TGCI 202: Creating a better place for seniors to get much needed care

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Episode 202: Creating better place for seniors to get much needed care

Copy of EP #18 - 2 Guests

Summary

In today’s show, Pancham interviews Brandon Schwab – founder of Boutique Senior Living Fund and Shepherd Premier Senior Living.

With 20+ years of operating in the boutique senior living asset class, Brandon is changing and improving the industry by providing a cozy and homey atmosphere, delivering quality care to the residents, and changing people’s perceptions of how elderly care should be!

Learn how you can invest in the opportunity to change the future as he shares everything you need to know about the boutique senior living niche industry! He’ll also unpack his knowledge as he provides insights on how he brings quality care to the clients and how this asset class is a good addition to your investment portfolio.

PanchamHeadshotTGCI
Pancham Gupta
Screen Shot 2022-08-04 at 4.30.13 PM-removebg-preview-removebg-preview
Brandon Schwab

Tune in to this show and enjoy!

Copy of Quote #00 - 1 Guest

Timestamped Shownotes:

  • 0:39 – Pancham introduces Brandon to the show
  • 3:42 – From opening his first business to investing in boutique senior living
  • 7:03 – Changing the senior living industry through quality care and housing
  • 13:52 – On earning huge profits while only using a small amount of capital
  • 18:24 – Payment schemes and how vetting out his potential clients works
  • 24:10 – Marketing strategy that works for his investing niche
  • 26:47 – Active vs. passive investing in the senior living industry
  • 32:05 – Taking the Leap Round
  • 32:05 – His first investments after discovering real estate investing
  • 34:01 – Overcoming his analysis paralysis by quickly grabbing opportunities
  • 35:35 – Lessons learned from his investment that didn’t work out
  • 39:38 – Why you should start investing in the senior living asset class
  • 43:00 – How you can connect with Brandon and get your free 85-page eBook

3 Key Points:

  1. They’re changing how caring for the elderly is perceived by providing a cozy home atmosphere for them and a caregiver that would help cater to their needs.
  2. Investing in the boutique senior living industry is ideal as it is one of the top performing asset classes from 2005 through 2015.
  3. When investing in the senior living asset class, identify your strengths first then hire people for the other areas in order to get started.

Get in Touch:

Read Full Transcript

Welcome to The Gold Color 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.

 

Hi this is Tom Burns, author Of Why Doctors Don’t Get Rich you’re listening To the Gold Collar Investor Podcast with Pancham Gupta.

 

Pancham Gupta  

Welcome to The Gold Collar Investor Podcast. This is your host Pancham. I’m really appreciate you for tuning in today. I have Brandon Schwab on the show today. You know he’s going to talk about the strategy where they can convert one single family home and generate $55,000 Yes, you heard me right $55,000 cash flow in just one month. Definitely tune in to find out how he’s doing it. So, before we get into the show his background Brandon has been a serial entrepreneur since the age of 15. He brings 20 plus years of operating experience to shepherd Premier Senior Living since its founding in 2014. He has a vision to improve the Senior Living industry forever. He wants to provide a better way of delivering quality care that is resident focused, not bottom line focused. Some would call him a disrupter and others would call him a visionary. He prefers to be thought of a passionate businessman that saw a problem and wholeheartedly pursued the solution. His grandpa Schwab who meant the world to him receive what he considered subpar care at one of the big box facilities and it broke his heart. He knew that there had to be a better way out there. He didn’t find a better way until July of 2014 where he discovered it in Orlando, Florida, in a small boutique five resident cozy home called Sutton homes. This home inspired him, it opened his eyes or turned on a light bulb to the better way. At least he was confused and didn’t understand how he didn’t know how much about boutique senior living. Although he fancied himself as an experienced real estate investor that CO-Led an investment club of over 100 people. And he quickly realized that this was his purpose in life. Everything else he’s done, left him empty, are always seeking more but in reality, it prepared him for Shepherd Premier Senior Living and the Boutique Senior Living indicate industry. So, the industry is currently being led by large corporations with investors to report profit margins to as a priority while working. The needed care of the greatest generation of residents caregiver to resident ratios of one is to 15 or one is to 20 as a national average is unacceptable. It needs to be changed his Boutique senior living model aims to provide one caregiver to every five residents, the better caregiver ratio directly equates to the better care provided to residents. Brandon, welcome to the show. Thank you. Are you ready to fire up my listeners break out of Wall Street investments?

 

Brandon Schwab  

Yes, sir. let’s go.

 

Pancham Gupta  

Let’s do this. So, Brandon, before we get started, why don’t you talk about your background, how, what you did before we got into assisted living and how you got into that. And what are you up to now?

 

Brandon Schwab  

Yeah, so I when I was about 15, I opened up our first company, I was detailing cars, boats, and RVs from the age of about 15. I did that for 14 years. The 2008 happened that kind of killed that industry. I got into investing into homes in 2010. So, I was wholesaling for the first two years. And then I quickly figured out that active income is awesome, but to have income that constantly keeps on able to come in is awesome, too. So, I got into building. I’ve built passive income in 2012 through 14, I built up a portfolio of 23 homes and I kind of thought I had it all figured out. I had a total passive income of 5400 each month and I kind of thought had it all figured out until I was down in Florida, July of 14. And I got exposed to a five-person home that got converted to care for the elderly. And I was like what is this. I have never heard of this. I typically think of homes for the elderly like 100 to 200 type people. So, I go into this house. And I was very confused because I haven’t ever heard of it. And it turns out that this five-person home outperformed all 23 homes that I had two times per month. And I said, I need to learn a ton on this topic. So that’s how it was first expose that was over eight years ago. And I fast forward to today we’ve got about five homes open and operating. I’ve got two homes Pending to Open by end of quarter three, first part of quarter four, and I’ve got 7.2 acres of land to convert to six homes on it. It as well. So, we are actively expanding and changing the industry of how people think of caring for the elderly today, we are turning it upside down.

 

Pancham Gupta  

That’s awesome. So, are these all in in one place, like in one city? Or are they auto or diesel?

 

Brandon Schwab  

When I was down in Florida, I found out that down in Florida, there’s 1800 of these homes that are under 10 to 15 people per home. I went out to California and there was 2800 of them out there. Arizona had over 3000, Texas had over 15,000 When I came back home, Chicagoland right, I thought that there’d be 500, 1000, 2000, right, there was 55 by five. And I said, I’m gonna operate right here, because we’re on the top 10 lists for the elderly. In the overall country, we are number seven. And there’s only 55 of these. So, I’m in a very fertile place where there isn’t a whole ton of people doing this. And I can charge an extra 15 to 20% Compared to other places compared to Florida, California, because there’s just 1000s of them translate into you have to cut your costs, we are actually doing the opposite.

 

Pancham Gupta  

Right. So, all of them in Chicago. So that’s awesome. I want to ask you, for my audience. A very basic question on what is residential assisted living? Can you define that? But before that, I want to just out of curiosity, how did you find out about these homes? So, is there a central place that you can go to that? Oh, Chicago has 55. Florida has 1800? Like how did you find out? So

 

Brandon Schwab  

residential assisted living is a term that was coined by a gentleman out of Arizona, and I really don’t, I’m not a fan of it. Okay, I would rather describe it as boutique Senior Living. Because I feel that that better describes what all of us are doing to us, I can describe it as a 10-to-20-person home, that is in a very cozy home atmosphere that care for the elderly. Okay, so that’s what we do, there is not a place that you can easily find the answer that I told you earlier. However, if you do Google the A assisted living directory per state that is that is out there. And then you have to go through 1000s of them in just cross any places that have under 10 beds, because they do have to publish how the quantity of beds that each are able to hold. So, there’s plenty that are able to 80 100 200 but our sleep niche per se is 10 to 20. And there is another piece of it that I’ll tell you that is pretty common. That is going to be homes under 10 beds. So those are typically going to be owner operators, those are people that are have a health care past and they are taking care of people themselves are aspect of this business is a business that can operate on its own because it has 10 to 20 people per home, our average home is anywhere from 5000 to 8000 feet, have been doing it for eight years, we are changing the overall industry from how people used to think of it to how people think of it going forward. I think COVID the past couple of years has changed people’s thought process of where they’re going to bring their family when they have to have care. We offer a very cozy home in an atmosphere that provides quality care. So let me ask you this, right like just for the audience. If I were to summarize, you said this is Boutique Senior Living versus, you know, residential assisted living. In a nutshell, it’s more like a homely environment. For someone who is elderly, elderly and they can’t live by themselves they need help. And instead of going to a big box facility where they have 80 of them and they are more like hospital setting or maybe slightly better than hospital but not really cozy, homely atmosphere, right. So they go to this home, where there are five of them, and they all have their rooms, they’re all separate and they can come out there’s a dining room and there is TV living room, like, you know, it’s like they’re going to a different home from their own home. And now they have these other housemates. You know, and they have additional care. Is that a fair summary? Yes, ours will target homes that can hold 10 people up to probably 20. There are other folks that do five to eight people per home. But those are typically owner operators. But I think that that is a fair description of it. Because when you go to these big cold buildings, I don’t know if you’ve ever had a chance to go there. But I’ve been there before for our own family. So, like my grandpa had a stroke when he was 85. He was in a big, huge building that had a very psych hospital type feel right? When he had to have help. We pulled on a pull cord type button, right? Yeah, it was only maybe 28 At the time, and I thought that people would come like, booking over to help them. And I was sitting there for 10 minutes going, where are these people, they have to be coming 10 minutes goes by 15 minutes goes by 20 minutes goes by. I got to admit, here, I’m getting a bit upset trying to find out where are these people because like his face was just changing colors, because he just felt so bad that he couldn’t control that. And by 25 minutes, I said, hey, I’m gonna go get help. And I went to go get help. And granted, I probably wasn’t as pleasant as it could have been. Because I was upset. I was trying to get him help. And the difference is, is in those buildings, the average caregiver has to care for 20 to 30 people. Right. Now, I don’t know on you, but like post COVID, that’s just too much back before COVID. It was like 15 to 20. But post COVID. I think that that’s pretty easy to say that it is an average of 20 to 30. On a coast to coast upon level, what we found out quickly was that doesn’t cut it. Right, that doesn’t pan out to good care. So, what we do, we put them in a very cozy atmosphere, but it doesn’t have anything to do with the house. It’s also the fact that they are in a house is able to help but a bigger part is I have a caregiver every five to eight people, right. So, if we have 10 people in our house, we got two people in our house offering care, right? The difference there is you can offer great care if you don’t have to care for 20 to 30 people. Now, if you haven’t ever been in their 100, or 200 Bed building, if you go in there, a thing that you’ll typically pick up first is the odor, the odor is pretty bad because people don’t get changed. So, if that’s the taxicab industry, if that’s the old ancient how things have been done for 20-30 years, we are the Uber that’s coming in and just turning it upside down. We are using apps technology to change how this industry is done in a cozy home. So that would describe what we are doing today. Because if you think of our country, it’s the top country in this whole planet, but how we care for the elderly is pretty disgusting. It isn’t how it ought to be.

 

Pancham Gupta  

Yeah, I totally agree, and I hear you. So, you mentioned when you went to Florida in Orlando, you first saw this, it was a twice the return of one home was twice the return of your 23 homes. Right? And that was almost eight years ago. And with all these prices going up, I’m sure it’s much more now. Can you share with us like, you know, break it down for the audience, the numbers in terms of how much per bed? Typically, it would cost. And does it all come from the insurance that these guys have? Whether it’s Medicaid or non-Medicaid plans, or is it the family who’s paying for it? Or all of the above? Likely? Yeah, you know, but typically how much insurance pays and how much per bed cost? And how much is the expense ratio on a typical 10 Bed house for example?

 

Brandon Schwab  

Yeah, sure. So, the first house that I bought was in a town of 832 people, not exactly a huge booming type of town but I bought it because it was a 4880-foot house on the first floor, those houses are hard to find, first of all, this house happened to be on three acres, this property, we bought it for 250,000. And we invested $550,000 into it, right? Not your typical deal. But we went overboard where we put an ADA accessible, slick bathroom, I did three of them. And I only really had to do our first one. But I felt if people are going to be in there paying huge money, we ought to like to take awesome care of them, right? We put fire protection, and just all these different types of things in the house to get it up to date. So fast forward, after we opened it, we filled it February. So, I opened it September of 2015. We filled it February of 2017. So that house had four private bedrooms and three bedrooms for two people. So, 10 people total, right. Our private bedrooms were paying $6,000 Each month, where our double bedrooms were paying $5,000 each month. So, our average bed was about 5500. Right? When you have 10 people paying 5500, our total income was 55,000. Right? Our expenses were anywhere from 28,000 to 32,000. So, this property back in 2017, was generating a profit margin of 35%. Plus, we were clearing $20,000 Each month

 

Pancham Gupta  

after all the expenses. So, because you put 250 plus 550 total 800. Right? Did you take loan for that? Or did you put in cash? Like did you take hard money loan for

 

Brandon Schwab  

these? Yeah, so I on the front part, we did an owner carry via financing, the owner put in part of the 550, I put in 220, he put like 308, we did all that in there. And then we had an option to buy afterwards for a upside. So that’s kind of how we got our first one going, we found upfront that the typical financing options weren’t really open to us, because they’re like, you’re gonna take a house in generate 55,000 of income, it was like over their heads, you could just tell like they were just confused. And if anyone gets confused, they just don’t do anything. So that’s kind of what happened there. So, we had to bring in some upfront investors to open up our first houses. Fast forward to today, we actually have some takeout financing that our first four properties a praise for over $12 million. So, what we found is that when you can purchase them up front for cash, kind of do everything to get them going. And then when you do take out financing, they will collectively pool them together. And then they will use an income-based appraisal using a cap rate of six to 10%. This particular appraisal for four properties appraised at seven and a half percent. So, we were very happy with that. 

 

Pancham Gupta  

Yeah, that’s pretty awesome story, actually, you know, so the first one, you said that you had 55,000 overall graces, and you’re netting 20, after all the expenses, which is pretty amazing return right. So now, going to my second question that 5000 or 6000, which is average $500. Is that, like from non-thinking more from the consumer point of view your clients? Obviously, you have a family member who wants their parents or elderly to live in a nice-looking place, right? And who can give them nice care. So, there is that emotional side to it, which is huge. But then the economics of this is that do these come from insurance companies typically or they pay out of pocket? Like how does that work?

 

Brandon Schwab  

Yeah, so it is actually each of those options. So about 7% of our country has a surrogate long term care plan. But most people don’t. So, when people don’t have that they need to pay for it. per family has to take care of that. So, like we don’t do anything else other than the families pay us each month or we do submit invoices to the sort of long-term care plans.

 

Pancham Gupta  

Yeah, oh, got it. So, this is like really family’s responsibility. So then from your side, right like you know, I’m in the multifamily business, and you know, you were doing single family rentals before you do these screening criteria, okay, three times the income and all that, right? We have credit score and all that. So how do you get out? Assuming they don’t have long term care? Which seems like majority, right? So how do you vet out whether this family would pay for this or will come through all this time, right, because I’m assuming not one person is paying, they may be sharing couple of children or sharing and you know, all that.

 

Brandon Schwab  

Sure. So, in our experience, which hasn’t been a huge problem, what we have found is that the average family that comes to us, they typically have pensions, or they have cash in investments of 150 to 200, to $300,000. And then on top of that, they also have a free and clear home, that they can put up for sale, which is 100 200 300, to $400,000. So, the average time that people are in our homes is about 3.2 years, so they need about 200 to $230,000 of income to cover their time in all of our homes. 

 

Pancham Gupta  

Wow, that’s okay, so you really don’t have any kind of screening, they’re like you just ask them for your, you know, this pension plan or something, or none of that.

 

Brandon Schwab  

Yeah. So, we do run a background on all people coming in, we are asking them for them to prove out the assets that they have. And there are times where people get close. And they are able to tell us, and we can figure out how to help them by placing them in one of our other local places to help kind of put them or else we could just figure out how to keep them in the house where the thing that typically happens in is the kids are able to help offset that. That’s the thing that typically happens.

 

Pancham Gupta  

Got it. All right, which sounds great. So, switching gears here, how long does it take for you? Like, you know, I know now it’s, you probably have it in as a well-oiled machine. But before like, how long did it take you from buying that property to actually taking it to the full completion and operating it? I know, the first one was 2015, September to February of 2017. Let’s leave that then that one out, but the next one, like when did you actually start looking for it? And how long did it take you to get to the finish line?

 

Brandon Schwab  

Yeah, so it typically takes me about three months to go through the upfront conditional permit process, it could take up to 120 days, our build time to work on the property could be anywhere from three to six months. So just that right there, it could be three quarters of a year just to get it open, right. And then depending on the time of the year that I opened, because don’t forget, I’m in a part of the country where it is cold, right. So, if I open a property from April through August, I can typically fill a house in about maybe three months to about six months, right. But if I open from August to April, it takes me six months to 12 months to fill. So back before it took me about 18 months to fill our first house, where afterwards we’ve kind of figured out how to get it done faster. But I find I’m in a part of the country where it is very sensitive to how cold it is outside. Yeah, how fast people come in. So, April through August, people are outside, they’re busy. They’re doing things like that when it’s cold, or they kind of tend to hunker down per se.

 

Pancham Gupta  

Got it. So, do you advertise somewhere in order to get them in once it’s ready, or is it a specific place to go?

 

Brandon Schwab  

So, I did every advertising option possible. I did TV ads, billboards, I had six billboards, I was doing pay per click, I was using everything under the sun. Fast forward to today, our team has actually found the final puzzle piece per se, of how to fill the houses and it’s actually to partner up with the discharge planners at these hospitals. Right? It one of the things that I discovered was the hospitals have a payment plan with the federal government and insurance where if anybody discharges from a hospital and if they come back to the hospital for Any reason within 30 days, guess who doesn’t get paid hospital, the hospital. So, what we do is we come in, and we build up connections with them, and we help the hospital get paid because the hospital in our area, that typical series admittance is 45%. So just picture, if you didn’t get paid on 45% of your total income, you would have a pretty big issue with that, right? You’d be looking at things going, I don’t know if this works kind of a thing, right. So that’s kind of what we’re doing is we are really looking for the ability to help add some value, because I can help cut that down, where we create partnerships up with the hospitals where they would come directly to us. And we have been able to prove that we’ve can cut that down from 45%, down to 10, to 15%, which that’s an extra 30 to 35%. And that they are able to earn, which is

 

Pancham Gupta  

so, they did that for you, basically, those people like or you pay them per lead. If they ended up ending up with you

 

Brandon Schwab  

know, you actually can’t do that, that that would get you into trouble. We just help we help them get paid because they don’t have people coming back to them. Right. So yeah, one of the things that I think you find is people that get into this industry that are in here is really just to earn dollars, they don’t really do that well, because they don’t care. So enough, one of the things all of us do is we build an awesome home, we take awesome care, but then I can help these hospitals get paid, therefore I become a very good partner, for them to have people come to us.

 

Pancham Gupta  

No, that’s great. That’s awesome. So, all right. My final question here is, before we go to the second part of the show, is that what things you know, you need to be careful about when you’re this is two parts to this question. One, if someone listening wants to get into this business getting inspired from your 55,000-1st house story, and they want to kind of get into this business, like what would you suggest they need to look at? or be careful about as active person and second as a passive person who’s investing just passively? What would you suggest to them? 

 

Brandon Schwab  

Okay, so if a person looking at doing this actively, I would seriously question them, and make them really think hard. Is this really what you want? I was excited about helping change the industry. But I realized I didn’t have any health care past. So, I quickly figured out that I wasn’t the person that’s operating, right. So, I would really think really hard and long that it’s harder than you think the industry is full of people that jump in that they think it’s easy, and then they just get chewed up, and they just get kicked out. Right. So, I would tell you to be very cautious. If you are going to come in, I would identify the areas that you feel you’re awesome at. And then I would hire other people for the other areas. So, with that being said, that’s for the active person, if anyone’s looking to do it actively, if you call our office, our EA that I have will get you a copy of an 85-page book that I built, and I was thinking of putting it up for sale. But I decided not to because I don’t want to coach people. I want to focus on building 1000s of these homes. So, if anyone’s actively looking, I would give you a free opportunity that is worth probably $2,000. If you get to the end of this show, I will tell you how to get the info. Anyone that’s looking to invest passively, I would tell you, this is a great time to be adding this asset class to your current portfolio. If you look back to the 2008 crash, this is the top performing asset class throughout all commercial asset classes, I encourage people to have at least 20% of the current portfolio in this asset class, because it can handle the up and down curves right where the 2008 crash was pretty tough, right? This the average IRR to investors throughout the whole country through the 2008 crash was over 14% compared to like multifamily, which was about 8%. Now that’s coast to coast that’s comparing the top commercial asset classes to each other. Now, I don’t know what’s going to happen in the future, but there’s going to be some type of correction. And if you don’t currently have this in your current portfolio, I would highly encourage that you considered if it is an RS or if it’s in a others that’s fine, but I would figure out how to get this asset class in your portfolio it will help you hand Well, if things do tank, you want to have your dollars in sick, multiple different avenues, right? Yeah. Oh, that’s great.

 

Pancham Gupta  

Cool. Thank you, Brandon for answering all those and we’ll be back after this message to go on to the second part of the show. If you’re an accredited investor and have been thinking about putting your money to work for you, then I have good news for you. I have created an investor Club, which I call the gold collar investor club, I will be putting together investing opportunities exclusively for the group. These are the opportunities where I have done the due diligence for you and will be investing my own money alongside you. If you are interested, please sign up on thegoldcollarinvestor.com/Club, I repeat thegoldcollarinvestor.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 passive income. And in case you were wondering, what is an accredited investor, accredited investor is someone who has earned more than $200,000 as filing single, or more than $300,000 Filing Jointly for last two years. Another way to qualify as an accredited investor is if your total net worth is more than $1 million, excluding your personal home. It includes your stocks, 401, K’s, IRAs, cars, etc. Just not the equity in your personal home. If this is you, I would highly encourage you to sign up. So, Brandon, let’s move on to the second part of the show, which I call taking the leap round here. I asked these four questions to every guest on my show. My first question for you is, when was the first time you invested outside of Wall Street? Was it in 2015? Technically, when you started that the car detailing business.

 

Brandon Schwab  

Well, when I invested outside, well I invested in so like myself to open up that first business. And that was really good. I think it taught me how to operate a company. And those 14 years were awesome, because it taught me a ton. What I figured out by the end of it was I didn’t really own an asset. I thought I did. But I really didn’t. And when you have kids working 70-80 hours per week isn’t really cool anymore. We’re back when I didn’t have kids, I was fine doing that, because I was earning tons of extra money. So, what I’ve really found was I invested first into some real estate after the 2008 crash, because that’s really the first time that I felt the impact of things changing, right. And it challenged what I thought. And I began investing in properties in 2010 and 2014. So, I’ve invested in companies, I’ve invested in assets. And where I’m at today is I feel the best of each of those worlds. Because what I do today is both the tangible asset underneath, as well as the healthcare type company to operate it in the asset, right. So, I feel the tangible asset and healthcare over the upcoming 10, 15, 20 years caring for the elderly is a great place to be so I couldn’t have done it. If I didn’t have the past experience that I’ve had to help get me to this point today.

 

Pancham Gupta  

Yeah, great. So, my second question, is that what did you have any fears that you had to overcome?

 

Brandon Schwab  

Yeah, so one of the things that I found a lot of people did was they had a bit of a case of where they would overanalyze things, and they wouldn’t do anything. So, it’s called analysis paralysis, says yes, where they will overthink, things overthinking, and they don’t take action. I quickly figured out that like I have seen people do that. And they just didn’t ever do anything. They didn’t never take action. So, one of the things that jumped out at me because I was able to tell that there were quite a few people that did that. And one of the things that I chose to do was always take action quickly, and then kind of figure out what I needed to by taking action. Now that has been painful too because I’ve had to go through some trial and error is by taking action up front taught me something angles, and sometimes it took me time to kind of figure that out. So, I would tell you that everyone has fears. And it’s how you can handle those fears and overcome them to do what is right when there is opportunity in front of you, because it’s only an opportunity if you take advantage of the opportunity. So that’s one of those things is out there is you have to be able to tell what’s going on today. And know that if it’s an opportunity, you have to take action. So

 

Pancham Gupta  

yeah, great advice. And so, my third question for you is, can you share with us one investment that did not go as expected?

 

Brandon Schwab  

Yes, I have one in particular that cost me $85,000. Last year, our company was expanding, we were doing good. Our occupancy through COVID was really doing good. We kind of thought we had this whole COVID thing figured out, right. And we heard of another portfolio that was up for sale. And we were trying to buy an existing portfolio that would have to exit our whole portfolio overnight. And I was excited because the SBA had some financing on last year, that was really good financing. Like it was 10%. Down, it was two and a half percent tight money. I’m just like, wow, this is so good. And it was almost like it was too good to be true, right? So, we’re going through the whole process, we put the upfront $100,000 down. And then what we found happen was the SBA needed an extension of 30 days. And what we did is when we contacted the seller, we were under contract to buy a portfolio of seven homes. For the five total beds for $12.5 million. It was a 14.5% cap rate, great deal, super excited. When I called them, they said, Brandon, we can’t give you the extension, we just got an offer that was 14, so 1.5 million higher than our offer. So, I panicked, right? I’ve got 30 days left; our financing isn’t going to come through for 30 days after those 30 days. So, I was like, Okay, I’m gonna bring in private capital for 12 point 5 million, and I couldn’t get it done. I was panicking. What that taught me is that you need to dig. So, like your hole for like water before you actually need water. Right? If you are thirsty, it’s hard to do that because you’re thirsty, right. And that’s what happened. I had this great deal. And I couldn’t come up with 12 point 5 million. Now back before that I’ve had capital over that in, but I was not in that type of hurry. Yeah, taught me was. I had to ask for the upfront $100,000 back. But the part that didn’t go so well is I racked up $100,000 of attorney bills, which I got them to settle for 85,000. But like that experience taught me I need to have the access to capital prior to actually finding these awesome deals. So that actually led me to exit our Opco. I used to be pretty active in the day-to-day operations. And I decided that I needed to actually focus on our fund and focus on bringing in capital. So, we had the capital on hand that when things kind of turned, we could go buy properties for cash at huge discounts of 10 to 20 to 30% plus type discounts. Or in this particular case, we could have doubled our portfolio, it’s 1.5 million that I would have only had to have that 12 point 5 million for literally only 30 days. Right.

 

Pancham Gupta  

so well. These are the things that you do, and you learn in the real-world seminars, you know, yeah,

 

Brandon Schwab  

yeah. Well, that taught me by us paying $85,000. I was like, what can this teach me? And I said, you know, I need to get out of operations. I was able to hire an awesome person to handle operations. And I focus on our fun. Sorry.

 

Pancham Gupta  

Exactly. Exactly. Cool. Well, thank you for sharing that. My last question for you is, what is one piece of advice would you give to someone who is thinking of investing in Main Street that is outside of Wall Street in hard assets? 

 

Brandon Schwab  

Well, selfishly, I would tell you to look at what’s happening today. Look at what’s going on with the aging population. The biggest population of our country is over 65 years old, that’s the first time that that’s ever happened in our country’s history. And that’s going to create a huge opportunity going forward that the ones that are of age right now, we’re taking care of their parents today. But in 10, 15 years, we’re gonna be taking care of that. And that’s the biggest population in our country. And they aren’t going to put up with 100 to 200 Bed type places. So, if that’s you, I would encourage you to invest into a company that’s trying to change it for you. Because if you think 100 to 200, place bed with these giant, slick hallways are for you, you’re gonna hate that part of life. And we are trying to change the industry. I mean, I’ve our fund is a 5 or 6, and we are given opportunities for folks to invest into this asset class, you don’t have to have huge capital, I mean, seven, 8, 10 figures, you don’t have to have that to invest in this asset class, I would ask you to call our office book a time to talk with us and find out if this is an opportunity for a plus, I would tell you, everyone ought to have at least 20% of their current portfolio in this asset class. Senior Living is huge. And it is changing, just like how the taxicab industry has been able to change over the past five years, I will tell you that Uber is changing it, it’s turning it upside down. That’s what we are doing to this industry, changing how people expect and think of this particular asset class, we are turning it upside down where it feels cozy and homey. And you get awesome care, which is really what I think has to happen, because our current country barely got through COVID. And with what’s going to happen next, they just aren’t built to handle it. And these 100 to 200 Bed buildings are built for efficiency for the owners, and not really for the quality care for the people that are in the houses. I mean, picture if you are 80 to 85, right? Is it going to be easy for you to find your room with a giant slick hallway of 100 to 200? Beds? No, that’s great when you are going to college, right? That’s fine. Not when 80, 85. That’s terrible. Things have to be done different. So, invest in opportunity to change the future, invest in helping the elderly and invest in an Avenue. That was the top performing asset class from 2005 through 2015, outperforming all other commercial asset classes.

 

Pancham Gupta  

Great, thank you, Brandon, for your wisdom here. And you know, how can people connect with you if they want to reach out find out more what you’re up to? And also, that 85-page book about which you were talking? How can they get that.

 

Brandon Schwab  

So, we are trying to old fashion. So, the best way is to call our office and our office is 84738086 to four that is 847-380-8624. Okay. The other way you can book if you want to talk to me directly, is I can put this in the chat for you. But if you go to www.brandonschwab.com You can book a time to talk with me personally, if you’re looking for the 85-page book, please pick the 15. So like minutes session, and if you would like talk to me a about investing, I’d encourage you to pick 30 minutes. And after our first call. If everything goes well, we’ll book a face to face call for like one hour. 

 

Pancham Gupta  

Hey, well, thank you for that. We’ll put all of that in the show notes. And thank you for your time.

 

Brandon Schwab  

Yeah, thank you for the opportunity. I have a good time talking on this. And so, I have fun teaching people that there is another asset class out there that I didn’t hear up until 2014. So, I feel there’s quite a few people today that have never heard of that either. So, if I can help teach them, I feel that I’m helping folks get introduced to a pretty cool piece of this asset class.

 

Pancham Gupta  

Yeah. Great. Yeah. Thank you. Thanks. Thank you for joining me today to find out more about residential assisted living and you know my goal for this podcast was to may make you aware of this asset class I have invited guest even before on this show to talk about this and Brandon has a different take on it. So well thank you for listening. If you have questions, please email them to me at p@thegoldcollarinvestor.com. That’s P as in Paul at the gold color investor.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 dot the gold collar investor.com And follow us on Facebook at the gold collar investor. The information on this podcast are opinions as always, please consult your own financial team before investing

Copy of EP #18 - 2 Guests

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