April 17, 2022
Joe Fairless

JF2784: 5 Things You Need to Know Before Investing in Senior Housing ft. Adam Benton


Adam Benton owns Stellar Senior Living, a family business in which he has partnered with his father and brother-in-law for the last 10 years. Today, Adam is GP of 4,000 units including independent, assisted living, memory care, and skilled nursing. In this episode, he laid out the five most important concepts investors need to understand before adding this alternative investment class to their portfolios: 

 

1. The work that goes into self-managing. 

Adam describes senior housing as a blend between healthcare and real estate. Self-managing requires making up policies, procedures, and processes on the fly, Adam says, which he and his partners did with their first properties. Looking back, he thinks it would have made more sense for them to wait to dive into self-managing until they had acquired more knowledge and experience. 

 

2. The barriers to entry in the senior housing space.

In addition to providing living space, owning and operating senior housing requires delivering quality nursing care, food, activities, transportation, and having knowledge of all of these operational pieces. “This is not an easy population to keep happy,” Adam adds. “... and because of that, it can be challenging. But also incredibly rewarding.”

 

3. The top three ways to increase NOI in the industry.

  • Occupancy. Adam says if you come in and start offering better care, your occupancy will increase. It’s an indicator that’s based on your reputation.
  • Food. Spending more money in order to provide better food options goes a long way in attracting new occupants.
  • Labor. “Being able to come in and tightly manage labor and be able to get people in the places where they need to be, but not overspend, is a real trick,” Adam says. “And that’s where you can add a lot of value.”

 

4. The metrics used to determine senior housing property value.

While door counts are used when it comes to senior housing, Adam says there are several other important variables that determine the value of a property. He and his partners conduct a full pro forma analysis, and they also check replacement costs and the cost to build. They also research their top three to five competitors in the general market and their occupancy rates.

 

5. The five criteria Adam uses when purchasing senior housing. 
  • The property is more than 100 units.
  • It is in an area with a population size of 100,000 or more. 
  • The property is private-pay rather than government-funded. 
  • It is an independent assisted living/memory care facility.
  • He is able to catch a direct flight to the property multiple times a day in case an emergency same-day flight is needed. 

 

Adam Benton | Real Estate Background

    • Owner of Stellar Senior Living, which develops, acquires, and operates senior housing properties in nine states.
    • Portfolio:
      • GP of 4,000 units including independent, assisted living, memory care, and skilled nursing
      • LP of hotels and apartments
    • Based in: Salt Lake City, Utah
    • Say hi to him at:

Greatest lesson: During due diligence, sometimes the smallest question highlights the biggest issues.

 

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TRANSCRIPT

Ash Patel: Hello Best Ever listeners. Welcome to The Best Real Estate Investing Advice Ever Show. I'm Ash Patel and I'm with today's guest, Adam Benton. Adam is joining us from Salt Lake City, Utah. He is the owner of Stellar Senior Living which develops, acquires, and operates senior housing properties in nine states. Adam's portfolio consists of being a GP on 4000 units, including independent assisted living, memory care, and skilled nursing. He is also an LP on hotels and apartments. Adam, thank you so much for joining us and how are you today?

Adam Benton: Doing great. Thanks for having me. I'm grateful to be here and I'm happy to talk about specifically senior housing. It's kind of an alternative asset class, and happy to shed some light on that today.

Ash Patel: How did you get into that?

Adam Benton: It's a good question. It's a family business. I have two partners, it's my brother-in-law and my dad. Really, my dad had a lot of experience in this space. So I went to business school, and after that we had talked about potentially starting a business together. We built this from the ground up and we opened our first properties in 2012, so 10 years ago.

Ash Patel: You guys were brainstorming and trying to figure out what kind of business to start, and this is what you landed on.

Adam Benton: Knowing what I know now, there's no way I would have done it this way, but it's just one of those things... For example, for the first properties that we bought, we decided to self-manage. Looking back on that, it's just like totally insane now just, because you're having to make up policies and procedures and processes on the fly. But we did it, and we've come a long way since then.

Ash Patel: Adam, what were the factors that led you to believe this was the best course of action?

Adam Benton: You mean to get into senior housing?

Ash Patel: Yeah.

Adam Benton: I think everybody knows this is easy. But senior housing has a lot of good demographic tailwinds, and there's a lot of demand coming into the space. So when we looked at it, we figured that you actually need about 10 years to put the platform together. Just like in any management business where you want to be developing, owning properties, and managing them, you have to get to a certain scale, so we laid out a plan early on to do that. If you look at senior housing today, there are really three phenomenal growth factors that haven't even totally started yet. One is baby boomers are aging. Most people think of baby boomers, that's 1945, the end of World War II, people come home, they started having kids.

But in reality, if you look at birth rates in the US, birth rates were really picking up in the late 30s, like 36, 37, and our average age is 86 years old. So if you take that kind of 1937, add 86 years, now you're talking like 2024, 2023, right in that timeframe. That's a big driver of growth in our business, is people in their mid-80s. The second factor is just that people are generally living longer. Every decade that goes by, people that were born in that decade, they're going to live way longer than the people in the previous decade. Even 10, 15 years ago, to meet somebody who's over 100 years old was a complete surprise. Today, it's pretty common that at every one of our 30 locations, there's at least a handful of people that are over a hundred; over a hundred.

And then the last one is just what we call the utilization rate, which is the percentage of the population above a certain age that uses assisted living. In the early 90s, that was 7%-8% of people about 75. Today, that's 13%-14% and that's going to continue to grow. So those are three factors that I just laid out, that are pretty easy for a lot of people to come up with and realize there are a lot of tailwinds here, and we're right at the cusp of about a 20-year cycle here in senior housing.

We looked at that early on and said, "We want to be in this space. We think it's going to take a while to build a platform that's capable of growth." That's why we got into it. I don't know if that answers your question, but that was our thought process.

Ash Patel: It absolutely answers my question, and it gives me a segue to my next question. All of those tailwinds that you mentioned, couple that with the higher reimbursement rates, the higher returns for senior management - why isn't everybody in the space? What are the barriers to entry and what are the challenges?

Adam Benton: One great thing about this business, the reason why we're talking on a real estate podcast is it's a nice blend of real estate and operations. I think people are generally in one of those buckets, not in both. Just as an example, if you think about a standard spectrum of real estate here, you have your home on one end, you have a hospital on another, and there are a few spots where people stop along the way. Including 55 plus active living, independent living, assisted living, memory care, skilled nursing, long-term care, and hospital. That's your continuum. And what we find is that if you look at an assisted living location versus private pay, you're going to have an apartment complex, a 150-unit apartment complex. But then you're going to just inject that with steroids, you're going to add in food, so now you're making three meals a day, and then you layer on activities, and then you can layer on transportation on top of that... And if you're doing some sort of care, you're going to have a license, you're going to be offering nursing care. Because of that, the core foundation of this business is real estate, but on top of that, you do have to understand all those operational pieces; I think that's a huge barrier to entry for a lot of people. It comes with a fair amount of challenges. This is not an easy population to keep happy; a lot of opinions... Because of that, it can be challenging, also incredibly rewarding. But that's probably the basics of it.

Ash Patel: I love the intangible - not an easy crowd to appease.

Adam Benton: Yes. Right.

Ash Patel: Yeah. You mentioned it was a mistake to self-manage, why?

Adam Benton: Well, looking at it now, I know too much. But would I still recommend it for anybody? Yes. Maybe I'll tell you the story of how we took over our first four properties. I was just finishing business school... This might be interesting to listeners.

Ash Patel: I'd love to hear it.

Adam Benton: Just finishing business school, and we decided, "Let's start a business together." We didn't know if that was possible if we could find funding for it, so I just started cold-calling property and property owners in different states that we wanted to be in. That took me quite a while, and we landed on a guy who was willing to sell four of his 30 assets. If you can imagine, the four that he's willing to sell aren't his nicest properties. They're going to be a mix of just some really challenging, older assets.

We put those under contract, but we didn't have the cash to purchase them; it was about a $40 million purchase. So we ended up working with a public real estate investment trust, where they actually bought the assets and then and turn them back around and leased them back to us. It's just your classic lease agreement with a public real estate investment trust. Then to give us some space, we negotiated to have our lease payment paid at the end of the month. The lease payment was about a quarter-million dollars a month at the time.

So you combine that, and now all of a sudden, we have a free business. We didn't put any money down and we've taken over these four properties, we've got about $12 million to $13 million in revenue, enough money to pay management expenses for ourselves. We're off to the races, and then we've given ourselves some room by not having to basically paying arrears our first month's lease. That gave us a float of $250,000. But then as you're going, we just realize like, "Okay, we caught the bus, but now we actually have to operate these."

That means that we have instantly 250 employees and we have all sorts of stuff related to paying employees, HR regulations, things related to getting food in, cooking food, all the policies and procedures that go with it. People would call in and say, "Hey, do you have a form for that?" "Yeah, what does it look like? Give me like 30 minutes," turn around, go make it, turn it back around.

Looking in hindsight, we would have probably just hired out the management to another company to do it, take really good notes, and then come back and done it. That's why I said it was probably a mistake, looking back on it. It's like, "Yeah, you just spent a year watching somebody else do it, and then maybe step into the role." But we did it right out of the gate.

Ash Patel: And way to start off small.

Adam Benton: Right.

Ash Patel: I've heard go bigger, faster, but damn...

Adam Benton: Employment numbers in senior housing are eye-popping and it's just that's the nature of it. We have 2,300 employees today, and that's a lot of hourly workers, nurses, chefs, maintenance directors, and professionals. It's a huge group of people that you have to keep track of and help perform to the best of their abilities. But it sounds harder than it is. I promise you, if I handed you the same opportunity, you would have done the same thing; it would have been fine.

Ash Patel: Adam, I feel like we could do a case study on just that one deal.

Adam Benton: Yeah.

Ash Patel: So what was that, senior living? Was that assisted living? What was that?

Adam Benton: Yeah. That was a really good question. When people hear senior housing, they automatically think of skilled nursing, they think of dark, dingy, smells like urine when you come into it, paid by the government, Medicare, and Medicaid. That's not necessarily the case. There's actually what you had mentioned, assisted living, which is privately paid. Somebody's leaving their house, they want to move into a place where they can get three meals a day, have socialization activities, and then potentially have additional care when needed as they age in place.

If you walked into the newest ones that are getting built today, they feel like anyone would want to live there, it feels like a cruise ship, totally amenitized, with different dining locations. They're pretty amazing. So we started out in that space, the assisted living, privately paid, where people are basically moving into an apartment complex that you run, but you're offering all of those other services. That's a good distinction.

Ash Patel: In terms of the different margins on the different levels of care, what's the highest margins?

Adam Benton: It's a great question. Maybe an easy way to think about this is what is an apartment margin? 60% to 70% margin, and maybe a 30% expense ratio? Is that fair?

Ash Patel: I'm a commercial investor, I don't do multifamily. I do retail, industrial, yeah.

Adam Benton: Okay, great. Alright. I'm asking, but maybe you say it's really high margins, and if you're looking at EBITDAR, so you add in rent, you actually put it for rent on EBITDAR. When you're adding in more care, as your residents get more frail, that margin goes down, but your revenue goes up, and you end up with a similar amount of money coming down to the bottom. An example of that would be the next step from apartments would be independent living for the senior space; that means that you're doing everything but the care portion and you're looking for margins between 40% and 50% margins. When you get into assisted living, think like 30%-40%. Then when you get into memory care, like Alzheimer's care for dementia residents, that's more like 20%-30%. Those are broad numbers, but at the same time your revenue is going up. But then as you move down that spectrum that I just laid out, your cap rate also increases because there's an additional risk. It all kind of blends together, but that's the short answer.

Ash Patel: Thank you. Adam, when you started out, real estate was not part of your business plan, right?

Adam Benton: Right. We started out more on the operation side of it.

Ash Patel: Yeah. When did you get that epiphany that real estate's a huge play here?

Adam Benton: Pretty early on, obviously...

Ash Patel: When you were making giant mortgage payments, or your lease payments? [laughs]

Adam Benton: I know. And leases are interesting because these are 35-year leases. I'll be in my late 60s by the time these retire. But you do get some portion, but you don't own all aspects of the real estate spectrum. So when you look at senior housing, there's good cash flow, you can make money on the cash flow side, and it's probably 50-50 between the cash flow and then appreciation based on just operating things a little bit better.

So we started early on -- like, the fifth property that we bought, we bought it with the cash flow from the first four. We found a property where we assumed the HUD loan, and then put in the money. We had to borrow some money from the seller because we didn't have enough cash and then we were just off to the races. Early on, we knew that we wanted to be participating in the real estate side of this business. But you need capital to do that, where you syndicate and then cut deals to get basically a promoter-carried interest on that.

Ash Patel: How long ago did you acquire that piece of real estate?

Adam Benton: Well, after those four leases, we then acquired our first asset 10 years ago. It was pretty soon thereafter, probably nine and a half years ago.

Ash Patel: Do you keep all of your real estate, or do you sell it with a leaseback?

Adam Benton: We try to keep it all after that. We have not leased anything since then. That was a great way to get the business started and create some cash flow. But since then, we've used the cash flow from the business to continually invest back in the business.

Ash Patel: Have you sold any of your facilities?

Adam Benton: Yeah. Do you want me to walk you through some stuff related to that?

Ash Patel: Well, here's where I'm going... If you sold the business, did you keep the real estate?

Adam Benton: Yeah. What's interesting about senior housing is oftentimes they go together. For a long time, people were splitting it up where it's like, "I'll sell the business, you pay me a lease payment, and I'll hold the real estate." What people found is, in general, that didn't work out for the operator. 10 years ago, you'd see a lot of those. Today, you don't really see many of them where the operator would be leasing back and you'd have a landlord situation. It's a good question.

Ash Patel: Makes perfect sense.

Adam Benton: So we sell everything.

Ash Patel: I've spoken to a number of people in this industry, and every one of them seems very passionate about what they're doing; you do as well. Do you think somebody that's wanting to transition from multifamily or retail to another asset class should get into this?

Adam Benton: Oh, it's a great question. If you're already investing in real estate and you're doing the standard food groups, this is considered an alternative asset class in real estate. It's along the same lines as self-storage and student housing, and maybe data centers, for example. It's actually the largest portion of the alternative asset class; it will definitely feel different. We own a 100-unit apartment complex in Spokane, and we hired Greystar to manage it. We don't even manage it, because it's not our business... And in my opinion, that is so much easier and so different compared to this that I would say, you'd want to talk to a lot of people before you just jumped in as we did. I really understand you want to be in this space, because there's a care component as well.

Ash Patel: So if they're in it for the money, don't self-manage.

Adam Benton: No. You won't last very long. So think about - in an apartment complex, you can move weight around on pricing, maybe do a refresh on CapEx, and start being competitive and do pretty well. But imagine if you're selecting a hospital to go to, you're more interested in the reputation of a hospital. Even if the building might be way older, but reputation has a huge deal.

So this is a blend between healthcare and real estate. So to come in and say, "Hey, if I just have nicer chandeliers and some better paint carpet, I'm going to really crush it," you're not thinking about it straight. There is a huge component related to actually having quality care that you're delivering, or service where people will decide.

That's actually one of the great opportunities though, if you are looking to come in and turn properties around, for example... Unlike apartments, where you might have just a few levers that you could pull that could increase the value, there are literally hundreds of items in revenue and expenses that you can work on, that will change the outcome of your income, which will ultimately have a cap rate applied to it, which can increase value. We like it for that, because of the amount of opportunities and options that you have for working on a property to make it more valuable.

Break: [00: 19:30] - [00:21:17]

Ash Patel: What's some of the low-hanging fruit for increasing NOI in your industry?

Adam Benton: Step one is occupancy. Just like most, occupancy is a big one. Occupancy is an indicator based on your reputation. If you come in and you start offering better care, your occupancy will start moving up. It's not as price-sensitive so if you come in and just drop rate thinking that your occupancy is going to go up, it's like buying a LASIK operations care center and just slashing prices by 50%, expecting people to start showing up.

Ash Patel: Half-price Mondays.

Adam Benton: Half price for your LASIK surgery, it's not going to go well. That's one. The second thing that you can do - for example, food is a huge one. If you just come in and say, "I'm actually willing to spend more on food, so that people have better food options", that goes a long way into attracting more people into your space. The other biggest expense is just labor. Being able to come in and tightly manage labor and properly get people in places where they need to be, but not overspend is a real trick. That's where you can add a lot of value. Occupancy, food, labor, those are big ones.

Ash Patel: Not much different than a cruise line. How do you evaluate what a cruise to go on? It's the quality of the food. Do you raise capital for your deals?

Adam Benton: We do; we'll do it deal by deal. This summer, we did a deal where we purchased a property from a large private equity fund. They were coming into the end of a seven-plus-year hold for this asset. We assumed a Freddie Mac loan, and then we raised about $7 million in friends and family money, just directly syndicated. We put in some of our own funds, we signed on the debt, and then we took that over. That's one way we do it. Sometimes we partner with larger private equity funds to purchase assets, sometimes we do it on our own balance sheet. But yeah, we'll do all of those.

Ash Patel: Adam, when you raise funds from private individuals, what's the typical rate of return and how is that setup? Is it the typical, you get a pref and then upon sale, you get additional funds?

Adam Benton: Yeah, that's exactly how we did it. I'll walk through the exact example. On this particular one, it was a light turnaround, so it's sitting at 80%-85% occupancy; there wasn't a ton of meat on the bone in terms of additional value appreciation, but the risk was pretty low. We targeted a 16% IRR total return for investors, and that's split probably 60/40, the 40% coming from just payments along the way, and coupons, and then you have price appreciation at the end. In a typical hold, you're trying to get to year five or six, you're going to get to that 2X return number that you're always trying to hit on your equity multiplier.

Then we had an 8% pref, with a 75/25 split. So after you get an 8% return on your money, then everything splits 75% to investors, 25% to us as the GP, but that's after return of capital. It's a pretty standard deal.

Ash Patel: When you evaluate buying one of these facilities, it's obviously not by the door. There are a lot of factors involved. Are there some high-level metrics that you use to get a ballpark price?

Adam Benton: Yeah. By the door still gets thrown around a lot. I really don't like that one, because to your point, there are so many things that will change the value of the property outside of the real estate itself, that it's not a great apples-to-apples comparison. When we look at a property, we'll do a full proforma analysis and back into the returns that we're looking to hit, and that's kind of our main hurdle there. We do have some gut-check numbers, like replacement costs or cost to build is a big one.

If we're looking at a deal right now where it's coming out, they want 500,000 a door; we know it costs between 250,000 to 300,000 a door to build these, so we're not going to buy that deal. That's something that we look at. Then the second one that we look at is just similar to apartments, but the markets are more - think about five-mile radius type stuff... Just like in a market where you wouldn't have too many supermarkets in the same neighborhood, you can't have too many senior housing properties, or anything that's threatening to be built. So we look heavily at just the competition, and occupancy rates in a general market, and you're really looking at your closest three to five competitors.

Ash Patel: Have you looked at doing this in rural areas? I know the trend's been you want to be closer to medical services, doctors, hospitals. But I've also seen where people now are setting up in more rural locations. Because if you grew up in a rural environment, you don't want to be in the city near the hospital. Is there a market there, do you think?

Adam Benton: Yeah. I think when people think of senior housing, you think the best location is going to be right next to a hospital. And really, think about taking the entire country, and just start doing five-mile bubbles, and you've got to fill all of those. We have a few locations in more rural, less densely populated areas; we have one in Idaho Falls, we have one in Coeur d'Alene. These are 60,000+ population sizes. You do run into a few challenges.

The challenge one in a tertiary market is labor is a challenge. If you're going to try to keep this thing completely occupied and running on a 24-hour cycle, it might be difficult for you to find enough labor to staff it properly. So that's one. Then the second problem I think with these smaller markets is that if it turns out that you have more beds than the market can support, there's not a lot you can do. Whereas if you're in the middle of Phoenix, there's a lot you can do to grab and compete on market share.

So when we look at senior housing, we actually have five criteria that we look for. We like them to be larger than 100 units, we like them to be in population sizes larger than 100,000 people, we predominantly want private pay, so we try to actually avoid government payment types; then we want to be independent assisted living and memory care. And then the last thing for us which is specific is we want to be able to have a direct flight from Salt Lake City multiple times a day. So we want to be able to fly in and out and the same day in case of emergency.

Those are our five litmus tests, but the two that are relevant to everybody is you want to come up with maybe a size that you'd want to operate at, and then a population. There are plenty of operators that have created a great bread and butter business, operating like what you said in those tertiary markets, but it's been more of a challenge from what we've seen.

Ash Patel: Adam, on the private pay side, for apartment operators - very easy to evict somebody, not a lot of emotion put into it, often they've overstayed their welcome... How do you evict somebody in senior living?

Adam Benton: Oh, okay... I'll tell you two stories on that. For one, senior living, this will come as a surprise, but it's actually a month-to-month lease. We don't have anything longer than a month. And that actually protects us, but it also protects the resident. Oftentimes, our average length of stay is two or two and a half years. So to consider signing even a year lease just seems really daunting for a lot of our residents. So - month-to-month lease.

The second is often there's licensure on top of what we're doing. Now, if you imagine, people are aging in place, and at a certain point, they're going to be beyond the level of care that we can provide, so there is a safety component here.

So part of the lease is it's month-to-month. So every month is, "Hey, we're not going to renew this." And then the second issue is that if we can't safely take care of somebody, then we have the ability to move them to a higher level of care. So the eviction process is actually pretty well-determined; there are some state laws around that.

Now, we had a property in Seattle where we had a resident that turned 104, then ran out of funds, and that's a different scenario. They're healthy, they're doing fine, but they just can't pay, but no one wants to evict somebody who's 104. She was a fantastic lady. So we actually went out, signed up for a Medicaid license just to then continue to have her live there, and then charge Medicaid for the services. That was a solution that we came up with. Medicaid comes with some additional hooks and requirements, and then it doesn't pay as much, but it is a safety net for the elderly when they run out of funds.

Those are the two examples that I give; higher level of care is the most common reason why people move out or need to be evicted. Rarely do we get to the point that we're evicting somebody. Oftentimes at that point, we're probably dealing with the kids, like the family members, and they just want the best place for their loved one, and the last thing they want to do is keep them in a place that can't take care of them anymore.

Ash Patel: I love that story, and what a great solution you put in place. My buddies and I often joke that if we were in a nursing home, one, we'd go together and we'd probably get kicked out. Do you have any unruly guests that you have to discipline?

Adam Benton: Yeah, I think everyone knows there are a lot of stories within senior housing. A few things... It's about 75% women and 25% men. So you and me, Ash, we're not going to make it. Statistically, we're not going to live as long, and about 85% of our residents are single. They're a widower or they're not married. So you put that together and they're still pretty active; you end up with almost like a college scene vibe that people love. Can you imagine that there are all sorts of stories that go along with that, related to just having a lot of fun?

Ash Patel: Yeah, good. So it's encouraged, versus a disciplinarian approach?

Adam Benton: Yeah. They continue to live and not die.

Ash Patel: That's awesome.

Adam Benton: That's the real key portion of it.

Ash Patel: I love that. I want to ask you - when you raise capital, what's the education component for your investors? Because it's easy to say, "Okay, multifamily, here's our plan on renovations, our entry cap rate, rents are increased by this..." You've got to do a tremendous amount of education to your investors, right?

Adam Benton: Yeah. What we've found is that when somebody's investing in senior housing, they've probably already done a handful of deals in just different types of real estate, and they want to have some exposure to a different asset class within real estate. So I think when you actually look at an income statement, it looks very similar, your revenue and expenses and income, and then we just have to educate a little bit more on the types of strategies that we'll be implementing to turn a property around or increase profitability. It's not as difficult as you think, but it definitely does take an extra level of explaining. But there's definitely interest as well. There are people that know, like what we talked about earlier, that this is a great asset class to be in. It acts very differently in recessions than does other real estate asset classes. In fact, I think it performed the best in the last recession in 2008 and 2009, when it came to asset classes.

So looking at senior housing -- and in 2008 and 2009 it had a dip, and that had to do with the source of payment for residents moving into a property got chopped in half, like everybody else. The value of their home dropped, their pensions dropped, their savings, and so they can still rely on social security, but everything else was down. If you look at this time around after the pandemic, housing prices are up, the stock market is up, and so when people are looking to move into senior housing, that is actually not a barrier right now. It's an easy decision.

Ash Patel: And you're an LP investor in a hotel. What's the play there? You have a great thing going on, and you invested as an LP.

Adam Benton: Yeah. We have a couple of LP investments, thanks for bringing that up. This came along, and our main goal was we wanted to see how hotels operated, so we invested in one. And that's been a great deal. We watched what happened during the pandemic and then coming back out, and it really rebounded. We wanted to see their putt and we've learned a lot about it. That was our reasoning for doing that.

Ash Patel: I've seen business plans where they're converting hotels into memory care facilities, because there are so few entrances and exits, and it's easier to control. Have you seen that, and is that a viable option?

Adam Benton: Yeah. Great question. One of the tricky things about hotels and about senior housing, in general, is that it's typically purpose-built for a certain concept, like hospitality, or taking care of seniors. And there are some scenarios in which you can change its use. And what we've seen - I've been a part of this - we've seen hotels getting converted into not just memory care, but just to senior housing. If you think about senior housing, you don't need as much square footage in the units.

You won't compete as well as a purpose-built senior housing these days, but you see that a lot... Early on in senior housing, we saw a lot of apartment complexes getting converted into senior housing. We've actually done this once where we've now converted senior housing back into an apartment complex, because it wasn't working out. So you are seeing those conversions. These extended-stay hotels, you're starting to see people turn into multifamily, or look at senior housing. We've been involved in a handful of underwriting exercises related to changing the use of a hotel to something related to senior housing, and that's not uncommon at all. It's one of the next uses that people think of when they think of if a hotel is not working now.

Ash Patel: Adam, what is your best real estate investing advice ever?

Adam Benton: Oh... Well, I don't know if it's the best real estate investing advice, but I've found that during due diligence, sometimes the smallest questions lead to the biggest issues. We've dealt with that a handful of times; it might be an easement, or that somebody has a right on your property that you're not aware of, or property taxes is going to triple when you take it over... There's no question too small to ask during due diligence, because once you own the property, you own it; that's your problem. So that would be my biggest advice, don't be afraid to ask a lot of questions, and then read books on it, ask other people what those questions are, and just ask, ask, ask and ask. That will save you a lot of headaches and lower your risk in the long run.

Ash Patel: Adam, are you ready for the Best Ever lightning round?

Adam Benton: Sure.

Ash Patel: Let's do it. Adam, what's the Best Ever book you recently read?

Adam Benton: I read Red Notice by Bill Browder. Phenomenal. Happy to go into that, but it's basically a private equity fund in Russia. It's pretty relevant today and worth a read.

Ash Patel: Adam, what's the best way you like to give back?

Adam Benton: I have a son with Down syndrome, so I love working with the down syndrome community. I think right now, a hole to plug in that space is there are a lot of good programs for people with Down syndrome and other special needs up until about high school and early college. But it starts looking a little bit fuzzier after that in terms of jobs and types of opportunities. So basically, giving back to that community.

Ash Patel: Adam, how can the Best Ever listeners reach out to you?

Adam Benton: Yeah. You can always reach out to me on LinkedIn. Adam Benton on LinkedIn. You can find me there, with Stellar, Senior Living. Or you can go to stellarliving.com, that's our website. There's an investor portal, just fill in your name and a comment, and we'll set up a time to talk.

Ash Patel: Adam, I've got to thank you for all of the education that you've given us today. What an amazing story of being in business school and figuring out what kind of business you want to start and now having this amazing empire where you're helping a lot of people. Thank you for sharing your story, your journey, and giving us a tremendous amount of education today.

Adam Benton: Yeah, you bet, Ash. Thanks for your time.

Ash Patel: It's our pleasure. Best Ever listeners, thank you so much for joining us. If you enjoyed this episode, please leave us a five-star review, share the podcast with somebody you think can benefit from it. Also, follow, subscribe, and have a Best Ever day.

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