking like? I know there's no guarantees. I'm not putting on the spot here, but give me a range of what that would look like if an investor was investing in a development project with build senior living, what would that look like? On an annual basis, we're typically looking.
[00:16:18] Speaker A: At a 17% a year return. So assume the project takes two to three years. 34% to 51% over two to three years is a pretty normal return for us.
[00:16:31] Speaker B: Okay, and how much are you looking to raise between now and the end of the year? Just give me an idea of capacity.
[00:16:43] Speaker A: No, no, that's a good question. I personally think if we were able to raise, call it six to $8 million, it would take care of our needs for the rest of the year. Okay. So we're always, we've always, because we always have properties, we always have deals available. And because a lot of our development deals, we start the development with our own capital, investors can join development deals that are kind of midway done already.
And so it can be a shorter period than the two to three years, depending on which project they join, because we do use our own money to develop these.
[00:17:23] Speaker B: Okay, walk me through a deal right now that an investor could invest in. What does it look like, where is it, and what phase of the development? Are you sure?
[00:17:36] Speaker A: So Venice, Florida, the groundwork has all been done. Some of the cement has been poured for the base, and I would say there's probably about a year and a half to two years left in that deal. And so the way that that works is we finish building it. It takes four to six months to lease it up to a stabilized level, which in assisted living is about 64%, is stable.
One of the things I love about assisted living, and particularly the way we do it, is because we've identified markets that need it. We fill up incredibly quickly. Merritt island was another Florida property that we built, and within three months, we were 80% full.
We usually get deposits before we're even finished and open. For folks to start moving into these communities, they're just a massive need. And obviously, Florida's a hot market for it. But one thing that we found, even in markets that you wouldn't necessarily think are hot markets for it, like Florida and Missouri or Michigan and Missouri.
[00:18:35] Speaker B: Yeah.
[00:18:35] Speaker A: Is that as when folks retire, a lot of them move south or to Texas or to Arizona. But as they get much, much older and need to move into an assisted living, it's time for mom or dad to move back closer to home, spend more time with their family. And so that's why we've done really well in a lot of these markets that you wouldn't necessarily think are great markets for assisted living.
[00:18:56] Speaker B: I didn't think about that. It's a great thought because when they get in their eighties and nineties, you're still living in Michigan, right. You're still kind of living your best life. You're in the prime and the only way you're going to be able to visit at that point is if they're close to you. So that's a really great point. I didn't think about that on the analysis side, but I could definitely see how that connects back. All roads lead home. Right?
[00:19:22] Speaker A: Exactly right.
[00:19:23] Speaker B: That's exactly right. Ultimately, having your elderly loved ones very close to you is really what makes it work towards the end of life for sure. Okay, so how would an investor invest with you right now? How would that happen?
[00:19:40] Speaker A: Yeah, so they could send me an email, schedule a call with me. I do webinars maybe once a month on various offerings.
It's pretty simple. Investing process normal, I would say signing docs, sending the funds along. We send out quarter at least quarterly updates for the stabilized properties. The updates are pretty simple. Like here's our occupancy, here's how many people are moving into the community. I usually include some. We've got great activities directors at our communities and so I like to include pictures and videos of some of the activities going on at the community. You know, it doesn't really like, tell you anything about, you know, how the community is doing. Other than that, it's nice to see that the people are taken care of well.
And I've been to a lot of the communities myself. Most of them, I say, and you know, I love the communities. When my grandfather down in Punta Gorda actually reached the point of needing to move into a home, I almost moved him into an assisted living community of ours.
But he needed a different level of care, more like skilled nursing, more so than assisted living. And so I ultimately wasn't able to get him in there, but I would have been proud to have him stay in there.
[00:20:55] Speaker B: That's awesome. Is there any question I didn't ask you that I should have? Is there something that our listeners should know about senior living? About build senior living, about how to invest?
Keeping in mind that these are all IRA clients looking to place funds in a reliable alternative investment and senior living is a topic that I think all of us are in tune to. What did I ask you?
[00:21:25] Speaker A: Yeah.
One thing that I've noticed because as I mentioned, I've raised money for a lot of different things. And so I know sponsors across a ton of different asset classes. And one thing that I've observed lately is multifamily has been a bit of a struggle for some people, is that people see the opportunity in assisted living because you can easily look, if you've ever moved a loved one into a community, everybody's had that moment where, like, oh, my goodness, this is going to cost $6,000 a month.
And so I'm seeing multifamily operators move into the assisted living space, which I think is, on one hand, great because there is a need, but on the other hand, I get nervous because this is like a full fledged business. We've got, like, 800 employees, and if you're not experienced with running one of these communities, you run into a lot of problems. And I've seen it firsthand.
You know, getting referrals from hospitals is a big thing. And if you haven't run one of these before, you don't know that. You know, you need to have a sales team. You need to have a sales team going out and meeting with hospitals and discharge nurses and things of that nature to get people to move into the community. The staffing side of it is very difficult if you're looking for not only somebody who has experience in this space, but also the right kind of temperament to be in this space. And so I would just say this is a great asset class to invest in.
But I would make sure that whether you're investing with us or anybody else in this space, specifically in this space, make sure that they've been doing it for a long time.
Because it is, like I said, it's a great space, but it's not like having a multifamily property where you have a property manager that is fixing toilets and things like that and collecting rent checks. This is, you've got cooks, you've got activities directors, you've got people that need to have an extensive experience with memory care, because that's a whole different thing. People with experience that are, like, happy to do things like bed baths and helping people with incontinence and things of that nature, which is, it's a lot different. And so I myself, when I was looking at who do I want to work with?
Because, you know, I raised a lot of money over the years. I could have worked at a lot of different places. Yeah.
But what I was mostly focused on was somebody who's been doing their given thing for a long time with no interest at all in seeing what else is out there, because my feeling was, Shaheed in particular is assisted living all the way. I remember one time I talked to him about bitcoin mining back in the day. And he was like, Ryan, please, I don't have time for bitcoin mining. And so things like that make me feel much more confident in joining a team, raising money for something, and also just kind of proud that we're building these beautiful communities in places that always need them.
[00:24:35] Speaker B: Yeah. Well, thank you. I appreciate your time.
Do you have a website that clients can look at? See kind of where you're building, how you're building? Certainly. What is your website?
[00:24:48] Speaker A: The website is buildseniorliving.com.
[00:24:53] Speaker B: Okay.
[00:24:54] Speaker A: And if you'd like to reach out to me, my email address is Ryan B. As in boy, Ryan bildseniorliving.com.
[00:25:04] Speaker B: Perfect. Well, thank you so much for joining us today on the preferred Way podcast. If you want to learn more about build senior living, you have the website. Please check them out. If it's an asset class that you're interested in investing your self directed Ira, give us a call. Thanks so much.
[00:25:21] Speaker A: Thanks for joining us for another episode where retirement savers meet alternative investments. Can't wait for the next episode. To learn more, visit our
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