August 5, 2019

JF1796: What Is Residential Assisted Living? How Can You Profit From It? With Emmanuel Guarino

Emmanuel is here to share his story and experience with residential assisted living facilities. We’ll hear the mistakes they made on their first deal, and what they’ve done now to eliminate making those same mistakes again. We also hear what they do to help other entrepreneurs and investors build their own residential assisted living facility. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

Best Ever Tweet:

“When you add up everything they get, it’s actually a really good deal” – Emmanuel Guarino

Emmanuel Guarino Real Estate Background:

  • Realtor for residential assisted living in Arizona
  • He trains entrepreneurs and investors at the Residential Assisted Living Academy in Phoenix, AZ
  • Based in Phoenix, AZ
  • Say hi to him at
  • Best Ever Book: How To Win Friends And Influence People

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Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast, where we only talk about the best advice ever, we don’t get into any of that fluffy stuff. With us today, Emmanuel Guarino. How are you doing, Emmanuel?

Emmanuel Guarino: Hey, I’m doing great. Thanks for having me, Joe.

Joe Fairless: Well, I’m glad to  hear that, and it’s my pleasure. A little bit about Emmanuel – he is a realtor for residential assisted living in Arizona. He trains entrepreneurs and investors at Residential Assisted Living Academy in Phoenix, Arizona. With that being said, do you wanna give the Best Ever listeners a little bit more about your background and  your current focus?

Emmanuel Guarino: Sure, that’d be great. Well the Residential Assisted Living Academy – what that is is we teach investors in how to invest in residential assisted living homes; how to start them, how to create them and how to run those businesses.

We got involved in that – my father and I – about 7-8 years ago. He had heard a  gentleman about 15 years before that who said “You’ve gotta get into assisted living, in that space.” We’ve all heard, the baby boomers, and this and that. And this guy was in front of the room and he was saying “You’ve gotta get involved.” And then my father went up to the guy and he said “Teach me, show me how to do it.” The guy said “Well, I don’t do it, I think you should do it.” So my dad is like “I don’t know where to go, I don’t know what to do…”, and around that same time my grandmother – her health was starting to decline. She lived in Upstate New York, we live in the middle of the desert in Arizona, and we wanted to go visit her, and we were noticing that hey, she probably shouldn’t be living on her own. Then we said “Well, we’ve gotta put her into an assisted living, or we need to move someone into the home, so that they can take care of her.”

The reason why not everyone wants to move someone into a larger facility is that the level of care isn’t very good. You might have one caregiver for ten or twenty people in that facility. And then the idea of bringing a stranger into the home to take care of our mother, our grandmother – that’s a little dicey situation on its own. So at that point we said “You know what – this is the time to get started in residential assisted living.” So we started our first residential assisted living, we made all the mistakes in the world, and on the second one we got better, and by the third one we had it down and we had perfected it… And people were coming up to us and they were saying “Hey, you’re doing this. We wanna learn how to do this. How do we do it?” And that’s how we started teaching on this topic. That’s a little bit about us.

Joe Fairless: Thank you for sharing that background. I would love to learn more about the mistakes on the first one… So let’s just talk about those.

Emmanuel Guarino: Sure. One of the big mistakes – and I’m at an event right now and people are coming up to me saying “Well, don’t you need this, and don’t you need that?” and one of the things that people always think is “Well, don’t you need a van for all the residents in the home? Don’t they wanna go to the movies, and restaurants, and the opera, and this and that?” And when we started, we actually bought  a $50,000 van for the residents, so they could go out and do those types of things… But once you’re in the industry, you realize that’s really not a daily thing that’s going on. They’re in the home, they’re there, they’re relaxing… The idea of them going to the movies, and this and that – that’s a whole lot for them at this point. So that was one of the early mistakes we made – buying a $50,000 van. We drove it from the car dealership to the house, and then from the house back to the car dealership. So that’s kind of a funny one from that standpoint.

Joe Fairless: Okay. So that’s one mistake. You said you’ve made a bunch of them, so what are some other ones?

Emmanuel Guarino: Well, we’re not so bad, right? …but one of the other mistakes I would say is maybe not doing it in the right area. This is a business where you wanna make sure that you’re doing it in the right area. So we have three homes, they’re in three very different locations; we have a scale that we use – level one through five. Five is high-end, one is low-end. And we have a level three, and a level four, and a level five.

Our level four and our level five – those are our favorite homes. Then the level three home – it’s okay… But it’s kind of like being a realtor – when you sell a $200,000 house, you make your 3% or 6% commission; when you sell a two million dollar house, you make your 3% or 6%, but it’s not a worlds apart difference of what you’re really having to do in regards to work… So that was one of the mistakes – instead of maximizing our work, our efforts, we were saying “Well, let’s start small and then let’s move bigger.” That’s one of the key mistakes when people are wanting to get into anything – they start too  small, when really they need to be thinking bigger.

Joe Fairless: Sure. So the levels correspond to the value of the property that’s being purchased?

Emmanuel Guarino: Quality of the home, quality of the area… Yes, exactly.

Joe Fairless: Okay. So what were the purchase prices of the first, second and third house that you all have?

Emmanuel Guarino: The first home was around 550k all-in, and that was an existing business; so the real estate was 500k, the business was 50k. The second one was a single-family home that we actually converted. It was a five-bedroom, four-bathroom home, and it had a giant, great room in the middle of this home.

I remember my father taking me to this home when he said “I find the perfect home, man. You’re gonna love this.” And we’re walking through this home and it’s got this 30 by 30 room in the middle of the house, and I’m like “This is weird.” It was just like “Oh, my goodness…” And my father told me that the realtor told him that they used to throw ’70s style parties in that room. I don’t know what that means; that was before my time, but… They were getting crazy.

Joe Fairless: People were getting down, and really high, I think…

Emmanuel Guarino: [laughs] So nobody wanted that house; I wonder why. And we were able to pick that one up — I believe that one was about 650k; we put about 150k in renovations into that home, turned that from a five-bedroom, four-bathroom home into a nine-bedroom, six-bathroom home where it is today.

Then our nicest home, in Scottsdale – that one we actually bought for around 800k; we’ve put about 200k into that one, so that one was about a million all-in.

Joe Fairless: And what did you do to it with that 200k

Emmanuel Guarino: It had a four-car garage that we actually converted into about five new bedrooms. That one was almost like more of a custom-type project, because there was probably about 2,500 square feet to that property, and we added on about 3,000-4,000 square footage to that home for that Scottsdale property. So that one was almost like a custom type project that we did there.

Joe Fairless: And how many bedrooms does the third one have now?

Emmanuel Guarino: That one is – you’re gonna love this – a 10/10. Ten bedrooms, ten bathrooms. In fact, that one actually has an extra bedroom that’s attached to the side of the house, where it has an entrance through the backyard, where if one of the residents’ family members wants to stay, instead of staying at the Hilton or Sheraton when they’re visiting mom or dad, they can actually stay at the home, for a small fee. So that’s a really cool thing we have about that home. So I guess it’s an 11-bathroom, 10-bathroom home that we converted that one into.

Joe Fairless: What is the fee for them to stay there for a night?

Emmanuel Guarino: Yeah, that’s a great question. Right now across the U.S. the average to live in an assisted living home in a private room, a facility or a residential facility, is $4,000 to stay in a home. So that’s covering food, that’s covering care, that’s covering everything for them. It sounds like a lot, but really when you add it up, it’s actually a good deal for the most, when you really think about it.

For our homes – our level three home, our middle of the road home is about $3,500/month per resident. Our little bit nicer ones are about $4,000 and $5,000 per resident, and then our nicest home is about $5,000 to $6,000 per resident to live in the home.

Joe Fairless: And then how much to rent out that 11th bedroom for the night?

Emmanuel Guarino: That one it’ll be $50 or $100 for them to come over there and stay if they wanna visit mom or dad… But really that’s one of the cool amenities, and that’s one of the reasons why people pay more to be in that home. We really didn’t even touch on the numbers too much.

Just as kind of an example for the listeners there, let’s just say our level four home, the one right in the middle – that one has ten residents who live there, and they each pay around $4,000/month to live in that home. So that home brings in around $40,000 of gross income each month… But there’s expenses; there’s caregivers who are taking care of the residents, there’s electricity, food, things like that. So the expenses on a home like that might be 20k-25k at the end of the day. So that one home, after all that is said and done, could be netting 10k, 15k, 20k a month, with that one single-family home.

Joe Fairless: And you said there are ten residents who live in the second one?

Emmanuel Guarino: Yes. Ten residents in all three of ours, actually.

Joe Fairless: Okay. And I think you said the second one is a nine-bedroom, right?

Emmanuel Guarino: Yeah. That one has one room that a couple of the residents share.

Joe Fairless: Okay. Is that common?

Emmanuel Guarino: You know, it’s not as common as you would think. Sometimes we think “Well, isn’t that like college? Don’t they wanna share a room with a dorm mate, and things like that?” And really, when someone’s moving into an assisted living, they’re going to want their own private bedroom. And the better way to think about it is it’s kind of like a hotel. I’m in a hotel right now, I’m at an event, and if they gave me an option, they said “Mr. Guarino, you can have a private room for $100/night in our hotel, or you can have a shared room with a total stranger for $75/night. Which would you prefer?” As long as I have the money, I would probably say I want the private room, 95% of the time. That’s the same way it is with an assisted living.

The children who are moving their mom and dad in, they would like for mom to have a private bedroom, private bathroom if possible; so those are all added amenities, and again, one of the reasons why someone might pay more to live in one of these homes.

Joe Fairless: You mentioned the expenses… What’s an expense that can sneak up on people if they’re not careful?

Emmanuel Guarino: That’s a great one. Really the big one is gonna be our caregivers. That’s a hard cost that’s gonna be there. Sometimes people say “Well, I wanna pay my caregivers $30/hour, because they’re working hard, and I want this and that”, and that’s great, but the business is gonna start to crumble if you’re not keeping all those things in check. So the staff is gonna be one of the biggest expenses; actually, the biggest expense that you have.

Then the other one might be your food cost… Because everyone needs to eat in that home, making sure that you’re keeping your food cost down. So  your manager, Gene and I, we’re not personally in the homes, taking care of the residents, taking care of the staff. We’re overseeing our manager. So our manager is making sure that we’re getting the best deals at the grocery store, buying in bulk, all of those things, to make sure to keep those costs down.

Joe Fairless: What is the hourly rate range for the caregiver?

Emmanuel Guarino: Usually it’s minimum wage plus a couple of dollars. If they’re there for a very long time, many years, and things like that, obviously we’ll give them incremental raises as time goes on… But usually that’s what you see as the industry standard – minimum wage plus a couple of dollars.

Joe Fairless: What’s the process for estimating how much food should cost?

Emmanuel Guarino: That’s a great question. Usually, what we see is about $5 to $8 per day, per person. Now, that sounds like crazy; like “What are you feeding them, stone soup over there?” But $5 per person per day… You and I – it’s lunchtime coming up here in a second – could go to Outback Steakhouse and spend three times the amount on one meal, for one of us. But with this home, we’ve gotta remember – they’re not eating out; that’s your most expensive way of eating. They’re eating at the home, and it’s not pre-made food; we’re making food from scratch.

The other thing is we’re buying in bulk, and we’re preparing food in bulk, so that brings down the prices as well. And then the other thing is – at this stage of their lives they’re just eating less. They’re not moving around as much as you or I would be, they’re not in the gym running five miles a day or anything like that, so they’re eating less.

So we might have unlimited Jumbo Shrimp or anything like that, but they might be eating one or two, and you and I might be eating six or seven or eight, something like that. So usually that’s what we see – about $5-$8 per person, per day.

Joe Fairless: And you mentioned that you and your dad aren’t doing the actual running around and getting groceries, and stuff… I think you said your manager is. Is the manager the same person as the caregiver?

Emmanuel Guarino: Yes, that can be the same person as the manager. In our homes we have caregivers who are taking care of the residence, and then our manager is above them. In some homes maybe one of the lead caregivers will be the manager for your home. In ours, we have a specified manager, and her job is just to oversee all three of the homes. That’s her full-time job. And if she needs to jump in and take a shift, she’s ready to go; she’s trained to do that. But her job is really to oversee the staff, oversee the residents, make sure that the homes are running great, and then our job is just to make sure that she’s doing her job from that standpoint. So working on the business, not in the business is the way that we teach on how to run these homes.

Joe Fairless: How much are they compensated?

Emmanuel Guarino: A manager can be compensated differently, depending on – like we were saying – what they’re doing. If they’re a caregiver, let’s say, and let’s say they’re just taking on a little bit of extra duties being the manager, we might give them $500 or $1,000 additionally to do that job… Because the manager’s position is more of an entrepreneurial healthcare position. They need to be there when they need to be there; but if there’s nothing going on, they don’t need to be there.

So with a caregiver who’d maybe take on that position, it might be $500 or $1,000 a month. If we have someone who let’s say gets licensed through the state to be a manager of one of these homes, and let’s say they just wanna hang their license on the wall, that also might be $500 or $1,000 a month. But if it’s someone like our manager, it might be $1,500 per home, because she’s doing a little bit more, and we’re putting her in charge of everything.

We have a saying that we tell her – “The less we hear from you, the more you get paid.” Because if she’s calling us every two seconds, we’re having to do the work. So “The less you call us, the more that you get paid” is what we usually say.

Joe Fairless: Anything else as it relates to this business that we haven’t discussed, that you think we should?

Emmanuel Guarino: Well, there’s tons of stuff to be going over from that standpoint, but one of the big things when someone’s considering doing this – what’s nice about this industry is doing good and doing well. You get to help a lot of people, you get to make a lot of money. We talked about the money a little bit here… But for any of the listeners who have ever put a loved one in one of these homes, you understand the feeling of “I wish I didn’t have to do this. I wish I knew certainly that they were getting better care than they were”, and what’s nice about this is when you own one of these homes, you get that feeling of doing good and doing well. You get to help a lot of people and make a lot of money, and that’s what we’re all about at the Residential Assisted Living Academy – teaching people exactly how to do that.

Joe Fairless: What’s your best real estate investing advice ever?

Emmanuel Guarino: Oh, my goodness… The best real estate investing advice. I would have to say “Buy low, sell high”, from that standpoint. [laughs]

Joe Fairless: Yes, that’s tried and true, that’s for sure. We’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?

Emmanuel Guarino: Let’s do it.

Joe Fairless: Alright. First, a quick word from our Best Ever partners.

Break: [00:18:13].02] to [00:18:58].16]

Joe Fairless: What’s the best ever book you’ve recently read?

Emmanuel Guarino: How to Win Friends and Influence People. And then in addition, Outwitting the Devil, by Napoleon Hill. Those two right now.

Joe Fairless: What’s the worst deal you’ve done?

Emmanuel Guarino: Worst deal I’ve ever done? How much time do you have? No, I’m joking. The worst deal I’ve ever done – I took on a listing that I just never should have taken on, and it was just the ultimate time-waster. I was about 3-4 months of my life that I’ll never see back… But the lessons I’ve learned from it were very valuable. So even the worst deal can still bring good things, I guess.

Joe Fairless: So if you were presented a similar opportunity, what questions would you ask where you would approach it differently in the future.

Emmanuel Guarino: I guess what I would have done is — I took on the listing and it was a little bit too long, and I see things throughout; so if I tell them “Hey, I’m gonna work hard for four months”, I’m gonna work hard for four months. And at that point what I should have done is said “You know what – let’s try this for 30 days, and then let’s come back, let’s discuss, let’s see if we wanna move forward.”

That’s a little thing that I do with a lot of my listings now… A lot of agents want to list the home for a year, or two years, or six months… I say “Let’s do this thing for 30 days, and if you’re not proud of my performance, then all that you’re out right now is 30 days. So what’s the worst that can happen? Let’s do this.”

I’ve found that to be the best, because then I’m earning that trust with them, I’m showing them what I can do, and so that’s really that lesson that I learned from that listing, for sure.

Joe Fairless: Best ever way you like to give back to the community?

Emmanuel Guarino: I have a big part of my heart for the special needs community… I have a good friend I love hanging out with and being friends with, Jordan; so whenever I get a chance, I love hanging out with him.

Joe Fairless: How can the best ever listeners learn more about what you’ve got going on?

Emmanuel Guarino: On that website we have videos, we’ve got a free book for you, and then we also have the number for our discovery call, to help you find out if this is the right opportunity for you… Because it’s not for everyone. But if it is, that’s a chance to find out if it is the right opportunity for you.

Joe Fairless: Well, thank you for talking through the three properties that you’ve got, and the details about each of those properties, how you think about them in terms of levels based on the area, and the value of the properties, and what you did to each of the properties, as well as some of the biggest expenses with this business model… So thanks for being on the show. I hope you have a best ever day, and we’ll talk to you again soon.

Emmanuel Guarino: Thanks, Joe.

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