Senior Housing Real Estate Investing: Demand, Development and the Silver Tsunami

Crystal Wilmhoff (00:00)
So this is not something that’s going away. So I think anytime that you’re looking at real estate, you want to look at what are the shifts, what are the trends, what’s happening. So in this case, this is not a one-off. This is something that will be here for quite a while.

And there’s anywhere from 700,000 up to a million beds short in senior housing. We are all aging longer. One out of every seven people will need help with an activity of daily living. So it just—all of those things stacked up just kind of made this a no-brainer. Like, everything I feel like we’re gearing towards should be towards that generation because they’re the need, and they’re right now.

Cody Crabb (02:12)
Welcome back to the Real Estate Pros podcast by Investor Fuel. I’m your host, Cody Crabb, and today I’m talking to Crystal Wilmhoff. Crystal is based in Northern Kentucky, where she’s developing a residential assisted living and memory care community to help meet the growing demand for senior housing. Today we’re going to talk about the silver tsunami, why this need is only going to grow, and what this means for real estate investors. Crystal, thanks so much for joining us today.

Crystal Wilmhoff (02:38)
Thank you so much for having me. I’m happy to be here.

Cody Crabb (02:41)
Yeah, so to start off, I’d love to hear, you know, your journey into this niche, because this isn’t something you just go—you know, you wake up and it’s not on the kindergarten job, but I wanna be a fireman, I wanna be an astronaut, I wanna start a residential assisted living and memory care. No, so I’d love to hear what that journey actually was.

Crystal Wilmhoff (03:01)
Sure. Okay. So I am a nurse practitioner by trade. So I’ve done that for over twenty-five years and always been interested in real estate. So my partner and I, who is also in healthcare—she’s in IT cybersecurity—we decided to go into real estate. We started out with some wholesaling. One—there’s been one flip.

It just—and it happened during COVID. So, of course, like, we partnered and were like, yes, let’s do this. And then COVID happened, and that was a little bit crazy for everybody. But it didn’t really feel like us. So we actually separately had been researching different forms of real estate investing and found residential assisted living. My business partner, Marky, had a really bad experience with her father in a nursing home.

And my granny was at the age that she was needing care. My dad was an only child, had passed away when I was thirty, so I kind of had stepped into that role. And she lived in a different state. And it was just becoming too hard to go three and four and five times with a family here. So I actually quit my job, moved her in with me, and then began researching areas, homes for her. And what I found was that I couldn’t find anywhere that I really felt comfortable with, and residential assisted living actually was the solution that we were looking for.

Cody Crabb (04:19)
Hmm. So at what point did this click that this wasn’t just, like, a healthcare problem, but it was—it could potentially be a real estate opportunity? Because it sounds like this is—this is kind of both sides, because you come from a healthcare background.

Crystal Wilmhoff (04:31)
Right. So we—after we started learning more about the residential assisted living—residential assisted living, excuse me—we found the Residential Assisted Living Academy that was started by Gene Guarino and is continued by his daughter, Isabelle Guarino. And so we actually went out, became certified specialist, and in that class it really talks about, you know, what you’re looking for in a residential assisted living, and it breaks down all the finances. So we realized, my goodness, instead of having, you know, thirty-two single-family homes, we could actually have thirty-two beds in a two—you know, in two homes, and it’s much, much more lucrative. And so it just—it just checked all the boxes.

Cody Crabb (06:00)
Not to mention, you have kind of this—this expanded knowledge. You would—you wouldn’t just be going into it cold. You have this healthcare background, so you kind of bring some expertise there. So I think this is—this is great. So, for people that have never really heard of residential assisted living, or they have, but maybe they have some picture of it in their head, what is that? Can you give me an idea of what we’re talking about here? Like, when you say 32 beds, like, what does one of these places look like if you’ve never had someone there before?

Crystal Wilmhoff (06:32)
So depending on where in the country you live, they look a little bit different. If you’re in Arizona, you could literally throw a stone and you could hit a residential assisted living. They are all over the place. They’re in the neighborhoods. You would drive by and probably not have any idea that it was a—that it was a home for seniors. So that’s, like, how I’d like to explain it to people is, you know, group homes are huge right now. Housing is a huge issue across all demographics. So this is a group home for seniors. It also provides some care for them.

Here in this area, we are going to be surrounded by neighborhoods, condos, different things like that. So these are homes that are usually larger. They’re 8,100 square foot, up to 10,000 square foot, for 16 residents. And so that’s the model that we have chosen. Some people have four residents, like out in California. I think that’s all you can have is four. So your area that you live in kind of determines what you can do. We stayed with 16 and under because we really wanted it to still feel like a home. That’s the whole idea, is versus an institution that has kind of long hallways with a bunch of bedrooms, this is a home with bedrooms and common areas. But, you know, seniors don’t have a problem getting around. It is their home.

Cody Crabb (07:42)
Yeah, that—I feel like anybody that would care for somebody in that situation, you know, if you ask them, where would you rather stay? I mean, it’s a no-brainer. It seems so obvious that that—that would be such a good—such a better fit for—it’s the kind of place you’ve lived your whole life and, you know, it makes sense. So as far—on the investor side, I find it interesting because this is not just a real estate investment. This is also—you’re starting a whole business with all kinds of regulations and things. This is a heavily regulated industry here. So I’d be curious, like, give me some of the—give me some of the logistics behind that. I mean, what kind of hoops did you have to jump through to make that work in your state? ‘Cause it’s, of course, it varies everywhere, but—

Crystal Wilmhoff (08:25)
We did have to have the land rezoned to make sure, because that’s the first thing, is zoning. So anytime that you’re looking in an area, you need to make sure that it’s zoned that you’re able to do this. So we had to do that, but the county really understands that they need senior housing. And so the county and the city were incredible. They walked us through the steps. We had no problem. That is not the case for everyone. So it’s really important. What I would say in that is that if you’re interested, go in person and meet people and talk to them and explain to them what you’re trying to do. Because a lot of times when you’re researching, it’s kind of gray, and you’ll call and different people will give you different answers. So it’s just really important to make sure they’re understanding you.

So my advice for investors is that this is—not only is it the real estate, so you have an appreciating asset, but there is also an operational company that is generating income. And you can be as involved or not involved as you want. You can lease the real estate to the operating company. You could be the operating company and lease from the real estate. There’s just so many ways that you can do this business.

Cody Crabb (09:27)
Yeah, I think it seems like it’d be a tough balance because you’re kind of managing two of these businesses at the same time. But, as you said, we were kind of talking before the podcast started, and you said the demographic shift that everyone talks about—the silver tsunami, as they call it—where so many people are gonna start aging into these facilities, it’s not coming. It’s actually already here. And so, what are you seeing that makes you so confident that this is just gonna keep growing?

Crystal Wilmhoff (10:00)
So the youngest baby boomers have just turned 85. So they’ve just aged into this. So if that gives you any idea, that’s—the window is 25 to 30 years. You have a little bit of a dip in our population, but then you have the millennials and the other generations under them that are just as big.

So this is not something that’s going away. So I think anytime that you’re looking at real estate, you want to look at what are the shifts, what are the trends, what’s happening. So in this case, this is not a one-off. This is something that will be here for quite a while.

And there’s anywhere from 700,000 up to a million beds short in senior housing. We are all aging longer. One out of every seven people will need help with an activity of daily living. So it just—all of those things stacked up just kind of made this a no-brainer. Like, everything I feel like we’re gearing towards should be towards that generation because they’re the need, and they’re right now.

Cody Crabb (11:32)
Yeah, everyone’s heard that saying. I don’t know if this is actually a thing, but, yeah, everyone’s heard that saying, like, the first human to live to a hundred and fifty has probably already been born. And so, like, it’s something—it’s something to think about because, in the coming years, the way we think of people being old or kind of getting into the—being elderly enough to be in these facilities, this might be a significant portion of someone’s life going forward because we might end up living way longer. So that is certainly something to think about. And so, yeah, I think that the longevity of this is really interesting.

So, all right, so now we’ve established, you know, you’ve got the expertise from your healthcare background. You’ve started getting the stuff figured out for zoning and whatnot. Tell me where you’re at right now, because this is still not quite in the stages of opening up yet.

Crystal Wilmhoff (12:23)
That’s right. So we are currently in the development money-raising stage. So we have the land purchased, and we have the architectural plans. Our construction design is 90% complete, and we’re raising the money so that we can move forward. We have the pre-commitment letters from bank and from the SBA. So we’re just really waiting to get the capital so that we can start breaking ground. And then we’re anywhere from 12 to 14 months out is when we’ll actually be able to open. And during that time, we’ll get the licensing, create all the staff training, and all the things that will be needed.

Cody Crabb (12:59)
For someone listening who’s intrigued by this type of asset class, where you have these two worlds kind of mixing together, what’s the biggest misconception people have before they go into it? Like, maybe you shouldn’t get into it if—type of stuff.

Crystal Wilmhoff (13:16)
So I think the biggest misconception is that it’s just going to be completely passive and that it’s just a money-making thing. So I think if that’s what you’re looking for, this is—this is not it. You definitely have to have the heart for this. You don’t have to have a medical background. I mean, there are experts that you can bring in that will—that will be able to handle that piece. And you can be as hands-on or as hands-off as you want, but that’s once you get it up and running.

After, you know—before that, you really are—this is every single day. You’re networking, you’re talking to people, you’re going to the city. You’re—there’s so much that happens. So if your heart is not in it, then you shouldn’t do this.

Cody Crabb (13:59)
Yeah. Yeah, really. It is kind of one of those—healthcare in general, I think, is one of those things where, you know, if you don’t wanna be around it, that’s fine. But, like, then maybe don’t get into the industry. One thing that I’d like to ask you is, so you specifically mentioned that you landed on—was it 16 beds as your number? So I would be curious to know, like, why—how did you arrive at that number exactly? Like, what was it about sixteen that—you said you still want it to feel like a home. You still want it to feel like a real place that people live and not kind of a facility, basically. But where—how did you arrive at that sixteen number?

Crystal Wilmhoff (15:17)
So there’s a bunch of different ways. So we had visited different-sized—different-sized homes. So that was the first thing. And then the second is that we have financial projections that we’re able to do. And those—the modeling kind of shows you what you need to be at. So we’re doing two homes. They have a secured courtyard in between them. So each home has 16 beds. We didn’t want to get into the institutional code, like when you’re building—building code. So if it’s under 16, it’s that.

And then also, again, that just—that home-like feel. So everyone is different. There’s some homes that are twelve. That didn’t make sense for us because we could fit four more bedrooms. So we were like, why wouldn’t we fit more—four more bedrooms at that point? And it doesn’t change staffing by that big of—but it’s all about financial projections. I mean, you really need to look at all the numbers because that’s what tells you yes or no.

Cody Crabb (16:08)
Yeah. And it sounds like—it sounds like a lot of this was kind of just, hey, sixteen fits within this part of the code, and also that’s a pretty decent number for what we’re able to provide for healthcare. It kind of sounds like it was a—not a happy accident, but, like, it kind of just looked, all right, that works out. Sixteen. That’s cool.

So if somebody is looking into this—this option as an investment, and I don’t even just mean the assisted living-type stuff. I mean, like, anything where you kind of have this—a business attached to your—your real estate investment. What advice would you give to make sure that—to people—to make sure that they are making a good investment that is—that they can rely on, not just the business, but also the real estate?

Crystal Wilmhoff (16:59)
I think you definitely want to make sure that the real estate asset is in an appreciating area, because not all areas are equal. So I think that’s one thing. The bank really likes that because, of course, they’re—they like that real estate. That’s what the collateral is. But also, just that you are not—when you’re looking at someone’s numbers, that you are not just going with their numbers. You really need to do your research, and you need to understand what it is that they haven’t added in and what it is that they have included that you—you wouldn’t be doing. Some people are mom-and-pop operators, and so they aren’t including their own salary, but you would have someone that you hired. That’s an example in this business. But it’s just really important to actually understand what it is that goes into that business and not just rely on someone else’s numbers when you’re evaluating it.

Cody Crabb (17:46)
Yeah, I think that’s very well put. So we’re coming up on time here, but I just had one more question for you. It seems like kind of due diligence is the main message here. Look over your numbers. Make sure you’re planning things carefully. Looking back at your own journey, what’s a mistake or a misconception that you see newer investors make in this asset class that you would hope that they could avoid?

Crystal Wilmhoff (18:10)
So what I would tell everyone is that it is a marathon. It is not a sprint. I think that that was the hardest thing for me, is I just, you know, I was like, I have this vision. I see it. I—let’s go. And that is not the way that it happens. And so just kind of surrendering and letting things happen the way that they’re supposed to, and usually it actually ends up working out better if you do. But that would be the key, is that, you know, you have to have the heart, and it’s—it’s a marathon. It’s not gonna happen overnight. And I think that’s—real estate investing in general is not just a get-rich-quick. It’s literally a plan. And then you have to follow that plan.

Cody Crabb (18:45)
Well put. Yeah, it’s a get-rich scheme that is not a get-rich-quick scheme, as I’ve heard it said. So thank you so much for all this insight. If someone is wanting to get in touch with you, learn more about what you’re building, follow your journey, potentially be an investor in the future—I don’t know if that’s even something that’s possible—how can they get in touch with you?

Crystal Wilmhoff (19:04)
So they can call me. My phone number is (513) 262-6180. My email is [email protected]. We also have a website. It’s www.honeysucklehouseral.com if you’re interested in looking at what we’re building.

Cody Crabb (19:23)
Fantastic. Well, this has been super informative. Thanks so much for—for sharing this today. And thank you, listeners, for joining us as well. Crystal, we’ll see ya, and audience, we’ll see you on the next one.