December 13, 2021
Best Ever CRE Team

How to Build Your Own Residential Assisted Living Portfolio

Some people start their commercial real estate portfolios with apartment buildings, strip malls, and similar structures. Loe Hornbuckle, a Texas-based entrepreneur, has seen great success by creating top residential assisted living properties. His advice in the real estate investing world can help others follow in his footsteps and gain success.

Early Beginnings

Hornbuckle was born in Shreveport, Louisiana. His background was in sales and marketing. In fact, his first real job had nothing to do with commercial real estate. Loe ran a car dealership and accrued solid income. However, he wanted more control of his time. He began working with MC companies in the apartment syndication field. By accident, he stumbled into assisted living care properties.

Hornbuckle’s father required hospice care during his final years. As others in the same situation can attest, this experience is stressful. His father was neglected, which weighed heavily on him. At this time, he was running apartment properties. Although he enjoyed the work, he never felt that it was having a positive impact on his community. Following the passing of his father, Hornbuckle got word about investing in residential assisted living, or RAL. He immediately took interest and felt a sense of purpose. He knew that he could give other families a better experience than he and his father had.

First Opportunities

Hornbuckle’s first opportunity in this niche was to take over an existing RAL home. It had three residents, so it was quite small. He was not sure that he could do it. He did everything possible to provide residents with top care. After receiving positive feedback from clients, he gained the confidence to keep moving forward.

Learning the Business

Although Loe feels that experience is key to learning any business, he also took a class from Gene Guarino. He taught Hornbuckle how to turn single-family homes into eldercare facilities. In August 2015, Hornbuckle dove in and never looked back.

In the beginning, it was tough for Loe to break into the commercial real estate sector. He couldn’t find employment in the apartment world. Nobody understood why he would take such a drastic pay cut to become an apartment manager over his lucrative car sales background. Luckily, he gained a job from a company that had taken some of his investments. He literally “worked his way down the ladder.” However, it was vital for him to learn the mechanics of property management and ownership. He claims that people get too reliant on third parties. He feels that it is fine to take help, but you must understand the business first.

Different Types of Business Plans

Loe reveals four different types of business plans that involve this type of investment property. To begin, it is possible to participate in residential conversion. He was familiar with this idea. In 2015, he purchased a home outside of Preston Hollow, which is the neighborhood that used to house George Bush. It was converted from a regular dwelling into a residential assisted living property.

Another plan involves a change of ownership, which is when a person takes over an existing care facility. It provides an opportunity to gain an established business and to improve on it. If things are running smoothly from the beginning, there is very little hassle.

Also, it is possible to obtain a facility that has a license but no residents. Sometimes, it becomes difficult to obtain permits and licenses to run this type of facility. When there is already one in place, it becomes easier to build a successful business without outside interference.

Finally, ground-up development is an option. It is the most time-consuming and expensive way to go. However, it may not always be possible to find a piece of property that is already established. On the positive side, it allows a developer to customize every aspect of the facility.

He urges people to proceed cautiously. If you are interested in this type of investing, make sure that you work with knowledgeable individuals. He explains that one of his biggest mistakes was purchasing a property with a faulty fire system. Ignorance cost him a lot of time and money.

Building a Solid Portfolio

Managing a residential assisted living property is a 24/7 business. To be successful, it is essential to be fully committed and focused. According to Hornbuckle, it is vital to build a business with a number of different units. You must have various facilities to make it worthwhile. To gain success, you should look at the number of beds in each facility and understand how many people are needed for staffing. It is more cost-effective to handle a large facility than one with only a few beds.

How Much Money to Build a Portfolio?

Loe explains that the amount needed for managing a multi-house portfolio varies depending on the area. In Dallas, each house costs approximately $1 million. Also, many cities and states limit the number of people per setting. If you are forced to start small, it is essential to offer a premium product. The fixed costs and highest expense of running this type of facility is staffing. Labor drives price. Hornbuckle explains that you must be willing to dedicate 30%–40% of the cost to labor. This ensures an efficient staff-to-patient ratio.

To gain success, it is crucial to stand out. Besides offering premium services, you should dedicate the facility to a specific segment. For example, a facility may be dedicated to serving clients with dementia or Parkinson’s disease.


It is not possible to begin real estate investing without adequate funding. Purchasing and managing an assisted living facility is quite costly. When pursuing a house conversion, it is necessary to acquire a traditional mortgage and to raise private money as well. This route is quite equity-intensive. On the other hand, an existing business is easier to finance through a bank or SBA loans.

Mitigating Risks

Hornbuckle explains that the construction side of RAL investing is challenging. Remodeling a facility is difficult. However, he surrounds himself with good people and has developer partners. Also, he works with his architect to develop successful models. He recommends others do the same.

Looking to the Future

Currently, Loe Hornbuckle is CEO and founder of The Sage Oak, which is a memory care community with five locations throughout Dallas and over 40 beds. Also, he has two great development deals in the works with 300 beds. He is committed to providing the best outcomes for society’s most vulnerable people and encourages others to do the same. Understanding the risks and rewards will help you to make the best choices and enjoy the best outcomes.

Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.

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