Navigating the Lease Operator Model in Residential Assisted Living

The lease operator model in residential assisted living involves various investment options including owning real estate, leasing it to an operator, or operating facilities as a lessee. The preferred approach is to own the real estate and lease it to qualified operators, particularly for active-duty individuals with full-time commitments. The model entails identifying suitable homes for assisted living, conducting thorough interviews to find reliable operators, and establishing lease agreements typically spanning three to five years with modest annual increases. The arrangement is structured similarly to a triple net lease where the owners cover mortgage, taxes, and insurance, while operators manage maintenance, repairs, and day-to-day care responsibilities. The success of this model hinges on securing proficient operators; prior negative experiences highlight the risks associated with inadequate vetting. While sober living homes may attract interest due to lower initial investments and minimal renovation needs, they pose operational challenges leading to instability. In contrast, focusing on residential assisted living provides a more secure and essential service for elderly care, emphasizing the critical need for dependable operators in this sector.