Buying an Assisted Living Facility in Florida is not the same as buying an ordinary house or a simple small business. The transaction may involve the operating business, real estate, a lease, licensed beds, employees, residents, insurance, permits, equipment, zoning and financing.
Before closing, a buyer should be able to answer the following 20 questions.
1. Am I Buying the Business, the Real Estate, or Both?
Start by identifying exactly what is being sold. A transaction may include the operating ALF business, the property, both, or a business operating from leased real estate.
2. What Is the Current Licensed Bed Count?
Do not rely only on the number of bedrooms, an advertisement or the seller’s representation. Verify the current licensed capacity and the operational status of the facility.
3. Is the Facility Currently Licensed and in Good Standing?
Review the current licensing information and determine whether there are matters that require additional investigation before closing.
4. What Is the Current Occupancy?
Ask how many beds are currently occupied, how long vacancies typically last and whether occupancy has been stable.
5. What Are the Actual Revenues?
Review available financial records rather than relying only on a verbal revenue figure. Understand resident rates and the consistency of income.
6. What Are the Operating Expenses?
Review payroll, rent or mortgage, utilities, food, supplies, insurance, maintenance, professional services and other recurring costs.
7. What Is the Payroll and Staffing Structure?
Understand how many employees work at the facility, their roles, schedules, payroll costs and whether key staff expect to remain after the sale.
8. If the Property Is Leased, What Are the Lease Terms?
Review remaining term, renewal options, rent increases, assignment provisions, landlord approval requirements, maintenance responsibilities and insurance requirements.
9. Does the Property Work for the Intended ALF Use?
A house can look perfect and still fail zoning or spacing requirements. Review the applicable zoning, proposed resident count and local requirements before becoming financially committed.
Read our Miami-Dade ALF zoning and spacing guide.
10. Are There Nearby ALFs or Group Homes That Affect Spacing?
For certain Miami-Dade projects, spacing can be critical. Do not search only for Assisted Living Facilities; relevant Group Homes and County records may also matter.
11. Are There Open Permits or Unpermitted Improvements?
Check additions, garage conversions, bedrooms, bathrooms, enclosed areas and other improvements that may affect the intended use.
12. What Is the Physical Condition of the Property?
Review roof, electrical, plumbing, HVAC, structure, bathrooms, bedrooms, accessibility, parking and other major property components.
13. What Fire and Life-Safety Work May Be Needed?
Do not assume that a normal residential setup will automatically satisfy the intended ALF operation. Determine what additional review or work may be necessary.
14. What Furniture, Equipment and Other Assets Are Included?
Identify beds, furniture, appliances, office equipment, inventory, vehicles, phone numbers, websites and other operating assets included in the purchase.
15. What Contracts or Vendor Relationships Exist?
Understand which agreements may continue, which may terminate and which may require new contracts after closing.
16. What Insurance Will Be Required?
Evaluate liability and property insurance early. Depending on the facility, that may include General Liability, Professional Liability, Property, Workers’ Compensation, Commercial Auto and specialized endorsements.
Learn more about ALF insurance options.
17. What Are the Liability Limits and Deductibles?
Do not accept a statement such as “the policy is 100/300” without understanding what each limit applies to, what the deductibles are and which endorsements or exclusions matter.
18. How Will the Purchase Be Financed?
Determine the down payment, loan structure, lender requirements, appraisal needs, closing costs and how much cash must remain available after closing.
19. How Much Working Capital Will I Need?
Budget for payroll, insurance, food, utilities, repairs, supplies, marketing and unexpected expenses after the purchase closes.
20. What Must Be Resolved Before Closing?
Create a written list of unresolved items and determine which must be completed, verified or documented before you become obligated to close.
Do Not Close Until You Can Answer These Questions
The purpose of due diligence is not to find reasons to kill every deal. It is to understand the deal before you own it.
A buyer should know what is being purchased, what the business earns, what the property needs, what approvals matter, what insurance is available and how much capital will be required after closing.
Use the Right Professionals
An ALF acquisition can involve real estate, business, legal, accounting, insurance, inspection, financing, zoning, licensing and regulatory issues. No single professional should be expected to replace every other specialist.
Carmona Real Estate Group can assist with the real estate brokerage side of the transaction, while Florida FairPrice Insurance can separately help evaluate insurance options. Buyers should use qualified attorneys, accountants, inspectors, lenders, zoning professionals and licensing or regulatory professionals when appropriate.
Ready to Evaluate an ALF?
If you are considering an Assisted Living Facility in Florida, tell us the location, asking price, bed count and whether the transaction includes the business, the real estate, or both.
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