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Investor Insights Blog|3 Ways to Make Money with Residential Assisted Living Investments

Real Estate

3 Ways to Make Money with Residential Assisted Living Investments

The following was written by guest blogger Gene Guarino.

The Baby Boomers are here and there are more on the way. The population of seniors age 85 and older is the fastest growing demographic in the country today.

It is expected to increase by 300 percent over the next 20 years. That is a huge problem and an even bigger opportunity.

Here are the facts about our aging population:

  • Four thousand people are turning 85 every day.
  • Seventy percent of them are going to need help for an average of three and a half years, 24 hours a day.
  • Most people are probably not going to be the one to take care of Mom and Dad on their own.

They are going to have to bring somebody into their home to provide that care or they are going to have to move them to an assisted living facility.

3 Methods for Investing in Residential Assisted Living Homes (RAL):

Own the real estate and lease it to the operator of the RAL business.

Two risks associated with single-family home rentals are misbehaving tenants and smaller returns. Bad tenants can add a lot of wear and tear on a property; everything from broken windows to dissecting their motorcycle in the family room.

Typically a lease term is one year. After one year, the misbehaving tenant moves out and your property may be empty for a month while you are repairing the damage.

With a RAL operator, they will want a long term lease of five years or more. That’s a long term low impact tenant, who may be willing to pay a higher rent. Up to twice the “regular” rent because of the income they will generate. Now you have stable, well behaved tenants and a higher return.

Ultimate Real Estate Investors Resource Guide

Convert the home for use as a RAL and sell it to a RAL operator.

This type of a home can be worth $50,000 or $100,000 more when sold to a RAL operator. If you acquire the license to operate and start the business, you can sell the business for $50,000 to $300,000 or more in addition to the real estate.

Own the home and own the business.

A RAL business can generate $10,000 a month or more in net income. That business will have a value of two to three times the annual net income.

1

Can my IRA invest in a newly formed entity that will invest in real estate?

Yes. Investments in newly formed private entities, such as limited partnerships, limited liability companies, C corporations or land trusts, are permissible under the Internal Revenue Code, with the exceptions of subchapter S corporations.

2

Can I use funds from my IRA to renovate property to sell it at a higher price?

Yes. However, your IRA must pay all expenses associated with a property that it owns, including renovations. Further, all proceeds from the sale of the renovated property must be deposited into your IRA.

About Gene Guarino:
Gene Guarino, CFP is the founder of the Residential Assisted Living Academy. Residential Assisted Living Academy is an American training organization specializing in residential living center investments. Launched in 2012 by entrepreneur/real estate investor Gene Guarino, Residential Assisted Living Academy has trained hundreds of investors, business owners and entrepreneurs regarding this investment option. More information about Residential Assisted Living Academy can be found at www.RALAcademy.com.

*Gene Guarino and RALAcademy are not affiliated with Equity Trust Company or its affiliates. The information provided in this article is for educational purposes only and should not be construed as tax, legal, or investment advice. Whenever making an investment decision, please consult with legal, tax, and financial professionals.


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