best approach, develop congraget care facility with no money and ok credit,or sell the idea and property

I have a 5 unit rental building with 40% equity, pays for itself, have the land to build small 30 to 40 bed congraget care facility, have city behind me,( probably due to a culvert/water issue city caused with one encroachment) Residential neighborhood (R12), am told no zoning change is needed, property is walking distance to town center, along river, walking trails, etc. beautiful piece of property. My problem is that I am new to this and my cash is very low and my credit is only ok. I would need assistance as this is a bigger project than I could normally handle, cash seems to be the biggest issue. I would love to build and be known in the community for putting something very nice together, and make some money as we all do. Or would it be better if I present it to a buyer and sell. I do need some money to purchase another property in the near future and do need the funds to do so. Thank you for your time and thoughts.
In General Area - Asked by steve h. - Dec 4, 2009
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Answer(s)

Minnette L.
Broker/Agent
Brooklyn, NY

First, I would speak to a good accountant and assess your specific situation and how the various scenarios could impact you. Then, I would find the best attorney in the project area, someone who has put together development deals and transactions and also done construction contracts and joint venture partnerships, and assess the potential deal, including both zoning allowances and requirements, laws, state licensing requirements for congregate care facilities, implications of City water issues, public funding options- then decide to sell all, or do a joint venture with a reputable builder or developer. Don't do it alone, it's too big a stretch.

Dec 4, 2009
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Nadina C.
Broker/Agent
Phoenix, AZ

If by "congregate care" you mean assisted living, this is a very specialized area and market, over and above getting city approvals and building permits. The architecture must meet specific standards for such a project (handicap accessibility, fire/safety, width of halls to accomodate gurneys, if necessary, emergency notification system, etc.) and most states have licensing regulations and annual fees for operating such a project. Then, marketing to tenants is also very specialized, as well as managing/operating. It's more than property management, it's 24/7 availability of assistance, congregate dining (requiring a commercial kitchen, qualified staff, nutritional guidelines), personal service staff (caregivers), etc. It's a hybrid between hospitality (hotel/motel), multifamily, and medical services.
That being said, I suggest you identify all the similar facilities in your metropolitan area and find out who is the acquisition person for the company. Contact them (or get a licensed broker to do the research and contact them for you) to talk about buying the property outright or participating in a joint venture where you bring the property to the table but they bring the expertise and ability to obtain the financing or investors.

Dec 11, 2009
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