How to Sell a Residential Assisted Living Home: Preparing Buyers and Their Lenders
For many owners, a residential care home is more than a business. It may be a place they have lived, worked and cared for residents for years. When it is time to sell, most want to be sure residents will continue to be well cared for and caregivers treated fairly. Most buyers rely on financing, and the buyer will usually need to satisfy the state’s licensing requirements, so the home must be ready for review by the buyer, the buyer’s lender and regulators. Owners who prepare in advance can sell a residential assisted living home more smoothly and with greater peace of mind.
This guide is written from the seller’s perspective for owners of existing, licensed residential care homes. It is not legal, tax or regulatory advice. Licenses and program participation do not automatically transfer with a sale, and requirements vary by state, so work with qualified professionals throughout.
Outside Sale or Internal Transition?
Before marketing the home, consider whether a family member, partner or trusted caregiver could take it over. If so, see our guide to residential assisted living succession planning.
Understand What Buyers Value
Buyers and lenders focus on documented cash flow, occupancy history, licensing standing, caregiver stability and the condition of the house. Our guide to residential assisted living valuation explains what drives price.
Organize Financial Records
- Tax returns and financial statements for several years, plus year-to-date
- Bank statements
- Resident census history and rate sheets
- Resident payment sources, where applicable, summarized appropriately
- Payroll records
- Existing debt and liens
If you personally provide care or cover shifts, be ready to explain how much, since buyers will account for replacing that work.
Prepare Licensing Information
Gather the current license, inspection reports and how findings were addressed, and any complaints or enforcement matters. Learn what the buyer will need to do to become licensed where the home is located and be prepared to cooperate as required. Our guide to residential care home licensing explains the considerations.
Prepare Caregiver Information
Summarize schedules, overnight coverage, tenure, training and pay practices, and be ready to explain any live-in or contractor arrangements. Personnel information is sensitive and subject to applicable privacy and employment requirements. Plan carefully when and how caregivers will learn about the sale. See our guide to residential care home staffing.
Prepare the House
Decide whether you will sell the house, lease it to the buyer or offer both. Gather title information, any surveys, inspection reports and records of safety systems, and address obvious repairs. Confirm the zoning status of the home’s use. Our article on residential assisted living real estate discusses these issues.
Anticipate Due Diligence
Our residential assisted living due diligence checklist shows what buyers typically request. Resident information is sensitive and subject to applicable privacy requirements; work with counsel on what can be shared and when.
Plan for Residents and Families
Residents may be anxious about change. Coordinate with the buyer on how and when residents and families are informed, and emphasize continuity of care and familiar caregivers.
Consider Your Role and Terms
Buyers and lenders often value a seller who will support the transition for a period. Some sellers also consider seller financing or leasing the house to the buyer.
Common Mistakes to Avoid
- Assuming the license will transfer to the buyer
- Pricing the home on its best month rather than its history
- Disorganized payroll and census records
- Announcing the sale without a plan for residents and caregivers
- Deferring repairs to the house
Selling With Care
No seller can guarantee that a buyer’s financing or licensing will be approved. But a seller who prepares financial records, licensing information, caregiver details and property information in advance gives buyers and their lenders what they need to move forward, and helps protect the residents who call the home theirs.
US Professional Funding works with buyers acquiring existing residential care homes. Sellers can point qualified buyers to our residential assisted living acquisition financing page.
