�� #33 Residential Assisted Living / Adult Family Home Acquisition Model

The broker prices this care home as if every bed paid private. One in five beds is Medicaid. That gap is $162,000 of purchase price.

A residential assisted living home is a census business: beds times occupancy times the rate each resident actually pays. A private-pay bed and a Medicaid-waiver bed look identical on a tour and pay about 45% apart. Present the home as if all ten beds were private and you overstate SDE, because the staffing does not change with the payer. This model underwrites the blended net rate a bank accepts — not the private sticker — and shows the all-private pro-forma price ($610,800) next to the real, blended-rate price ($448,800), with the DSCR at each (1.12x, declined, vs 1.51x). Overpay avoided: $162,000 (26.5%).

It is the model a searcher / ETA buyer hands the lender, built the way a bank underwrites, not a startup forecast:

• Census and payer-mix revenue engine — 10 beds at 90% occupancy, 80% private / 20% Medicaid, at $5,500 private and $3,000 Medicaid-net, a $5,000 blended rate per occupied bed per month, $540,000 a year.
• Caregiver staffing-ratio engine — the dominant cost (about 40% of revenue) derived from a day/awake-night ratio and roughly fixed at 24/7 coverage. When a bed empties, the labor barely drops. A light night ratio that a state audit would reject is a hidden cost.
• DSCR true (1.51x) vs naive (2.55x) — the true figure hires a $55,000 administrator to replace the owner who runs the home and covers shifts, and reserves capex. The gap is the owner's own labor.
• Occupancy and caregiver-shortage down-case — one empty bed is 6–16% of a small home's revenue, and with direct-care turnover near 75% a wage spike bites while staffing stays fixed. Occupancy 90→85% + a 6% wage rise → DSCR 0.78x. Two mechanisms, not a recession back-test.
• Owning the real estate makes it harder, not easier — a fee-simple toggle shows that bundling the ~$600,000 home into the SBA loan adds ~$65,000/yr of mortgage and compresses the combined DSCR to ~1.06x.
• SBA 7(a) capital stack, seller-note standby lever, real amortisation, debt yield (26.1%), break-even occupancy (74.8% cash / 87.5% at the floor) and break-even blended rate ($4,858/mo), and 3 profiles (Private-Pay Boutique 3.25x / Balanced 3.00x / Medicaid-Heavy Volume 2.50x).

Excel model, 11 tabs, 5-year, every assumption editable and highlighted (Google-Sheets compatible — no macros, no add-ins); a PDF guide with sources. SDE (27.7%) and Adjusted EBITDA (17.5%) are held deliberately conservative. No live IRR by design; the 5-year MOIC (3.76x) is flagged leverage-amplified. This is the first acquisition-underwriting model for residential assisted living / adult family homes — not the first RAL model; startup forecasts already exist. Benchmarks from CDC/NCHS, Genworth, NIC, AHCA/NCAL, PHI, BizBuySell and BLS. Educational planning tool — not financial, lending, legal or medical advice.