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Adult Foster Care Home

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Every state has different facility requirements for care, and some have different requirements for level of care, such as day use only, or assisted living.

I get that SFRs are expensive in California.

However, if there wasn't any money in these conversions and licensing, no one would be doing them. AND, the state would be crying for people TO DO them.

But just like any business, they all need a license, so to discount the value, by comparing to other properties of more limited utility, because a buyer might not have the license is wrong. We don't work that way with any other type of real estate.

There is a federal, state, and mostly global plan to reduce the number of old people in nursing homes. Check the World Health Organization reports, and other such reports.

Here is the PA Plan
Pennsylvania state plan for Alzheimer’s disease and related disorders (ADRD) dated February 2014. Retrieved from: http://act.alz.org/site/DocServer/PA_State_Plan__Feb_2014_.pdf?docID=29381

Here is the Florida Plan
State of Florida Department of Elder Affairs Purple Ribbon Task Force. 2013 Final Report And Recommendations. State Plan on Alzheimer’s Disease And Related Forms Of Dementia (ADRD). Retrieved from: http://act.alz.org/site/DocServer/FL_State_Plan__Aug_2013_.pdf/931185879?docID=26221

Note that the Florida plan makes a recommendation for greater use of Adult Day Care services to prevent premature facility placement.

Here is the Federal Law.
Public Law 111–375—Jan. 4, 2011National Alzheimer’s Project Act
https://www.gpo.gov/fdsys/pkg/PLAW-111publ375/pdf/PLAW-111publ375.pdf


If entrepreneurs in your area have not caught on to this, they will shortly, as the laws are in place in all states.



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Marion Rhodes said:
Nope. you just said H&B is residential.

Not that it "can be", or even if there was an analysis concerning other properties that were licensable for similar use as an adult day care facility.

Sorry.

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Read my first post.

In fact, I'll quote and bold it here for you:
Having said all of that, your local laws/regs may be different. What you should be able to do is to support your H&BU analysis with more than the check-box, summarize the zoning requirements and any specific overlay for the adult day care use, and then, based on all of that, you'll know if it is residential or not.
If you cannot do "all of that" pass on the assignment.
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I really appreciate all the feedback. Definitely a few things you all brought up that I've taken into consideration. Thank you.
 
We have lot's of these in residential tracts and are permitted by the state and local city. They are still residential homes but are being used as care facilities. BUT with that said most have wheel chair ramps, the halls and doors have been widened to allow wheelchairs the bathrooms are expanded with holding rails and other things. I have appraised these things BUT would never do it again. It's almost impossible to find similar comparable sales and you could work two weeks on this project and spend another week answering all the underwriters or reviewers questions.

In Summary: I would walk because no matter what the lender will not like your appraisal. I have completed three over the last few years and each one is a nightmare. As far as rental stream that's a tough one too because the occupants in these care homes cannot simply be evicted like a typical residential tenant and the rent is often coming from the county or state. JUST SAY NO : )
 
It depends on what the license is for as to what extras the property does or doesn't need.

As for the profit motive, Marion is quite right that people don't do these for free. But the business interest is where the money is, not the property itself. I've don't a number of these properties over the years and I *always* look to see if there's a premium, it being particularly evident when checking their prior sales. In my experience the data just doesn't support the idea that they usually or always have a different value than other SFRs of comparable attributes.

I often see sky high listing prices, but they don't tend to pan out. One thing that's common is that they tend to put these businesses in the inexpensive neighborhoods and relatively inexpensive properties because costs matter to their clients.

Ramps and extra exterior doors and the like generally have no effect on either value or marketability. In my experience, that is. YMMV because all RE is local.
 
No different than restaurants, the value is in the business interest that brings it to its highest and best use. It's rare you walk into a restaurant and say this should be retail space, because a buyer would have to know how to cook and run a restaurant, so let's ignore the kitchen build out and call it retail. Does anybody really do that with a bar? Once the liquor is all gone, call it retail space, because someone would need to buy a liquor license, and we'll just call for removal of the bar?

They are specialty properties, once modified.

http://us.businessesforsale.com/us/search/care-homes-for-sale-in-California

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