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Show Summary
In this episode of the Real Estate Pros podcast, host Michelle Kesil interviews Dr. Alex Schloe, a physician and real estate investor specializing in assisted living. They discuss the growing need for senior living solutions, the differences between traditional assisted living facilities and residential assisted living, and the unique investment opportunities in this sector. Dr. Schloe shares insights on the challenges of staffing, the importance of networking, and the current development projects he is involved in. He emphasizes the need for education and community support for those looking to enter the assisted living market.
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Dr. Alex Schloe (00:00)
when we’re looking at kind of the supply demand demographics of assisted living, a lot of us have heard of that silver tsunami probably, right? And that’s the aging population in America. When you look at the actual numbers, there’s about 77 million baby boomers in the United States of America.seven out of 10 of them are gonna require long-term care, which is 59 million boomers. And that’s already in an environment where about 645,000 to a million beds short, as is right now. the median age for assisted living is 82. The first baby boomers just turned 80,
Michelle Kesil (02:05)
Hey everybody, welcome to the Real Estate Pros podcast. I’m your host, Michelle Kesil. Today I’m joined by someone that I’m looking forward to chatting with, Dr. Alex Schloe who is a physician as well as a real estate investor, focusing specifically on assisted and senior living. So excited to have you here today, Alex.Dr. Alex Schloe (02:27)
Thanks, Michelle. Really appreciate the opportunity. Looking forward to chatting with you.Michelle Kesil (02:31)
Of course, I think our listeners are really going to take something away from how you’re approaching the senior living shortage and yeah, developing from there. So lots to dive into.Dr. Alex Schloe (02:42)
Absolutely looking forward to it.Michelle Kesil (02:44)
First off, those not familiar with you and your work, can you share what your main focus is these days?Dr. Alex Schloe (02:51)
Absolutely. Well, besides being a Christian and a husband and a father, we focus largely on assisted living. So I still practice part time as a family medicine physician because I do love practicing medicine, but we’re focused largely on assisted living, more specifically, kind of the senior housing crisis that is to come. Largely focus on residential assisted living. And we can talk a bit about the differences on what is residential assisted living based, you know, compared to big box facilities and those sorts of things as well, if you’d like.Michelle Kesil (03:18)
Yeah, go ahead. Would love to hear your expansion on that.Dr. Alex Schloe (03:22)
Yeah, absolutely. A lot of times folks hear assisted living and they immediately think of that like big box smelly facility that smells like urine where there’s a caregiver running around like their hair is on fire because they’re taking care of tons and tons of residents. And typically that caregiver ratio may be one to 15 or one to 20. And we’ve all been touched by assisted living in some way, whether it’s seeing a family member in one of those facilities or thinking about what the future is going to look like. The beautiful thing about residential assisted living is I want you to think of a large single familyhouse with many bedrooms and bathrooms that’s been renovated are designed to take care of seniors. So this is typically anywhere from six to 16 residents in one of these homes. And typically it’s more of a boutique personalized environment that caregiver ratio instead of being one to 15 or one to 20, maybe one to five or one to eight. And it’s a really fantastic opportunity. This is also not a nursing home. So a lot of times folks here assisted living and they think like, there’s a lot of medical care that’s happening.
This is typically residents who need help with activities of daily livings like bathing, cleaning, toileting, medication management, cooking, those sorts of things as well. There’s a broad spectrum that falls under assisted living, but when I’m referencing residential assisted living, that’s what to think about. And it’s a really incredible opportunity. There’s a huge potential, not only from a business side and a real estate side in terms of cashflow and profit, but more importantly, there’s an enormous opportunity in terms of
seniors who really need exceptional care and deserve that exceptional care that assisted living can offer.
Michelle Kesil (04:52)
Absolutely. Are you operating in specific markets or are you working nationwide?Dr. Alex Schloe (05:46)
Absolutely, that’s a great question. So our mastermind called the Row Room Assisted Living Mastermind, we have members who are all across the United States. So in that regard, kind of working throughout the United States, we got started in the lease to operator model. And what I mean by that is we purchase either previously operating assisted living homes, or we renovate them into assisted living homes. And then we lease that out to an operator on a commercial lease who then runs the day to day care. Those typically cashflow about as well as a short term rental without all the headaches, so like three to $5,000.per month or so for each one of those homes. And so we call it the Least to Operator model. We got started doing that in Arizona. So we have five there. We have three that we partnered with an operator in Wisconsin, and then we’re working on two development projects, one outside of Houston, and then one also just outside of Springfield, Missouri as well. Then we have a few other projects in the pipeline.
Michelle Kesil (06:38)
Cool, and how did you find this niche and get started in it?Dr. Alex Schloe (06:43)
Absolutely, yeah, so I’m part of a mastermind called the War Room Mastermind, which is for military members and been in that mastermind gosh for about six years or so. And I think being a part of a mastermind community or program similar to this as well is so important to help you grow and to scale way faster. And you never know who you’re gonna meet. So I met my two business partners through there, Charlie and Luke. And one day Luke came to one of the meetings and we have what’s called a hot seat where we just like grill the person on.what they’re working on, what they’re planning to do, et cetera. And Luke’s like, hey guys, I think I’m going to invest in assisted living. And I have a long story and history with assisted living, way more than I can share just on this podcast. But Luke told us what he was planning on doing. And then the next month he came back and he was under contract. And then from there we decided to partner and go from there. So I think it’s the best opportunity in real estate now and for decades to come for a whole host of different reasons.
Michelle Kesil (07:36)
Yeah, I would love for you to expand on some of those reasons because it’s not talked about so often.Dr. Alex Schloe (07:41)
Yeah, absolutely. think a lot of folks don’t really know what residential assisted living even is and don’t even know that that’s an option and opportunity. So I’m glad that we’re having this pod class. Glad I was able to share a little bit about what that is.But when we’re looking at kind of the supply demand demographics of assisted living, a lot of us have heard of that silver tsunami probably, right? And that’s the aging population in America. When you look at the actual numbers, there’s about 77 million baby boomers in the United States of America.
seven out of 10 of them are gonna require long-term care, which is 59 million boomers. And that’s already in an environment where about 645,000 to a million beds short, as is right now. The reason that’s so important is the median age for assisted living is 82. The first baby boomers just turned 80, okay?
So we still have a little bit of a runway before all those 59 million boomers are gonna start aging into these homes. We already have such a substantial shortage.
with that $645,000 to a million bed shortage, that this is such a huge opportunity to hop into a space that is not gonna be as, I wouldn’t say complicated, because it is complicated and hard work, but not gonna be as much competition as say short-term rentals or perhaps multifamily investing. And it’s the only asset class that you’re really gonna get that true fulfillment, right? Like you have an opportunity to provide exceptional housing and care for seniors who need it most. And we’ve all been touched by those poor,
care environments and our grandmas and grandpas deserve a lot better than
Michelle Kesil (09:13)
Definitely, that’s important. What are some challenges that you have found in this particular niche that you’re working in?Dr. Alex Schloe (09:24)
Yeah, there’s challenges just like any other asset class for sure. I think one thing to keep in mind is how you want to invest in assisted living. That’s going to kind of determine what challenges you have to face. We like to teach there’s kind of four different ways that you can invest. You can invest passively as a limited partner, right? That’s your mailbox money, right? That’s partnering with someone like us. And then we just mail you a check every month or really send you a distribution.So that’d be a limited partner investing. That’s all the due diligence that you would do on any LP investing opportunity. Then there’s owning and operating. So that’s going to be like your opposite end of the spectrum. That’s going to be the most intensive and active, right? So you own the real estate, you do all the day-to-day care, or you hire the team that does all the day-to-day care. And then in the middle is a lease to operator space where we got started. So you own the home, you lease that out to an operator on a commercial lease. They run the day-to-day care.
or you wanna be the business owner, right? You just wanna operate and take care of seniors, but you don’t have the capital to own the real estate. So there’s really four different ways to invest. And depending how you decide you wanna invest is gonna have its own unique challenges. By and large, if you’re in that lease to operator space or you’re owning and operating, you’re gonna run into similar challenges and that’s gonna be staffing, right? You gotta hire really good caregivers. You have to retain those caregivers.
and they’re gonna be the backbone for the care that’s provided and really help build that culture for the residents that are there. And so that’s really important. The staffing is important. If you’re looking for the actual investment itself, it’s like, hey, how do you find a home that’s gonna serve seniors well and that’s gonna serve the caregivers well? What does that home need to look like? What’s the layout need to be? Those sorts of things too. So there’s plenty of challenges and… ⁓
You know, it can be difficult to get started unless you have some guidance to kind of help you along the way, but it’s absolutely possible. If we can do it, you can totally do it too. And it’s just such a massive need. And we didn’t even talk about the returns, right? So the least operator model, you can cashflow 3000 to $5,000 per month, typically with a fully occupied home with a good operator. And that’s going to be as passive or more passive than a short-term rental. Okay.
but that’s fully dependent on the operator, right? You need to vet your operator well, you need to make sure there’s alignment there. Do they have a track record? Do they have the financials to weather any potential storms or decreases in occupancy or God forbid, another pandemic? So that’s important. If you own and operate a fully occupied home and you’re providing exceptional care, you can cashflow 10, 15, $20,000 per month with just one home, which is amazing that you could potentially achieve financial freedom with just one home.
Michelle Kesil (12:42)
That’s awesome. And when you say operator, is that the person that’s like running the actual business for the seniors themselves?Dr. Alex Schloe (12:51)
Yes, absolutely. Yes. So the operator is typically going to be the one who’s providing that day to day care. So typically the operators in charge of licensing the home, getting everything set up and established and ready to provide great care for the seniors and then providing that day to day care, coordinating, you know, property tours for potential new residents, working with the chef or working with the caregivers for the meal plan, all those sorts of things that are entailed in operations.Michelle Kesil (13:16)
Right? Is that difficult to find operators for this field?Dr. Alex Schloe (13:21)
Yeah, it can be, because it’s certainly your linchpin, especially if you’re going to lease to an operator, like that’s going to be the most important person on your team is that operator. So it can be difficult. We, we actually started a Facebook group after we bought, I think it was our second or third lease to operator home. And we’re like, Hey, let’s start a Facebook group to find more operators. Right. That ended up just exploding into a group of just people interested in assisted living. And now we have three different groups and like 45,000 people. ⁓ And even despite having that reach, it can still be difficult.to find good operators. And so that is something that’s really important. There’s a lot of ways to do that, whether it’s posting in those different Facebook groups, posting on LinkedIn, Indeed, some of those other job sites, reaching out to other homes and just saying like, hey, can I just calling them up and saying like, hey, ⁓ are you interested in potentially expanding, right? Or do they want to operate more homes? So there’s a lot of different ways that you can find operators, but it ⁓ is a difficult process and super important.
Michelle Kesil (14:19)
for sure. What do you feel are some keys that have made the biggest difference in allowing your business to be able to grow and run successfully?Dr. Alex Schloe (14:29)
Well, I think with everything, I mean, it’s such a relationship game, right? Real estate and entrepreneurship, it’s all about relationships, it’s all about teamwork, it’s all about surrounding yourself with the right people. And I think that starts in like a community, whether that’s a mastermind community, whether that’s, you know, a group of friends, whether that’s your local real estate meetup, just surrounding yourself with people who are successful, who you can lean on and help kind of mentor you and help you succeed can be really important.And that continues throughout every stage of the process, right? Your friend group’s gonna level up, your mastermind community is gonna level up, and having those connections is really important. So I think community, relationships, teamwork, just having the mentality of everybody can win in real estate and in entrepreneurship, and let’s help each other all win together is gonna be a much better way to do it. And you’ll be really surprised at the success that can happen if you have that mindset.
Michelle Kesil (16:04)
Definitely, think that networking and collaboration can take you really far.Dr. Alex Schloe (16:09)
Absolutely.Michelle Kesil (16:11)
As far as the networking piece, there specific, like besides masterminds, other networking modalities that have made the biggest difference for you?Dr. Alex Schloe (16:22)
Yeah, I think for me personally, the biggest thing was starting my own podcast. So I host a podcast called Physicians and Properties. It’s for mostly physicians, but also healthcare workers. And really it was kind of to document my journey along the way, but also interview other people in the space. And once I started doing that, I was realizing like, man, there are so many doctors who are doing this, who have achieved financial freedom in their practice in medicine, how they want because of that. And so I really became motivated to share my journey as well and show physicians howyou can have the freedom to practice medicine and live life how you want to. And so it really does boil down to those networking opportunities that have come from that podcast and then our assisted living podcast as well. I think people who are on the fence about starting a podcast, gosh, it’s just such an amazing opportunity to have really great conversations with people. And you never know the kind of second and third order effects of that podcast and who that person knows and may introduce you with.
And as long as you continue to have that go-giver mentality, can just really be huge.
Michelle Kesil (17:23)
Yeah, definitely. And what are you most focused on solving or scaling to next in your business?Dr. Alex Schloe (17:31)
Great question. think ⁓ as a whole, I’m kind of focused on time management and prioritization. I got out of the Air Force in June. Now I’m practicing part-time in a direct primary care clinic and also got kind of part-time entrepreneurship and real estate and like figuring out how to blend those worlds together has been fun and challenging. Parkinson’s law is true that work will expand to the amount of time you allot to it. And I’m definitely feeling that. So working on prioritization as a, you know, as a whole in our business, we’re really focused onadding as much value as possible in the mastermind because we really see the benefits of that and how we can reach way more people to then open way more homes to take way more care of seniors. And so that’s kind of a ripple effect or kind of an economic wake that’s being created through that. So really leaning into the mastermind and kind of wrapping up these development projects in 2026.
Michelle Kesil (18:24)
Yeah, can you share more about the development projects on here?Dr. Alex Schloe (18:28)
Yeah, absolutely, I would love to. So we’re working on two big projects right now, development-wise. One of them, we’re partnered with Aaron and Andrea and me. are members in our mastermind and we bought some land in Tombaugh, Texas, just outside of Houston. The plan there is to build in phase one, two 16 bed, we call them memory care mansions. That was a model created by Brett Jett Cavis and there’s 16 beds, 16 baths.just massive, beautiful boutique luxury mansions to take care of memory care residents. So those are typically residents who have issues with dementia like Alzheimer’s, for example. And so in phase one, we’re gonna build two of those homes. And then in phase two, we’re gonna build two more. So a total of 64 beds. We just closed on the land about a week and a half ago. We just started clearing land yesterday. And so it is satisfying to finally kind of get a shovel in the dirt and get things started there.
We anticipate the build for those two homes is going to take about 12 to 15 months. And then we’ll get that stabilized. And then once we have that home fully occupied and stabilized, we’ll be able to leverage that through SBA to fund phase two of that project. So that’s one that we’re working on. That was really, really fun opportunity. Definitely like stretched us and helped us grow. That was our largest capital raise to date. We raised $2.8 million for that project. And that was a really fun experience.
And then we’re doing another new development just outside of Springfield, Missouri. This one’s gonna be really cool. It’s ultimately gonna be like a senior living neighborhood. So ⁓ the overall neighborhood and the build out is gonna be some independent living townhomes. So that’s gonna be 55 plus seniors. And then we’re gonna have some assisted living homes, two assisted living homes, two memory care homes. So we’re hoping that we’ll be able to kind of have those seniors transition throughout the end of life.
just in that neighborhood. And so we’re really excited for that. We’re going to close on the land in Missouri in 20 days. So really looking forward to closing on that land, getting started with the horizontal construction and then more fun, the vertical construction and start seeing things come together.
Michelle Kesil (20:32)
Yeah, that’s so exciting. What has been the biggest learning lesson through these projects?Dr. Alex Schloe (20:42)
Oh man. I think from a development side of things, we learned really quickly that development’s a really expensive hobby. We were under contract on 10 acres of land in Winchester, Virginia, and we spent probably about $30,000 $40,000 of due diligence because we just didn’t really fully understand kind of the timeline of due diligence and what needed to be done and what needed to be done when. And so we ended up sinking about $30,000 to $40,000 in due diligence costs, ultimately to find out.After we were already told there was plenty of utility availability, that there may not be enough sewer allotment for that property. And the city couldn’t give us a clear answer on a path forward. And then they were like, hey, there’s a lift station that may need to be repaired and that’s going to be on the developers. And we asked them what the cost may be. And they’re like, I don’t know, maybe 50,000, maybe a million dollars. And we’re like, well, we can’t like just budget a million dollars into this project. And so we ended up having to walk away and.
eat the cost and it was a pretty expensive tuition, but we learned a lot from that perspective.
Michelle Kesil (21:44)
Definitely. Do you have any advice for people that are wanting to start out and maybe get into senior living that you wish you had?Dr. Alex Schloe (21:53)
Yeah, I think really just kind of learning about the opportunity in the space is really important. ⁓ We do, do shameless plug, host a webinar every two weeks that’s about assisted living. So those are typically on Tuesday nights. If you go to ralrym.com slash webinar, you can find those there. And that’s kind of a broad overview of how you can start your first or your next assisted living home. So just really starting to get educated can be really important. ⁓When, when we first got started, there was not a whole lot of education and resources that were out there, which is why we started the community and started the podcast and some other things as well. So I think just really spending time to educate yourself, but also to not get overwhelmed because it can sound very complicated. ⁓ but really it’s, it’s not, if you just work on things stepwise at a time, right? It’s like the old saying, do you know how to eat an elephant one bite at a time? And so it’s the same thing for this, just like anything else.
But I think if you have a passion and a heart for caring for others, for caring for seniors, you want to invest in real estate, there’s no better opportunity that’s out there, to be completely honest.
Michelle Kesil (22:58)
Amazing. Thank you for sharing that perspective.Dr. Alex Schloe (23:01)
Absolutely.Michelle Kesil (23:03)
So before we wrap up here, someone wants to reach out, connect, learn more, where can people find you and connect with you?Dr. Alex Schloe (23:10)
Absolutely, probably the easiest way to do that is just go to the ralroom.com, ⁓ residential assisted living or ralroom.com. You can find a free 10 step guide on there. So a 10 step guide to start your first or next assisted living home, sign up for our webinars. You can listen to the podcast there as well. So there’s a lot of great ways to do that. And then if you just Google my name, ⁓ Dr. Alex Schloe or just Alex Schloe, S-C-H-L-O-E, you’ll find me. So more than happy to help out in any way.Michelle Kesil (23:38)
Perfect. I appreciate your time, your story, your perspective. Thank you for being here.Dr. Alex Schloe (23:42)
Thank you, Michelle, really appreciate it. Thank you for what you do.Michelle Kesil (23:45)
Of course. And for those tuning into the show, if you got value, make sure you’ve subscribed. We’ve got more conversations with operators like Alex who are building real businesses. We’ll see you on the next episode.
