Selling a Senior Housing and Assisted Living Facility and Business
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 30%+.
- Keep your intentions confidential.
Value = Net Operating Income / Capitalization Rate
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 team helps 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.
“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 taking non-cash deductions such as depreciation. The Capitalization Rate (the cap rate) is 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 business and 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.
Additional Information
Many of our clients work with tax strategy and wealth management firms that specialize in helping them plan for the sale of their business, mitigating the impact of taxes, and how to manage the proceeds from the asset sale.
- Would it be valuable to get the help of a firm that specializes in planning for the sale of your business, as well as minimizing the tax impact and what to do with the money once you sell?
- Would it be helpful to speak with experts that help you plan a tax strategy BEFORE the sale, so that you know what to expect?
- Do you need a trusted financial advisor that would help evaluate different scenarios prior to your sale to minimize the impact of taxes. Would you like an introduction?
When it comes to selling a business, vary rarely is anyone thinking about the net effect of the sale. Net effect after taxes, net effect to income, and what does it look like for them personally. Our trusted partner firms provide a glide path and flight simulation scenarios to put you in control vs. waiting to see what falls out. Would you like an introduction? In the form below, let us know your needs.
Our Services
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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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When you need assistance, please fill in this form and within 24 hours a representative will be in touch with you. Your information is held in strict confidence and is never sold to a third party. We look forward to serving you.
