PassivePockets: The Passive Real Estate Investing Show

Residential Assisted Living: Cash Flow, Risks, and 2026 Opportunity

Dec 23, 2025

Dr. Alex Schloel, a physician and residential assisted living investor, and Charlie Cameron, an operator and investor in the field, dive into the booming residential assisted living market. They discuss the aging population's impact on demand, the benefits of smaller care homes, and various investment models from passive options to full ownership. Key points include essential home specs, the importance of operator vetting, and the revenue potential of mixed payer types. Listen in for insights on navigating risks and maximizing cash flow in this niche market.

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ANECDOTE

Motivating Patient Story

Alex Schloel recounts a residency visit where an elderly patient was neglected in a large facility and needed cleaning before staff responded.
That memory motivated him to pursue residential assisted living as a more humane small-home model.

INSIGHT

Demographic Demand Is Structural

The U.S. faces a massive silver tsunami with 10,000 Americans turning 80 each day and a large bed shortage.
This demographic gap creates sustained demand for assisted living for decades.

ADVICE

Use Lease-To-Operator For Passive Cash Flow

Consider lease-to-operator as a passive owner model where you retrofit homes and lease them on commercial 3–5 year leases.
This typically yields 2–3x neighborhood rent while remaining hands-off for the real estate owner.

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Chris Lopez welcomes Dr. Alex Schloe and Charlie Cameron to demystify residential assisted living. Alex lays out the macro drivers behind the silver tsunami and why small, boutique homes can deliver better care and stronger cash flow. Charlie breaks down the models from LP to lease-to-operator to full operations and development, including typical home specs, licensing basics, private pay vs Medicaid, and realistic risk controls. The trio covers returns, staffing, marketing, and the due diligence questions LPs should ask before backing an operator or sponsor.

Key Takeaways

What residential assisted living is and how it differs from big facilities
Demographics and demand: boomers aging into care, large bed shortage, 10k Americans turning 80 daily
Investment models: LP, lease-to-operator, own-and-operate, and phased development of 10 to 16 bed homes
Typical home criteria: single story preferred, 300 sq ft per resident, abundant beds and baths, sprinklers, roll-in showers
Returns and timelines: value-add and development deals targeting mid 20s IRR ranges with ramp-up occupancy considerations
Risk management: operator vetting, staffing and marketing plans, licensing and insurance, location near labor and hospitals, contingency reserves
LP due diligence: private pay focus, sponsor pipeline for operators, comps via secret shopping and NIC data, personal guarantees and SBA scrutiny

Disclaimer

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