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Welcome to the Gold Collar Investor podcast with your host, Pancham Gupta. This podcast is dedicated to helping the high paid professionals to break out of the Wall Street investments and create multiple income streams.

Here’s your host, Pancham Gupta. Would you like to turn one single family home into monthly positive cash flow of $5000, $10,000, even $15,000? Yes, it can be done. You can get high positive cash flow from single family houses by converting them to residential assisted living facilities. There are 77 million baby boomers with 120,000 people turning 85 every month and 70% of them needing help with their activities of daily living. The opportunity in residential assisted living is enormous. My guest today, Gene Guarino calls this a silver tsunami. Gene is the President, CEO and founder of RAL Academy. Gene has over 30 years of experience in real estate investing and business. And now is focused on just one thing, investing in the mega trend of senior assisted housing. Having created tens of thousands of investors and entrepreneurs over the past 25 years. He now specializes in helping others take advantage of this mega trend opportunity. Gene. Welcome to the show.

Gene: Thank you for having me.

Pancham: Are you ready to fire up my listeners break out Wall Street investments?

Gene: Absolutely, love it. Can’t wait to get into this.

Pancham: Great, great. So before we begin, do you want to give a quick overview of how you got started out in residential assisted living business?

Gene: You got it. I’m going to start all the way from the beginning. 18 was my first property. Was an entrepreneur as a young age, professional musician at a recording studio music school…record label. Then as I moved on, my first real estate was the age of 18. First commercial was age of 25. But doing real estate for 30, 40 years now, but only thing I focused on right now is residential assisted living. And the concept there is you take a house a home in a neighborhood converted into an assisted living, so senior housing, and its 24-hour care and that assisted living home. And it’s a very lucrative business. And the timing because of the baby boomers is absolutely perfect.

Pancham: Right, right. So when would you say you started this?

Gene: I heard about this 20 years ago, but there was nobody there to teach me or show me how to do it. So it wasn’t until my own mother needed help. That became real. That was about eight years ago. And when she needed help, we went out to look to see what’s out there who’s out there who can help, what does it cost? And what I found was the homes that we wanted mom to be in, we’re full with a waiting list. And that means there’s a huge opportunity. Even the bad homes where we didn’t want mom in were full and with a waiting list, which made it an even bigger opportunity. So at that moment, and that was six years ago, I said I’m going to get into this. The real estate market had come down in our area. It was a good time to get involved. So I got started with my first business there six years ago.

Pancham: Wow. Why do you call this a silver tsunami? Why is that?

Gene: Well, the baby boomers that we all hear about born between 46 and 64 called the baby boomers, those people themselves are aging. So the front end of that, 72-73 years old, they’re not in assisted living yet, for the most part. Their parents are or their grandparents were but they’re coming. So it’s like seeing the silver tsunami seniors, aging 10 years from now. they’re going to be needing this assisted living, you cannot stop it. It’s like seeing a stock chart of Google 10 years in advance. If we only knew them. Well, we knew now we know when to get in when to get out right now with senior housing, the timing is perfect to be getting in.

Pancham: Got it. Got it. So could you explain for my audience the different levels of assisted living?  You know, I get confused. I used to get confused as there is senior living home, there is hospice care. 

Gene: Yeah.

Pancham: There is, you know, and there’s so many different levels. 

Gene: So it starts with just independent living. So probably you’ve seen or listeners have seen signs where it says adults only or 55 and above. 

Pancham: correct, yes.

Gene: Just independent living, no assistance, no care, no, no anything. But you need to be 55 or above to own a home in that area. So that’s not what we do. That’s before those people are playing golf and pickle ball and vacation and going to the opera. As people age, sometimes they need help or assistance. And what usually happens is there’s an event maybe somebody fell, they bruised a hip broke a hip, something like that. And they go to the doctor and they say, look, mom fell, and she fell three times last month, she needs help. And then they look at the kids, and say who can help? Who can watch, and what is the solution? So the assisted living, usually it’s an event that happens. Somebody needs extra help. The kids can’t just quit their job, stay at home, and take care of mom. So they’re going to either bring a caregiver into the home, which can be very expensive. The national average is $23 an hour. 

Pancham: Oh, wow. 

Gene: Yeah, if you do an eight hour day, five days a week, that’s $4,000 or $5,000 a month, just have an in home caregiver eight hours a day, five days a week, 24, seven care would be $15,000 or $20,000 at that range. So moving mom or dad into that assisted living home or a big box facility, whatever it may be becomes economical at that point where it’s $4000, $6000, $8000, $10,000 or more per month. But 24-hour care in a very comfortable upscale setting.

Pancham: Wow. Okay, so you mentioned its $15,000 to $20,000 a month. Tt can go up to that much. So this is what does this include? Is it like a hotel?

Gene: Well, when I was talking about that, I meant if you were to hire one person to take care of mom or dad in their own home, the average of $23 an hour times eight hours a day. 

Pancham: Right? 

Gene: That would be $190, $200 for that each individual day. Let’s just round it up, call it $200 a day, five days a week. That’s $1,000 a week, $4000 a month. But if you wanted mom to have care during the night, and on weekends, that’s where it can be $15 or $20,000. Out in our homes when somebody moves in. Actually, let me break it down. The national average right now is $4,000 per person per month to live in assisted living. So the people in our homes, we don’t do Medicare, Medicaid state pay. We do private pay. You and I are brothers. We’re paying to take care of mom or dad. And we’re paying four, six or eight thousand per month. And it’s not one person in the home. We might have 10 or 12 seniors in that home. 

Pancham: I see 

Gene: 24-hour care. So they’re taking care of day and night. It’s not a medical situation. But it’s not them staying at home there with a group of seniors in a home setting. And it can be very helpful to them and lucrative for us.

Pancham: Okay, so do you have to have some kind of special home for this? Or you can just take any home and convert it to residential assisted living? Like how does that work?

Gene: Well, it could be virtually any home. But let me give you what makes it a good home. And really the first thing is location, location, location. 

Pancham: Yeah. 

Gene: And it’s not just a state or a city. But very specifically, you want to be in a demographic where the people who live there 50-60 years old, have parents who are 80, 90 years old, and they’re in an upper level of income. They’re not middle or lower. They are upper level. I don’t mean the top of the top cream of the crop, but somebody who can afford to pay for a mom and dad’s care. So a 56 year old like myself, and my parents at 90 years old, they’re of the age where they need the assistance, but I’m really the customer, the client. So you want a home nearby where I live – so, demographically. And a single family home is what we focus on as opposed to a hotel that was converted into or something else that was converted into or even purpose built for 200 people. It’s a home where there’s 3000, 4000 square feet in the home. And there might be 10 or 12 residents in the home. The home itself is just like your home, my home, but a little bit of differences. Maybe sprinklers, smoke detectors, wider doors, smooth floors, but it’s a home.

Pancham: Okay, got it. So let’s say you have this home, right? And I am a passive investor, right. And I want to invest some money. You know, like you mentioned, it’s the silver tsunami, you want to catch this wave at the front end, as opposed to the back end. I want to…How do returns look for something llike this? Let’s say either from an active investor point of view, or a passive investor point of view,

Gene: We look at returns a couple of different ways. So first, you have to look at supply and demand. And right now there’s a huge demand for what we provide, which is this assisted living. Now a lot of listeners may be thinking, well, I just saw a big box facility being built in my city. And when you see that that’s a good sign, you know that they’ve done the research to tell you marketing wise the customers are there, they have the money, they’re going to be there for decades. So your location is easy. Do it at the end of their driveway, find a single family home and an upscale neighborhood, right nearby that big box facility. But the demand itself is not stopping. If you look at a chart, and you see where the average person who’s 82-83 today, who’s in assisted living, where were they born on that chart, it’s almost at a level how many people were born each day or a month or a year on that chart. And as you go backwards in time to the baby boomer generation, which started in they were born in 1946 right after World War Two. It’s a literal spike. So those people are 10 years from being 82 or 83. So that 10 years from now, this business is good now, but it’s getting better and better and better. Now, if you were to just invest money in a REIT or a real estate investment trust, which is focused on senior housing, you’re going to get a little better than average return today. But if you own the home, and if you operate that business and do it hands off, that’s what I teach and recommend and suggest, you can get a 20 or 30 cap or capitalization rate. I’m sure your listeners are somewhat familiar with the investment aspect. But that’s a huge rate of return, a huge ROI. If you’re getting 20 and 30% on an annualized rate. Now that’s without even leveraging, that’s if you bought the home with cash and you operate on cash. But if you leverage borrow money from the bank for the bulk of that your returns are much, much higher than that.

Pancham: Wow. Wow. So let’s say…so that’s good for the active investor. But let’s say I want to be a passive investor. And I don’t want to do any work. I like what I do, and I just want to invest some money because I like this space. What are the typical returns for that kind of investor? 

Gene: That I was explaining to somebody earlier today at lunch. We were talking about capital stack. So if you have a let’s say private individual, like yourself who’s saying I want to invest. The question is how much risk do I want to take? How passive do I want to be? So if you’re saying I want to be completely passive, I write a check, and I don’t think twice about it. I just get a check once a quarter, very low risk, very low participation, that itself, you might get 5, 6, 8 percent return on your money. If you’re saying, well, I’d like a little more participation, I’d like to share in some of these huge profits, you’re talking about, then it might be well invest money or be a partner with or lender to get a smaller rate of return guaranteed on that investment. And then at percentage of the profit a profit share. So that may look like you’re getting four or 5% on the money. But if you’re getting 25% of the profit, that may boost your rate of return to the teens.  13%, 14%, 18%. 

Pancham: Got it 

Gene: But it depends. But I really want to make sure that we’re clear about it to anybody who’s listening. I am not encouraging you to live in the home – be it the caregiver, be the manager. I don’t do that. I don’t recommend you do that either. What I want you to do is be passive, but be in control. If you’re the owner of the real estate and the owner of the business, and your job is to manage the manager, the manager of that home…My manager right now. As we’re recording this, we’re literally floating in a cruise ship, you know, in the ocean. And we’re floating here, my manager is the one that’s in the home right now taking care of the residents, the caregivers, and so on while I’m here. So my job is to give them the resources they need to be successful, support them, manage them, and I spend maybe 5-10 hours a week on the homes, on the business. She’s doing the day to day management. I’m in control, I own, but I’m very hands off and passive in that regard. But I’m more involved. So I do make that 20%, 30% versus the 8%, 10%.

Pancham: Got it. Got it. Thanks for explaining that. So what are some of the things you need to be careful about before investing in residential assisted living as a passive investor or as an active investor?

Gene: So a couple of things that I want everybody to know – The operator is key. So a good operator, somebody who knows what they’re doing can handle the day to day business and is the one who’s there on site that’s critical to your success. So good operator. Two- location. Got to be in the right location. Wrong location, I don’t care how nice the house is, it not going to work. If you’re going to be just passive, write a check and give it to him, that’s fine. But if you’re going to be the owner of the real estate and say, I just want to lease the real estate and lease it to an operator, that’s fine. But find the operator first. Don’t get the house first and say I have a house for rent. Find the operator first. Ask them, where do you want the house? How big? What do you want it to look like? Go shopping for them. Find the house, and then lease it to them with a five year lease with twice the market rent. And they’re going to pay higher rent if you ask because they’re making so much money on the business they can afford to.

Pancham: Right. So you know, you mentioned four or five or six thousand per room. And they are about eight to 10 rooms. So that’s about almost $40,000, $50,000 per house. Right? 

Gene: Right. 

Pancham: Is that right?

Gene: Yes, absolutely. I mean, that’s an average home. And we have students do this all over the country where they’re charging five, six or eight thousand dollars a month, and there’s 8, 10, 12, 16 residents in the home. And we’re not packing them in. These are very comfortable homes. Some of these homes are 6000 square feet, with all private bedrooms and private bathrooms. Some of those homes are built specifically for this and others are converted from an existing home.  But their location is key. Your manager is critical. And operating it as a business. It’s It is hard. We our motto is, “Do good, and do well” at the RAL Academy. But the idea of making money can’t supersede or be the only thing that’s important. You have to care about people as well. That’s the residents and the staff.

Pancham: Correct. Correct. So that’s great. And so mainly the things that you said that are you need to be careful about is the operator and then the location. If you have these two handled properly, then you’re pretty much 80% there. Is that fair?

Gene: Yeah. 

Pancham: Operator and the location? 

Gene: I mean, there’s so much to know. Yeah, I know. I know it by the way. I’m going to include everybody. And if you stick with us to the end, we’ll give you a website where you get some free information, some more background, because there’s so many questions that you have. There’s so much to know, learn as much as you can before you get in. You will avoid so many mistakes and issues and errors that are certainly avoidable if you know what you’re doing if you’re listening to somebody who’s done it before.

Pancham: Okay, great. So thanks, Gene for explaining that. Let’s go to the next section of the show, which I call, “Taking the Leap” round. I ask these four questions to every guest on the show. My first question is, when was the first time you invested outside of the Wall Street?

Gene: Outside of Wall Street, first time actually was the first time. I mean real estate. I was 18 years old, we had rented for two years I was 16, 18. I was a tenant, we rented a building that we had our music school recording studio. And after two years, the landlord was bad the real estate was worse the house. So we looked up the street, saw the “For sale” sign, grabbed it out of the yard, and we bought that house no money down because we had no money and no credit. I had no clue. We had to figure it all out. We did. So my first investment was actually never in Wall Street. It was in real estate.

Pancham: Wow, wait, and that too at 18 years. That’s pretty amazing. Okay, so what fears, if you had any did you have to overcome when you first invested outside of the Wall Street?

Gene: You know, my fears? It’s kind of ignorance is bliss, right? You know, I didn’t have money, didn’t have credit. So everything was new and exciting. And no…it was just somebody didn’t know what I was looking for. It wasn’t because I got turned down a lot. And banks…Imagine you’re 18 years old, you have no credit score, because I never borrowed money before. And I’m going to the bank to borrow money. And they’re like, “Well, no, you don’t even exist in our eyes”. And this is a long time ago. This was 40 years ago. So the point is the fears that I had to overcome, where can I do this? I think the older you get, the more fears you have, frankly, we kind of get into a mindset of we need to know everything. We have to be in control,

Pancham: You get more comfortable. 

Gene: And also I’m married, been married for years. And I’ve got four beautiful kids. And when you have those kind of pressures and so on, we fear. I could live in the car and eat tuna fish. I have no problem with that. But I don’t want to have them be uncomfortable.

Pancham: Right, right. All right. My third question, can you share with us one investment that did not go as expected?

Gene: Well, one investment that, you know…Since you mentioned Wall Street, I’ll give you this one because I don’t share hardly ever at all. So you’re getting an exclusive here. I moved from upstate New York to Arizona. We felt called to go there. We went there and I kind of retired at that time. And I was in my mid-30s. And when I went there and kind of retired on a golf course, playing golf four days a week. I’m getting bored out of my mind. I can’t play golf that much, that often. So the bottom line is that I was needed something to do. So what we did was we I started to trade stocks, and I started day trading. I had 4, 19 inch monitors on my desk and I felt like Captain Kirk of the Starship Enterprise there. But there was one trade. And I remember very, very specifically, I thought I knew what I was doing. Anybody who’s in the stock market. If you’ve had success, you feel like a genius. You’re smart, you know what you’re doing. And then there was a trade where it came and I put the trade on. By the way, it was a relatively complicated options trade. And I had the trade on and I had a lot of money in the trade. And then I asked a good friend of mine. I said, would you do this trade? He said I would not do it. And he looked at my eyes and he said you already put that trade on, didn’t you? And I said yes, I did. The next day it was earnings. And it was kind of an iron condors – either you win or lose, as long as it goes one direction or the other. It went completely wrong against me, and it cost me $65,000 on a single trade. And that was a third of my portfolio at the time. It was a huge, painful, gut wrenching loss. And I literally remember closing out the trade. And I just kind of shut off the three four monitors the computers, and I walked out of my office just kind of shut the door. And I don’t think I went back in there for a month. It just made me so sick to my stomach, you know…that one trade. 

Pancham: Wow. Sorry. Go ahead. That is bad. But you know, you do and you learn.

Gene: Yeah. 

Pancham: So that’s the thing

Gene: I said that to myself a lot of times, and I’m a genius, and I’ll figure this out.

Pancham: Yeah. Alright. So my final question is, what is one piece of advice would you give to people who are thinking of investing outside of the Wall Street that is in the Main Street? 

Gene: Alright, so I don’t know how much your listeners know, or her or who they listen to. But the bottom line is that what I learned very quickly, as Wall Street is highly manipulated. It doesn’t matter what the technical say, what the earnings reports are. There’s people, individuals that can manipulate the market up and down. There’s machines that are trading 85% of all trades are done by machines at a much faster speed the you and I can even imagine, let alone act on. And you’re simply playing against the game against the world in this case. It’s a stacked market, you may get lucky and you may win. But number one, it’s not a fair game, it’s manipulated. And number two, we’re humans. And I’m definitely human. I have emotions. I get anxious, I get fearful, I get greedy, I get all of those things. It just isn’t the right market for me. So it just doesn’t work for me.

Pancham: Right, right. All right. Great. Thank you for all of that, that you shared your wisdom with the listeners today. How can the listeners reach you?

Gene: Got it. And I appreciate that. So if you’d like to learn more, and by the way, again, I don’t mean to rag on above the stock market. I’m just saying for me, yeah, emotionally, it doesn’t fit. If you’re in the company and you’re working there and you know what’s going on completely different. You’re you’ve got some control, at least of what’s going on inside information on a legal way. You know, I want to give your listeners a free gift. And in that free gift, I wrote a book. It’s the number one best seller on Amazon in two categories – “The Insiders Guide to Investing in senior housing”. And to get that you’ve got in the show notes a link right there. If they just go to that link, they’re going to be able to get an electronic copy of that book. Number one, they can also watch a webinar where they can learn more about it and they can contact us directly. But go right to the show notes. You’ve got it right there.

Pancham: Yeah, the link is thegoldcollarinvestor.com/ral. l means residential assisted living.

Gene: Perfect. Thanks. 

Pancham: You’re welcome. 

Gene: Thanks for having me.

Pancham: Thanks. I hope that you guys enjoyed the show and got some perspective on this niche asset class of residential assisted living. My goal for this podcast was to make you aware of this asset class. If you would like to get free book from Jean, go to www.thegold colorinvestor.com/ral. I repeat the goldcollarinvestor.com/ral. Do you ever feel overwhelmed by the thought that you have no time after work and family time to learn about investing? Do you feel left behind that you are not putting your money to work for you Do you want to create passive income but you do not know where to start? If so, I have good news for you. I have created an investor club which I call the Gold Collar Investor club for accredited investors. I will be putting together investing opportunities exclusively for this club. These are the opportunities where I have done my part of the due diligence for you and will be investing my own money alongside you. If you are interested, please sign up on thegoldcollar investor.com/club. I repeat the goldcollarinvestor.com/club. I will reach out to schedule a 30 minute phone conversation to discuss your investing goals. Once you sign up, this can be a good opportunity to diversify and take some chips off the hands of Wall Street to produce some cash flow. And in case you are wondering what is an accredited investor? An accredited investor is someone who has earned more than $200,000 as filing single or more than $300,000 filing jointly for the last two years. Another way to qualify as an accredited investor is if your total network is more than $1 million excluding your personal home. It includes your stocks for one case IRAs, cars, etc. Just not the equity in your personal home. If this is you, I would highly encourage you to sign up. Thanks for listening. If you have questions email me at p@goldcollarinvestor.com. That’s p as in Paul@goldcollarinvestor.com. This is Pancham signing off. Until next time, take care.

Thank you for listening to the Gold Collar Investor podcast. If you love what you’ve heard and you want more of Pancham Gupta, visit us at www.thegoldinvestor.com and follow us on Facebook at the Gold Collar Investor. The information on this podcast our opinions as always. Please consult your own financial team before investing

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